Shared Ownership Explained

What is shared ownership?

Shared Ownership is an affordable way to buy a home which involves part owning and part renting a property. It’s designed to help people who can’t afford to buy a home at full market value, allowing them to buy a share of a property (usually 25%–75%) and pay rent on the part they don’t own. A mortgage will be required for the percentage share that has been purchased. If you wish, you can increase the percentage share you own, until 100% of the property is owned. This is known as ‘staircasing’.

Service charge will also need to be paid on the property, usually on a monthly basis.

There are many positive reasons to buy a Shared Ownership home:

• You can purchase a home with a smaller deposit
• Buy chain free
• Have a 10-year construction warranty from a leading warranty provider
• Buy in a sought-after development in a high-demand area
• Own a skilfully produced, meticulously designed home in an area you want to live

How does it work?

The price of the share you buy is determined by a property valuation, carried out by a Royal Institution of Chartered Surveyors (RICS) qualified surveyor. On the share of the home you don’t own, you will pay A2Dominion rent. You will need to have a financial assessment to establish the maximum share you can afford to buy. For example, if you purchase 40% of your home, you will pay rent on the remaining 60%.

What will you own?

Shared Ownership properties are always leasehold. This means that you own the property for a fixed period of time - usually 125 years - and will have the rights and responsibilities of a traditional private sale purchaser. A2Dominion will act as the landlord and will own the remaining share, the share you don’t own.

How much will it cost?

The level of deposit you need depends on the price of the share you are buying and the mortgage you choose. In addition to your monthly mortgage and rent payments, you’ll need savings of around £4,000 to cover the cost of the survey, legal fees and stamp duty (if applicable). The amount of deposit you will need depends on the mortgage provider you choose, the terms of the mortgage and your credit rating.

Am I eligible for Shared Ownership?

If you're a first-time buyer, or have previously owned a home but currently are not a home-owner, or if you're an existing Shared Ownership homeowner looking to move house – and your household income is less than £80,000 (or £90,000 in London) – then the answer is yes.

To qualify for Shared Ownership, you will need to meet certain criteria set by the Local Authority, this can vary across different boroughs.

Generally, you should be eligible for Shared Ownership if:

• You currently don’t own a property
• You have at least £4,000 to cover legal fees
• You live or work in the same borough as the property you want to buy
• You meet the household income criteria as set out below:
  London: 1, 2 & 3-bedroom - household income less than £90,000
  Outside London: 1, 2 & 3-bedroom - income less than £80,000
  

Shared Ownership applicants are often prioritised based on the Local Authority criteria. Priority is generally given to applicants living or working in the same borough as the property they wish to buy. When prioritising applicants, the Local Authority will also consider whether:

• You are a Housing Association tenant
• You work in the Ministry of Defence
• You are a first-time buyer
• You are deemed to be in a high-priority group by the Local Authority

In some cases, the Local Authority use their own criteria to prioritise applicants.

Is shared ownership better than renting?

There are pros and cons to both Shared Ownership and renting. After buying a home with Shared Ownership you will be paying towards the ownership of your own home and landlords won’t be in control of rent increases and repairs. The rent you pay to the Housing Association can only increase inline with the Retail Price Index, it is not influenced by the rental market or the whims of a private landlord.

How do I find a shared ownership home?

Shared Ownership homes are available through housing associations. They could be newly-built homes or existing homes. All Shared Ownership properties are leasehold, though usually with the option to extend.

Here at FABRICA, we have a range of Shared Ownership properties in London and the South-East.

View our homes available on Shared Ownership.

What is staircasing in shared ownership?

If, later down the line, you decide you want to increase your share of your home, you can do just that, though the cost of your increased share will depend on the current market value. For example, if your home has increased in value since you bought your original share, the new share price will be higher, but if it has decreased in value, it will be lower. Upping your share is called ‘staircasing’, and you can do it more than once. Of course, buying additional shares of your property means you’ll be paying less rent, and in many cases, you can ‘staircase’ up to 100% of the shares, which would mean you own the property outright and no longer have to pay rent.

How do you sell a shared ownership home?

You can sell your shared property at any time, just bear in mind that the Housing Association has a brief window to find a buyer before you put it on the market. Typically this period, known as the ‘nomination period’, will last between one or two months.

It's also worth pointing out that you have to pay for the valuation of the property, but once you sell, the amount you and the Housing Association receive depends on the amount your property ends up selling for.

Can you decorate your shared ownership property?

As you own the home, you can also decorate it however you choose, without needing to get permission from your landlord.

All FABRICA Shared Ownership homes are brand-new - meaning they will be built with modern fixtures and fittings, including integrated appliances and flooring throughout, so there will be no need for renovations. New-build homes are also more energy-efficient than standard homes.

Disclaimer

Please note the minimum incomes may vary.

The information on this website concerning Shared Ownership eligibility was current and correct when the website was last updated. Eligibility criteria changes regularly and we make no representations or warranties with respect to the accuracy of this information.