About Shared Ownership
Shared Ownership is a government backed Part Buy/Part Rent scheme designed to help you take that first step on the property ladder.
The properties sold under this scheme are new build or previously owned (re-sales) apartments or houses; you can purchase shares from 25% up to a maximum of 75% on the initial purchase for new build properties, or the share being offered for sale for re-sale properties.
As this scheme is designed to be the first step onto the property ladder, purchasers are primarily expected to be first time buyers not owning or having a financial interest in another property or land in the UK or abroad; and your household income must not exceed £80,000 gross per annum (outside of London). You should also be otherwise unable to purchase a property to meet your housing needs on the open market.
Catalyst Housing Limited are able to consider current shared home owners to purchase another property under shared ownership if they:
- have an approved application with the Help to Buy Agent
- have sold their current home with an exchange / completion date confirmed by their solicitor
- meet the current eligibility criteria
Other current home owners as well as meeting the above criteria, will also require the written support of their local authority, a copy of which we are required to keep on file.
All applicants buying brand new shared ownership homes (new build) are expected to purchase the maximum share they can afford and sustain in the long term via savings and a mortgage, and this will be dependent on your income and savings (for your deposit), and any financial commitments you may already have.
With Re-Sales Shared Ownership (i.e. previously owned shared ownership) you are generally expected to buy the share that is being offered for sale – you cannot purchase less, so you must be able to afford it.
There are some very limited circumstances where we may allow you to purchase the share outright with no mortgage but only if buying a suitable property on the open market with a mortgage is not a possibility for you, plus you have all the funds for the available share and can afford to sustain home ownership in the longer term.
You will need to use some of your savings for legal fees and purchase costs and the rest of your savings will be required for your deposit. You will need to arrange a mortgage for the share you want to buy and you will have to pay a discounted rent to your landlord on the share you don't own, plus a service charge. For example: if you buy a 40% share of a shared ownership property, you will pay a discounted rent to your landlord on the remaining 60% they own.
Rent and ongoing costs
Your discounted rent is due monthly and the amount depends on the share that you own. This amount will be reviewed annually and any increase applied from October. Service charges will vary between properties and will include the cost of insuring the building and may include 'communal' costs e.g. lift maintenance, cleaning communal areas, maintaining car parking areas etc. You are liable for all your household bills e.g. council tax, utilities, contents insurance etc. As a home owner, you will be responsible for your own repairs and maintenance, except for communal areas and services covered by the service charge.
Independent Financial Advice
When you come to purchase a home through shared ownership, you will be expected to obtain independent financial advice through a financial advisor who has knowledge of shared ownership. Not all independent financial advisors have experience of shared ownership. An experienced advisor will be familiar with which High Street lender is offering the best deals and be able to help you find the most suitable type of mortgage for your circumstances. They should be able to advise you on the maximum share that would be affordable and sustainable for you and what mortgage products are currently available for shared ownership. You will need to supply proof of income and other documents to them. Should you need assistance, Catalyst Housing Limited has a panel of Independent Financial Advisors who know the shared ownership market and they are available for you to contact.
Solicitors and legal fees
You will need a solicitor or Legal Conveyancer to act for you with the legal side of buying a property. It is recommended to use a solicitor experienced in shared ownership and you are advised to obtain a quote for their fees before they commence any legal work on your behalf. We have a panel of solicitors who know the shared ownership market and should you wish to do so, they are available for you to contact. Apart from solicitor's fees there is the Land Registry fee and Search Fees, Stamp Duty if applicable etc.
Purchasing Extra Shares
You may purchase further shares in the future; this is known as staircasing, and generally you may staircase until you own your home outright. A Royal Institution of Chartered Surveyors (RICS) qualified surveyor will need to value your property as further shares are based upon the current market value at the time you stair-case. You will incur legal and surveyor fees when stair-casing.
There are a few properties where you may not purchase 100% (e.g. properties with a rural restriction or in protected areas, homes build specifically for older people or the disabled etc, but your solicitor should confirm this with you before you complete your purchase).
Selling the Property
If you decide to sell your home, you need to contact your housing provider landlord who will try to find a buyer for you from their waiting lists. If they are unable to find a buyer within the lease's pre-determined time scale (often 8 weeks but may vary), the property can be sold on the open market. An independent RICS valuer determines the price (not negotiable) at which the property can be sold. It would be your responsibility to ensure the surveyor is made aware your property is shared ownership, how long is left on your lease and to pay the valuation fee and any other costs associated with the sale of the property.
Rights and Responsibilities
When you buy a New Build Shared Ownership property, you enter into a lease agreement, typically 99 years long although some leases vary e.g. 125 years. Re-sale properties will have varying terms left on the lease so you should check how may years are left on it. Your solicitor will explain the lease, but the main areas covered are the repairs and other outgoings that either you and/or the housing association are responsible for, how the rent and service charge will be calculated and paid, and how you can buy further shares (if appropriate) or sell the property in the future. You essentially have all the same rights and responsibilities of any homeowner. You are responsible for all maintenance and repairs to your home, including boundary fences, kitchen fittings, electrical cabling, water pipes, sanitary ware etc although your landlord is responsible for repairs to 'common parts' in a development. For any common parts such as roofs for apartment blocks you pay into what is called a ‘sinking fund’ within your service charge towards repairs in the future.
You will not be able to sub-let the property (with the exception of serving Ministry of Defence) or use your home for business (without the written authority of the landlord) or do anything that could affect the buildings insurance.
Improvements and adaptations
For any improvements or adaptations, your lease will confirm what permissions should be obtained from your landlord and always consult with your housing provider/ landlord first. If your (authorised) improvements add value to your property, this will considered when you sell the property or buy extra shares, in order for you to receive benefit from them. If you staircase to 100% ownership, you will receive all the uplift in the property value, if applicable. If you sell your share, you will share any uplift in property value with Catalyst Housing Limited, in accordance with the respective share you own.
REMEMBER YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED AGAINST IT.