Understanding Help to Buy: Shared Ownership

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What is Help to Buy: Shared Ownership?

Help to Buy: Shared Ownership is a scheme that enables people who cannot buy on their own to live in a property that meets their needs, without having to fund the whole purchase. Instead, you will own a share of the property and a housing provider will own the rest. You will be able to live there, but will have to pay rent on the portion you don’t own, alongside your mortgage repayments – though these will usually be at a reduced rate. This can enable those unable to afford a home of their own to move more quickly, as the total cost is lower than buying it outright.

How does Help to Buy: Shared Ownership work?

The scheme works like this. You buy an initial share of a home worth between 10% and 75% of its full value, and pay rent to a housing provider on the rest. The housing provider is obligated to support you with essential maintenance during an initial 10 year period.

Whilst you live there, you have the option of buying more shares in your home as and when you can. This is known as staircasing. The more shares you own in the property, the lower your rent will be. As of 2021, the minimum share you can purchase at any one time was decreased to 5%. It was also introduced that for every year that passes, you can purchase an extra 1% of your home. You can also sell your shares in the property at any point.

Who is eligible for Help to Buy: Shared Ownership?

Shared Ownership is intended for first time buyers or those who used to own a property but now can’t afford to buy another at its full value. Applicants must have a combined income of less than £80,000, or £90,000 for those in London. To find out for sure if you’re entitled to this scheme, it’s worth speaking to your local housing association.

Prioritised Help to Buy: Shared Ownership applications.

Applications for this affordable housing scheme are actively encouraged and prioritised for the following people.

  • Those in housing associations and council tenants.
  • Armed force personnel.
  • Those who live with parents or relatives.
  • Those who live in private rental accommodation.
  • People who need to move for work reasons.
  • Homeless people.
  • Those in temporary accommodation.

What costs should I expect from Help to Buy: Shared Ownership?

There are several costs to bear in mind:

  • Deposit – the amount required will vary depending on your mortgage lender.
  • Rent – you’ll have to pay rent on the portion of the property you don’t own.
  • Fees – there are fees to cover including mortgage, legal fees, survey fees, and stamp duty.
  • Annual charges – Shared Ownership homes are leasehold, so you may have to pay a service charge.

What happens when I want to sell my Shared Ownership home?

Selling a Shared Ownership home can be a bit more complex. The process will depend on how much of the property you own – 100%, or just a share.

If you own a share of the property:

  • The property will be marketed as a Shared Ownership resale property.
  • The housing association will find a buyer.

If you own 100% of the property:

  • You can sell it yourself.
  • But, for 21 years from the date you owned 100%, the housing association has first refusal.

How to get started with Help to Buy: Shared Ownership.

For those looking to buy a property through this scheme, the first step is to contact the housing team in your local council or housing association to check if its available and if it is, whether you’re eligible. To purchase the property, you’ll need a mortgage and this is likely to require a specialist lender. For help finding a suitable deal that can make your homeowning dreams come true, feel free to get in touch with our mortgage experts!

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Emma Jones
Emma Jones
Emma began her career in Lloyds Banking Group, first in the unsecured & secured loans department at Halifax and later as a mortgage advisor at Lloyds. During 9 years in these roles and a further 2 years at Yorkshire Building Society, Emma was able to observe the impact of the recession, and how the banks let their customers down by denying loans and mortgages. Wanting to be a driving force for change, she stepped into a market advice role where she has been able to help clients when others couldn’t. Identifying a gap in the mortgage space, Emma went on to establish When the Bank Says No. As a keen property investor, she has been the focus of features in publications including The Sunday Times and This is Money. Emma’s greatest joy is overcoming the low expectations of their customers, many of whom have all but given up on getting a mortgage due. One thing Emma has learned through her own personal struggles is every client must be treated like a human and understood better by advisors and lenders in the industry. “We all have to navigate life events which can ultimately impact your financial status. It shouldn’t mean dreams of homeownership or business growth should have the breaks applied”. Emma and her team’s passion for helping people overcome the challenges they may face when applying for a mortgage have fuelled the success of When the Bank Says No.