First time buyers Guide

Shared Ownership

Shared ownership means owning part of your first home in conjunction with a co-owner, typically a Housing Association.  You have a shared ownership mortgage for the part that you own. You will need to find a few thousands pounds to pay for house-buying costs. You will pay rent to your co-owner for your use of the share of the property you do not own.

The Government’s shared ownership scheme is called New Build HomeBuy. The main purpose of their shared ownership scheme is to make home ownership affordable for key workers and those considered being in need of housing. It is important that every community has a good spread of key workers.

The Government funds this programme through the Housing Corporation. In any particular region of the country, the Regional Housing Board in conjunction with local organisations decides the eligibility of those applying for shared ownership.

The benefits of shared ownership schemes are:

• It might be the only way to achieve home-ownership
• Shared ownership  properties are typically new or refurbished
• Your share can be as low as 25% or as high as 75% at the outset
• Your share can be increased as time goes by, called ‘stair-casing’.
• If you do the right job, you will be considered a priority
• You can jointly apply as long as all applicants qualify

The disadvantages of shared ownership schemes are:

• Eligibility can be very narrow in some parts of the country
• There can be a long wait
• There is a limited choice of properties or locations.
• You may still have responsibilities for the maintenance and repairs of the whole property
• You may have to ask permission to make improvements
• There may be costs associated with increasing your share
• You may not ever be able to buy the whole property in some areas

New Build HomeBuy has been created for a specific housing purpose and so whether you are eligible or not is an important factor. The scheme is primarily intended for key workers such as nurses, teachers, firemen, speech and occupational therapists, armed forces personnel in the south east and nursery nurses. The list of key workers evolves with time and it is always worth checking whether your profession has become eligible. As well as key workers, the scheme is meant to help others considered being in need of housing.

When considering shared ownership it’s important that you ask all the right questions so you can establish what your rights, responsibilities and any costs might be.

Typical questions you might want to ask are:

• Can I redecorate – will I need permission?
• Will my mortgage lender ask for a new property valuation each time I increase my share?
• Who pays for buildings insurance?
• What happens when I want to sell, do I pay all the costs?
• What will the rent be and can it be controlled?
• What are my responsibilities and which ones are shared?
• What happens if I can’t pay the mortgage?
• Should I take out life cover?
• How will the value be established when I want to sell?
• Can I improve the property and how will the value added to the property be accounted for?
• Can I sublet a room?
• How will I go about selling my share?
• What is the process and costs of increasing my share? Can I own 100%?
• Who is responsible for property repairs and maintenance?
• Are there any annual charges and if so, what for?
• Supposing I die - should I take out a will?

You need to make sure you really understand the ‘lease’ agreement. Your solicitor can help you with this.

To find out if you qualify for shared ownership in your area, you should contact your local HomeBuy agent. The HomeBuy agent will take your application and review it. Hopefully you will find you can be considered. Alternatively, it may be that you simply aren’t eligible or that you are, but not as a high priority. In this case it is always worth looking at other options.

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