Shared ownership explained
What is shared ownership?
Shared ownership is a government funded scheme aimed at helping first time buyers to afford to buy a home.
What kind of property can be bought?
There are two kinds of shared ownership property that you can purchase – a new build or the resale of an existing shared ownership property.
What will I own?
The scheme enables you to buy a share of between 25% and 75% of a property. At the same time you will pay a subsidised rent on the remaining share which is owned by us.
Who is the scheme intended for?
The scheme is intended to help people who could not afford to buy a home outright. This means your income must be enough to obtain a mortgage for the required amount (but should not be over £60,000).
Why part buy, part rent your home?
You will own part of your home rather than paying rent with no return. Often the monthly mortgage and rent can work out much cheaper than buying outright and sometimes not much more than renting.
You can also choose to buy further shares in the property later on when you can afford it. This means that shared ownership can be stepping stone to completely owning your own home.
Where can I find a shared ownership property?
Many housing associations in London advertise their properties on the www.firststepslondon.org website.
What happens next?
Once you have found a property, you will need to make a payment of £500 to reserve it. We will then carry out a credit reference check, and if this is ok we will make an offer to you.
If you accept the home, we will arrange an interview with an independent financial advisor. They will help you to decide what share you can afford to buy based on your income and savings, and also to arrange a suitable mortgage. You will also need to appoint a solicitor.
Finally, a date to exchange contracts will be agreed and this is usually around 4 weeks after the interview. On the completion date we will give you the keys!
How much will it cost?
It is important that you know exactly what your new home will cost, both the start-out costs and your monthly costs.
To cover the costs of buying you will need savings of at least £5000. This covers expenses such as legal fees, survey fees, removal costs, utility connection charges and furnishing the property.
After you have moved into the home, each month you will have to pay your mortgage (for the percentage of the property that you own), your rent (for the part that we own), household bills, service charges (to cover the costs of maintaining the communal parts of the building) and building insurance. In addition you will be responsible for maintaining the property.
Can I sell my shared ownership property?
You can sell your home whenever you want to just like any other home owner. Under the terms of the lease, we have 8 weeks to find buyer for your home. If we don’t find a buyer after this time, you can sell the property on the open market.
Is it possible to buy more of a share in my property?
You have the choice of buying a bigger share in your home at any time. This is called ‘staircasing’. The price that you pay for any extra share is based on the market value of your home at the time you want to buy.
How can I find out more about the scheme?
If you would like any further information please contact the home ownership team.
