by Wendy Hegarty, Partner, Red Loft
Shared Ownership has grown in popularity over the past decade and is now one of the best ways to buy, particularly in an area you never thought you could afford to live in. Shared Ownership schemes work by enabling homebuyers to purchase a share in a new home and pay a subsidised rent to the housing provider on the remaining share along with a monthly service charge.
Home Buyers can own an equity share in the property, anything from 25% to 75% dependent on what is being offered by the vendor and what the financial assessment has deemed the buyer can afford. Additional shares in the property can be purchased at any time; this process is known as staircasing.
As this is one of the biggest commitments you’ll ever make, it is important that you feel confident in the process. Here are some tips and guidance on the best way of ensuring everything runs as smoothly as possible.
Ensure your credit rating is healthy – no missed payments on loans or credit cards
If you are self-employed ensure your accounts are up to date
Is your deposit accessible?
Do you have money for legal fees and mortgage fees?
It can be a long process if you buy off-plan and the property is still being built
There can be delays in handover
Be honest on your application, for example if you have been in debt or about to change jobs
What notice period do you have to give where you are currently living?
Ask lots of questions; about the scheme and about shared ownership
If you’re not sure of the area, take time to explore and find out for yourself
A Shared Ownership property can also be sold at any time. However, the housing provider you buy from will normally have an 8-week period in which to find another person to purchase the property under the shared ownership scheme. If they are unable to find a buyer in this time period, the property can be sold on the open market at a value determined by an RICS Surveyor.
Shared Ownership is available to those outside London with a combined household income of less than £80,000 and in London for those less than £90,000. You need to have a minimum deposit of 5% and be able to pay towards legal fees, mortgage arrangements and stamp duty.
Each development will have an eligibility criteria and this can be based on the area in which applicants currently live or work and the type of accommodation currently occupied.
At Red Loft, we work on behalf of housing providers and private developers to market Shared Ownership and Private Rented developments. For further information about what is available in your area please visit www.redloftsales.co.uk