Shared Ownership Properties in London

Shared Ownership in London

Shared Ownership is a government home-buying scheme. It provides the option to buy a share of the property from a housing organization. It is a chance for buyers who do not own real estate, to buy a share of a home in a new or resale development. With Shared Ownership scheme, buyers pay the mortgage only for their share of the home. They pay the rest of the lease to the housing association. Thus, a mortgage is required for a significantly lower amount, and the amount for making a deposit is also much lower than when making a direct purchase.

How does Shared Ownership London work?

To put it simply:

• Buyers decide for themselves how much of the property they can afford. The minimum share is 25% while the maximum share is 75%, depending on the developer. In some cases, in the staircasing process, you can buy out 100%.
• Next, buyers pay a deposit, which must be at least 5% of the value of their share (not the full purchase price!).
• To cover the rest, you need to take out a mortgage.
• Monthly costs: you pay rent on the part you do not own + mortgage payments.

*If desired, buyers can increase their share in the home. This process is called staircasing. Typically, this process can continue until the tenant owns 75% of the property. It is very rarely 100%. However, not all housing associations allow this, so if you plan to do this, you must first check this information with the organization.

What are the eligibility criteria for Shared Ownership London?

London Shared Ownership gives many people the chance to become the owner of their desired home. But before choosing this scheme, you need to make sure that you match the established criteria. To take advantage of the 'part buy, part rent' scheme, the buyer needs to ensure that they comply with the following rules.

• Be at least 18 years old.
• Annual household income must be less than £90,000 (in London).
• Annual household income must be less than £80,000 (outside of London).
• Not allowed to own another home. If you already own another property (in the UK or abroad), you must be in the process of selling it.
• The buyer should not have the money to buy a home that meets his needs on the open market.
• To purchase one of the Shared Ownership homes, you must prove the absence of mortgage or rent arrears.
• Able to demonstrate a good credit history and show that you are able to afford the regular payments and costs involved in buying a home.
• It is preferable that the purchaser has some savings. He should be able to procure at least £4,000 to cover the costs of buying a home.

*Eligibility criteria may vary per housing association and therefore you should always check the exact criteria with the developer or housing association responsible for the exploitation of the property.

Can I increase my share of my Shared Ownership property to 100%?

Each buyer that participates in Shared Ownership London can gradually or immediately increase their share of home ownership. As mentioned earlier, this process is called staircasing. If you are going to take this opportunity, before concluding a shared ownership contract, check with the housing organization for the specific staircasing conditions for the house you are about to buy. Usually, conditions stipulate that the process will take place in at least 10% tranches. But in some cases, buyers can immediately get the piece of ownership that they want. The cost of the additional share depends on the price of the house at the time of staircasing. To be able to take possession of 100% of the house immediately, check your lease. Some housing associations limit the proportion that a buyer can acquire as a result of staircasing, for example, to 75%. Always check the conditions for your property directly with the developer.

How does staircasing work?

More recently, during staircasing, the buyer can purchase 1% of the house at a time as an additional share. At the same time, every time you make a purchase, you need to pay attention to the current market value of the house. To do this, you need to contact a certified appraiser. He or she will advise the housing association how much should be charged for the additional share in Shared Ownership houses that the buyer wishes to acquire.

At the same time, one should not forget about other fees. Even though the additional part is already part of the existing home, the buyer needs to restructure the mortgage or pay stamp duty. The medium amount of fees during the staircasing process is around £2,000. But it can change depending on individual facts.

Shared Ownership London pros and cons

Shared Ownership houses for sale is an excellent opportunity to purchase a property that you cannot pay in full right away. However, for this attractive scheme to work for you, you need to become familiar with all the nuances. What kind of Shared Ownership pros and cons can a potential buyer expect?

Popular locations for Shared Ownership

• Shared Ownership homes in Greater Manchester
• Shared Ownership homes in Berkshire
• Shared Ownership homes in Buckinghamshire
• Shared Ownership homes in Essex
• Shared Ownership homes in Hertfordshire
• Shared Ownership homes in Kent
• Shared Ownership homes in Manchester
• Shared Ownership homes in Surrey

FAQ

• Does shared ownership mean I have to share with someone else?

You do not have to share your home with anyone unless you want to. Buying a home with a partner or friend is not Shared Ownership. Shared Ownership means that the housing association owns the remaining share in the home.

• I already own a home, can I buy with Shared Ownership?

No, as long as the house is in your ownership, you will not be able to use Shared Ownership. But unlike other buying schemes, you can buy one of the Shared Ownership properties if you can prove that your previous home is in the process of being sold.

• Do I need to pay Stamp Duty on a Shared Ownership home?

Yes, but when getting a Shared Ownership property as a first-time buyer, you can pay Stamp Duty in full immediately. This way, although the tax may seem high depending on the price of the property, you do not have to pay every year.

• How much of the home will I own?

The special thing about Shared Ownership is that you decide how much you can afford. As a rule, at the beginning, it is about 50%. You can then acquire additional stakes in the staircasing process.

• What size share can I purchase in a Shared Ownership property?

Most commonly, the minimum share is 25% while the maximum share is 75%. In some cases, in the staircasing process, you can buy out 100% of the property, but this depends on the conditions of the housing association.

• Is Shared Ownership better than buying?

Shared Ownership has its advantages and disadvantages, but in some cases, it can be more profitable than buying. This scheme allows you to purchase housing that you might not be able to afford immediately. If the buyer already owns a property, they can use the scheme if they are able to prove that the previous home is in the process of being sold. A deposit for a home purchase under the Shared Ownership scheme usually is much less than a deposit for a mortgage.

• Who can get a Shared Ownership mortgage?

The basic conditions for obtaining a Shared Ownership mortgage require the buyer to be at least 18 years old, a first-time buyer or one whose property is in the process of being sold. It is also vital to have a good credit history.

• Do you still need a deposit for Shared Ownership?

Yes. A deposit for a Shared Ownership mortgage is typically between 5% and 10% of the value of the share you're buying – not the full purchase price.

• Can you ever own 100% of Shared Ownership?

You can get 100% of the Shared Ownership home using staircasing. In this case, you can purchase additional parts gradually or immediately. But before buying a home, check with the Housing Association for staircasing conditions, as some organizations place restrictions on total ownership of the real estate.