What is Shared Ownership?

Shared ownership is a "stepping stone" between renting and outright ownership provided by Housing Associations. You can buy a home to suit your needs by purchasing a share of the market value of the property and pay a subsidised rent on the part you do not own to the Housing Association. In the future, if your circumstances meant you could buy a greater share, you can. In most cases you can keep on buying a share until you own the property outright. If you can't afford it, or just don't want to, that's fine too.

Shared ownership means that your monthly mortgage and rent payments can be at a price you can afford and not much more than just renting a property. In addition you will have a capital stake in your home which may increase in time. For example, if your income would allow you to take a mortgage of £50,000, but the property that meets your needs would cost £100,000, you could buy 50 per cent of that property. You get your mortgage of £50,000 and pay rent on the remainder.
 
The benefits of schemes such as this are numerous. For a start, it gets people who otherwise would not be able to onto the housing ladder. Secondly, it helps people gradually reach a stage when they can own their own home. It's like a savings account in a way - while most people cannot afford to save and pay rent, shared owners are saving by paying off their mortgage.
 
And secondly, the value of your share - at the moment at least - is rising. If you buy a 50 per cent share of a property worth £100,000 and its value subsequently increases to £150,000, you still own a 50 per cent share, now worth £75,000. If you don't end up buying the full share, you can sell up and have a pretty healthy deposit to put down on another property.

What shared ownership opportunities are available?

There are three main types of shared ownership schemes which are as follows:

a) HOUSING ASSOCIATION NEW SHARED OWNERSHIP
Housing Associations will build a development on a new estate and will offer properties to first-time buyers who are on the Council's housing register or on the association's waiting list. These are usually available to buy at a minimum 50% share.

b) HOUSING ASSOCIATION - DO- IT- YOURSELF SHARED OWNERSHIP (DIYSO)
Through DIYSO you select a property of your choice, subject to localised price limits and availability of funding, buy a share in the property and the Housing Association purchases the rest of the property.

c) HOMEBUY
This is a new scheme through which you could be eligible for an interest free loan for 25% of the purchase price of a property. You will have to secure a mortgage for the remaining 75% and will have to repay the outstanding 25% when you sell your property.

Who is eligible for shared ownership?
Generally you should be a first-time buyer. There are other conditions that you have to fulfil. Firstly, you must be unable to buy a full share of a property on the open market. And secondly, you must prove that you have the means to pay both the mortgage on the share you buy and the rent on the remainder.
 
In the majority of cases, you will be expected to have some connection with the area in which you want to buy. This means that either you must have a history of living there, have a family there, or you work nearby.
 
The Housing Association will assess your application. If it believes that you are deserving of shared ownership and can pay the bills, you will be offered a place on whatever developments are available
 
Housing Associations work in conjunction with local authorities in the main, although some are now working with other organisations, such as NHS trusts. At times, the association will be asked to provide housing for a particular sector of people if the authority decides there is a need in the area. On occasion, there will be developments specifically for teachers, nurses, existing Housing Association tenants, or applicants on the Council Housing Register who wish to buy a property, but have insufficient income or resources to buy a property outright.

Priority will be given to the following :
Council and Housing Association tenants who will move out of their rented homes if they are successful in obtaining a shared ownership home.

Local residents who are registered on the Council’s housing register

Key Workers who work in the Borough

Q How does shared ownership work?

The purchaser buys a share of the property for a sum representing a percentage of the full purchase price, i.e. 25%, 50% or 75%. The balance is owned by the Housing Association. The typical purchase share is 50%.

Rent is payable to the Housing Association for the share of the property which has not been purchased i.e. if you buy a 25% share, then you will pay 75% of the rent which the Housing Association would normally charge for the whole property. Generally you will need a minimum income of around £15000 per annum to be able to afford a shared ownership home, although this may vary depending on the scheme. Here are some approximate examples of costs: based on a repayment mortgage. Mortgage costs will be lower on an interest only mortgage (These figures are a guide only and will vary according to the circumstances of your purchase).

Cost of House	£90,000	£200,000
Cost of 50% share	£45,000	£100,000
Typical mortgage cost	£76.00 p.w.	£168.00 p.w.
Typical rent	£50.00 p.w.	£110.00 p.w.
Total you pay	£126.00 p.w.	£278.00 p.w.
Please Note: The rent, but not the mortgage, is eligible for Housing Benefit subject to your income.

How much will it cost me to purchase a property on shared ownership terms?

Initially at the time of purchase Legal costs of conveyance
Valuation and survey fees
Stamp Duty on the full value of the property (if applicable)
A deposit (if required by your Building Society) You must also remember that as a Shared Owner you will have to make the following regular payments: Rent Property maintenance and repair costs
Mortgage payment if you have a mortgage
Other domestic bills such as water, gas and electricity
Home contents and building insurance

How do I purchase further shares in the property?

You have to write to the Housing Association stating your wishes. Some Housing Associations may require a non-refundable administration fee.

The Housing Association will arrange for the property to be valued, and if the valuation is acceptable, you will then be given a specific time limit in which to complete your purchase. Again the time limits may vary depending on whether the property is with the Council or a Housing Association.

What happens when I want to move?

If you have bought your property outright, then you may sell it on the open market in the normal way. If you only own a share of your property, then you must first give the Housing Association the option to nominate a purchase for your share.Housing Associations will often have a waiting list of people interested in buying a shared ownership home and they will usually offer you advice and assistance in selling the property. If the Housing Association is nominating a purchaser, arrangements will be made for the property to be independently valued. The Housing Association then has to ensure the valuation is acceptable to you after which contracts will be drawn up and exchanged.

If the Housing Association does not wish to nominate a purchaser, then you can sell the property on the open market, through an estate agent.

The Housing Association will rarely repurchase your share.

What is Homebuy? Homebuy is targeted at Council and Housing Association tenants to enable them to buy a home on the open market. It consists of an interest free loan of 25% of the value of the property to help buy through the private market and is lent by the Housing Association You would need to contribute the remaining 75% of the purchase price of a home through a mortgage and personal savings. The loan is tied to the value of the property that you buy and is not repaid until the property is sold. The money available for Homebuy is limited, so not everyone wishing to take part can do so. The only people who can apply for this scheme are existing tenants of Housing Associations and local councils or those on the council’s housing register who are nominated by the Council as being in housing need. To qualify for the scheme you must first be approved · You must currently be a tenant of a registered social landlord or a local council, or be on a housing waiting list and nominated by the local council as being in housing need. If you occupy your property on a temporary basis, such as an assured shorthold or licence agreement, you would not meet this tenancy requirement. So you would only be considered for the scheme if the local council nominated you as being in housing need. · You must be able to obtain a mortgage to cover your contribution (this is set at 75% of the purchase price) and have savings to cover the other costs of buying a home, such as legal costs. The mortgage must be from a qualifying lender such as a bank, building society or insurance company. Other lenders may be acceptable but you need to check first with the Housing Association whether the lender can provide a mortgage for the Homebuy scheme. · You must be able to show that you cannot buy a suitable home for your needs without help from Homebuy. · You must not be in rent arrears or in breach of your tenancy agreement. · You must not be receiving Housing Benefit or have received it during the months before you apply for Homebuy. · If you currently own your home or part-own a property, you can only be considered for Homebuy if the local council accepts that you are in housing need. You would have to sell your interest in the home at the same time as buying a home through Homebuy.

Selling Homebuy Properties
The 25% loan is tied to the value of the property. When you come to sell your home that you have bought through the Homebuy scheme, you have to repay the loan you took from the Housing Association. There is no interest on the loan. However, the amount you will have to repay is linked to the value of your home at the time you sell it. Therefore the amount you will repay to the Housing Association will be 25% of the sale price. (NB this may be more or less than the original loan).