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What are the benefits of shared ownership?

One of the biggest barriers to buying a home is often the size of the deposit you need to secure a mortgage.

The benefit of shared ownership is that, unlike buying a house outright, you won’t need such a big deposit because you are only paying for the percentage of the property you are buying.

This means you can get onto the property ladder more quickly than you might if you were saving up to buy a home outright.

It can also sometimes be cheaper than renting, although not always.

You can buy additional shares as time goes by (this is called staircasing). If you sell your shared ownership home you will benefit from any increase in its value.

What you need to know before entering into a shared ownership agreement

Whilst shared ownership is great for some, there can be drawbacks for others.

It is important you understand the full terms and conditions of shared ownership before deciding if it is right for you. Please seek advice from an independent financial and mortgage advisor.

It is important to understand, you can only buy where our shared ownership properties are, and this may not be your preferred location.

If the value of your home goes up, the shares will become more expensive, which might make staircasing – or increasing your share – more difficult. But the cost could come down too if the value of your home falls.

You might be required to pay service charges.

Finally, not all banks and building societies offer shared ownership mortgages. However, we can help by advising you on those banks that do.

Are you eligible for shared ownership?

You are normally eligible for shared ownership if:

  • Your household earns less than £80,000 per year.
  • You’re a first-time buyer or used to own a home but cannot afford to buy one now.
  • You are able to obtain or mortgage or have the funds for your share.
  • Your income is enough to cover the mortgage, your additional rent, any service charges and household bills.
  • You have access to £2,500 to cover the fees for buying your property, plus the deposit.
  • You have access to a minimum 5% deposit on the share you are purchasing.

Can you buy a share of the house you are currently renting?

No. Only specific properties are available for shared ownership. We advertise them on Right Move.

How do you buy more shares in a shared ownership home?

You can buy more of your home after you become the owner. This is known as ‘staircasing’.

The cost of your new share will depend on the value of your home when you want to buy the share, so expect prices to go up or down over time.

What do you do if you want to move from a shared ownership house?

You can sell your shared ownership home at any time but we retain the right to find a buyer before you put it on the open market. This is known as the nomination period. If you want to sell, please get in touch.

Are there any upfront costs?

There is no fee to pay to us directly. However, you will need funds for other costs associated with buying or moving home, such as:

  • Mortgage deposit
  • Mortgage arrangement fees
  • Solicitor and legal fees
  • Removal costs

What are the monthly costs?

In addition to your household bills, you will normally pay monthly rental fees for the share of your home we retain and your mortgage payments on the share you own. Monthly rent is usually calculated at 2.75% per year of our share, for example:

  • Your home is valued at £200,000
  • You buy a 50% share, so £100,000
  • We retain a 50% share, equal to £100, 000
  • The annual rent would be 2.75% of £100,000 which is £2,750
  • The monthly rent you would pay would be £229.17

On some properties you may need to pay an additional service charge.  Your solicitors will make sure you are aware of any additional fees in addition to these.

What does a service charge cover?

Service charges usually cover the costs of things like estate and ground fees, the upkeep of internal and external communal areas and may also include insurance.

Is Stamp Duty Land Tax (SDLT) payable?

You would usually only need to pay SDLT on the share you are buying and not for the full property value.  However, as rules and limits on SDLT thresholds are subject to change you should check what the current rules are before going ahead.

Do I need insurance?

We provide buildings insurance. How much you pay for this differs by each property, so we would let you know what you could expect to pay. It is your responsibility to arrange contents insurance, and we strongly recommend that you do.

Why is the home sold as leasehold?

All shared ownership homes are sold on a leasehold basis, whether it is a house, bungalow or apartment. This is because we are your landlord for the share we retain. If you staircase to 100% and become the sole owner, usually the freehold will be transferred to you and the shared ownership lease will end.

Can I sublet my property to someone else?

Subletting of the whole home is not allowed in shared ownership properties, however, you may be allowed to let a room within your home.  You will need to ask permission first though.

What happens to my share if I die?

You should make arrangements in your will to make sure any of your assets are passed to whoever you want your beneficiary to be.

Can I transfer my lease to someone else?

Yes. This usually happens as part of the selling process, but there may be other times when you want to transfer your lease (or your share of the lease if you’re a shared owner).

You’ll need to appoint a solicitor and we’ll need to agree to the transfer in writing.

Do I need to tell you if you are re-mortgaging?

Yes, you need to let us know if you take out a new mortgage.  If you own a share of your home, you’ll need a consent to re-mortgage notice from us.

How do I make a claim on buildings insurance?

You will need to contact us and we will be able to provide you with the latest insurance documents.  In most cases, you would contact the insurers and deal with them directly. This makes the process quicker and more transparent.

What are my rights and responsibilities?

Your rights and responsibilities are set out in your lease agreement.  Leases differ for most properties so make sure you refer to the actual lease for your home.  All of the terms and conditions will be listed in your lease but if you are not sure about anything in particular please get in touch.

Will I ever stop paying rent?

You will pay rent for as long as we have a share in your home.  If you eventually purchase 100% of the property then you will not have to pay rent but may still have to continue paying any service charges where applicable.

What happens if I miss any rental payments?

If you are struggling to pay your rent you should contact us straight away. We have people who will be able to help you.  Your rent forms part of your contract with Connect Housing and failure to pay this could end in you losing your home but we will do everything we can to make sure this doesn’t happen.

Can I buy further shares?

In most cases you can purchase further shares up to 100%, and then you will own your home outright. There are a few properties where this is not possible because of the types of lease but if this is the case then you will be made aware of this before buying.  There are costs associated with buying further shares in your home that you should be aware of such as valuations, legal and mortgage fees.

Can I move in the future?

Yes, you can sell your share of the home in a very similar way to how you’d normally sell a house.  To start with you would get the property valued by a RICS surveyor and then instruct an estate agent to market your share at the valued price.  Viewings and offers would be managed in the usual way with any buyers being asked to complete an application form and subject to the same eligibility criteria you had to meet when you first bought shares in your home.

Once everything is agreed, the sale goes ahead as normal.  Each sale is different but you should allow at least 12 weeks from sale to completion.  You must let us know before starting the sales process to avoid any delays in the sale.

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Connect Housing Association Limited is a charitable association registered in England and Wales under the Co-operative and Community Benefit Societies Act 2014 (Company No. IP17445R) and with the Regulator of Social Housing (No. L2285).

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