15. Shared ownership
Shared ownership is a government-backed scheme designed to help people who cannot afford to buy a home outright onto the property ladder. It allows buyers to purchase a share of a property from a housing association and pay rent on the remaining share. Here's how shared ownership works and what sellers need to know:
Shared ownership allows buyers to purchase a share (usually between 25% to 75%) of a property's value, with the remainder owned by a housing association. Buyers then pay a reduced rent on the housing association's share, making the initial purchase more affordable. Over time, buyers have the option to purchase additional shares in the property through a process known as "staircasing," gradually increasing their ownership percentage and potentially reducing their rent.
How does it work?
- Purchase share: Buyers choose a property available for shared ownership and purchase a share of it, typically through a mortgage or savings. The housing association owns the remaining share.
- Monthly payments: In addition to the mortgage repayments on their share, buyers pay a reduced rent to the housing association on the portion they do not own. There may also be service charges for maintenance of communal areas.
- Staircasing: Over time, buyers have the option to purchase additional shares in the property, increasing their ownership percentage and potentially reducing their rent payments. Staircasing allows buyers to gradually buy the property outright if desired.
- Selling the property: If a shared ownership homeowner decides to sell their property, they can do so through a process known as resale. The housing association typically has the first right of refusal to find a buyer for the property. If they cannot find a buyer within a specified period, the homeowner can sell the property on the open market.
For sellers looking to sell their shared ownership property, it is essential to contact their housing association or shared ownership provider for guidance and support throughout the process. The housing association will typically handle the resale process, including valuing the property, finding a buyer, and overseeing the legal aspects of the sale.
Finding details regarding shared ownership percentage
Sellers can find details regarding the percentage of their shared ownership by referring to their shared ownership lease agreement or contacting their housing association or shared ownership provider. The housing association will have records detailing the percentage of ownership held by the seller and can provide guidance on staircasing or selling the property.