Purchasing a Shared Ownership Property

You can be certain your purchase is in safe hands

If you are in a position where you are unable to get on the housing ladder, the Government’s Help to Buy: Shared Ownership scheme could help. Shared Ownership gives you the chance to buy a share of a property whilst paying rent on the remaining share.

With Shared Ownership, you can buy between 25% and 75% of property. It also allows you to purchase additional shares known as Staircasing at a later date.


Eligibility


To purchase a Shared Ownership home in England you need to be either a first-time purchaser, an existing shared owner looking to move, or you previously owned a home but cannot afford to buy one now.

To qualify for the Shared Ownership scheme, you will need to apply via the Housing Association (HA) or council running the scheme in the area you want to live. This application process will include a criteria assessment which covers financial and current living arrangements. Once you are deemed eligible, a Housing Association will be able to allocate a property to you under the Shared Ownership scheme.

After applying via the HA or council, you will receive a six-digit reference number which will enable you to express an interest in any shared ownership homes you have found in your area. You may also be invited to view Shared Ownership properties that become available in your area too.


Buying Shared Ownership


Your local housing association will offer to sell a property to the buyer who is most in need. Identifying a Shared Ownership purchaser’s needs is assessed during the shared ownership application process.

After agreeing a purchase with your Housing Association, you will be provided with a list of suggested conveyancers. From this list, you will be asked to appoint a conveyancer that will then represent you.

The Housing Association will send a Memorandum of Sale to your chosen conveyancer and their own conveyancer, which will begin the process of purchasing your Shared Ownership property.


Shared Ownership Leasehold


Regardless of whether you purchase a house or a flat, Shared Ownership homes are always leasehold. Although, if you staircase to 100%, your property may then become freehold depending on what is included in your lease.

As with most residential leases, you will have standard obligations to adhere to as a leaseholder, as well as additional ones specific to shared ownership. These can include:

  • Restrictions on selling your property, including rights in favour of the Housing Association to repurchase your property
  • Review provisions on the rent you pay on the share of your property you do not own
  • The procedure that must be followed by your mortgage lender in the event you default on your mortgage, and they wish to repossess and sell the property

Stamp Duty Land Tax


Shared Ownership homes, like most others, incur Stamp Duty Land Tax. However there are two options available:

  1. Make a one-off payment based on the total market value of the property
  2. Pay any Stamp Duty Land Tax due in stages

When paying in stages you will make a payment based on your initial share plus five year’s rent. If you purchase further shares through staircasing, you will only need to pay Stamp Duty charges again after you have purchased 80% of the property.

However, if you are a first-time buyer you can claim relief from Stamp Duty Land Tax, but only if you pay based on the total market value of the property.

We can talk you through the best options for you when you purchase your Shared Ownership home.


Rent Reviews


As a part-owner of your property, you will also need to pay rent on the other share not owned by you. Rent reviews will take place periodically, usually every year and will increase in line with the Retail Price Index.

The rent is reviewed on an upwards only basis, which means it will not go down when reviewed. Your Shared Ownership lease will provide an example of how this works.


The Process – Simplified


  1. Approved as a Shared Ownership buyer.
  2. Invited to view a property.
  3. Express an interest in purchasing a property.
  4. Allocated a property.
  5. Provided with a list of conveyancers.
  6. Appointment of a conveyancer.
  7. Memorandum of Sale – sent by Housing Association or council.
  8. Contract Issued.
  9. Exchange within 28 days of the issue of contracts.
  10. Completion – once notice is served.

 


Things to Know


  • Shared Ownership properties are always leasehold
  • You need to qualify to purchase a Shared Ownership home
  • You need to exchange on your property within 28 days of the contract being issued
  • If you miss the 28 day exchange deadline, the Housing Association can remarket the property
  • You can purchase further shares after your initial purchase by staircasing
  • Not all leases allow staircasing to 100% ownership
The Process in Detail

Purchasing a Shared Ownership Property


STEP 1


You have been allocated a Shared Ownership property.

  • You instruct New Homes Law as your conveyancer, by returning our instruction forms, your ID, proof of funds and money on account.
  • The Housing Association issues a Memorandum of Sale to us and their conveyancer.

We wait for the Housing Association’s conveyancer to issue your Contract to us.


STEP 2


  • The Housing Association’s conveyancer issues your Contract paperwork to us.
  • We will apply for all the required searches.
  • Once we have received your contract, we will prepare a Contract Report for you detailing all the important aspects of your purchase.
  • You will receive your Contract Report to review and sign.

STEP 3


  • We will receive a copy of your mortgage offer direct from your lender.
  • We will send your mortgage offer to the Housing Association’s conveyancer for approval.
  • We will prepare a mortgage report and send to you along with your mortgage deed for signing.

STEP 4


  • We receive your mortgage approval from the Housing Association’s conveyancer, all your signed documentation and your exchange deposit.
  • We will request your authority to exchange contracts either on notice, (if a handover hasn’t taken place), or with a fixed completion date.

STEP 5


  • You will give us the authority to exchange contracts.
  • We will exchange contracts with the Housing Association’s conveyancer.

You are now legally committed to your purchase. Failure to complete your purchase could result in the loss of your exchange deposit, as well as incurring additional costs.


STEP 6


  • We will let you know that your exchange of contracts has happened.
  • We will send your lease to you for signing.
  • Await notice of completion to arrive from the Housing Association’s conveyancer if a fixed completion date has not already been set.

At this point of your purchase, everything may go a little quiet whilst we wait for the notice of completion to arrive (if there is no fixed date).


STEP 7


  • You will return your signed documentation to us.
  • Once a confirmed completion date is known, we will send you a Completion Statement confirming the balance required from you (this is needed from the Housing Association first).
  • We will request the mortgage advance from your lender for the completion date.
  • We will carry out all the necessary pre-completion searches.

STEP 8


  • We will receive all your funds from you and your mortgage lender.
  • We will send the full completion funds to the Housing Association’s conveyancer.
  • We will receive confirmation from the Housing Association’s conveyancer that the completion funds have been received.

Congratulations, legal completion has taken place! You are now a home owner!

You will be able to collect your keys from the Housing Association at a time that has been agreed with you.


STEP 9


  • We will register your purchase with the Land Registry. The wait time for confirmation of registration from the Land Registry can vary, but will be in the region of 6-9 months.

Your questions answered…

Shared Ownership

  • Can I sub-let my Shared Ownership property?

    No. You must live in the home that you purchased or rent. In exceptional circumstances (serving member of the armed forces) then subletting may be considered but written permission from your housing association would need to be obtained.

  • Am I eligible for Shared Ownership?

    Find out whether you’re eligible via your local Help to Buy agent.

  • What is Shared Ownership?

    Shared Ownership is a government scheme that means you can buy between 25% and 75% of a property, whilst paying rent on the remaining share.

  • I now own all my home, is subletting an option?

    Unless it states otherwise in your leasehold agreement, now that you own 100% of your property you may sublet. However, before you make any arrangements, we recommend you check your leasehold agreement and to contact your housing provider.

  • Are there any circumstances where I can sublet my shared ownership home?

    Typically, under the terms of your loan you are not allowed to sublet. This is because the Shared Ownership Scheme uses public funds to help buyers unable to afford a property on the open market. However, under the following set of circumstances, exceptions may be considered, if:

    • You must temporarily relocate because of your job and will not earn enough to afford your mortgage alongside relocation costs.
    • Due to a medical condition you cannot live in your home for a temporary period.
    • You must temporarily move to look after an ill family member.
    • Written confirmation from your mortgage lender that they are willing to allow you to sublet.
    • Confirmation regarding how long you want to sublet for and your intentions once the period of sub-letting has expired.
    • Evidence supporting your case.

    There are also, of course, other compelling social reasons which may be considered upon application to your housing association.

  • If I have made home improvements will I benefit from them?

    If, at the time of sale, you are a shared owner of your home then the valuer will not value these improvements separately. You sell the share that you own, which shall be a percentage of the full market value including improvements you have made. If you are the outright owner of your home then when you come to sell you can make a profit from any home improvements.

  • What will happen if my housing association is not able to find a buyer?

    Normally, if your housing association is unable to find a buyer within 8 weeks they will let you know that you are free to sell your home through an estate agent. But, despite being allowed to place your house on the open market, you must still sell at a price no less than the one set by the valuer.

  • How long will the process of selling a shared ownership property take?

    Once your housing association finds a suitable buyer, they have 12 weeks to complete the purchase. Although, if you still need time to find another home, then this process can be made more flexible, depending upon what you and the buyer can agree.

    Your conveyancer and the buyer’s conveyancer will need to decide an exchange and completion date. Your housing provider is not normally involved in agreeing dates, so these are negotiated exclusively between you and the buyer.

  • I want to sell my Shared Ownership home, will the housing association need to be involved?

    If you own less than 100% of your home, then the housing association will be responsible for finding a buyer for your home. Generally, your housing association will have a “nomination period” of 8 weeks from the date they received the signed contract of sale to nominate prospective buyers.

  • I don’t own 100% of my home; can I still sell?

    You can still sell your shares if you do not own 100% of your shared ownership property.

  • I want to staircase, will I need to speak to a conveyancer?

    Yes, a conveyancer will be required to handle the legal work involved in your staircasing and, potentially, in your re-mortgaging. A conveyancer is needed because staircasing will involve changes to your existing lease and other legal work associated with your home and mortgage.

  • Is there a limit on how many times I can Staircase?

    Normally, you are permitted to staircase up to three times, and the third time will take you up to 100% ownership. The minimum shares you can buy is specified in your lease but will generally be around 10% or 20%, unless it is the final share which may be less than the minimum share to bring you up to 100%.

  • Are there any additional costs involved in staircasing I should know about?

    Yes, there are a few additional costs that the you will be expected to pay. You will need to cover the cost of having your home valued. Also, this valuation will expire after three months, so you must complete the staircasing in this period or risk having to start again.

    There will also be legal fees to consider, such as typical conveyancing fees as well as any additional legal and mortgage fees.

  • What are the funding options available to help me staircase my property?

    You can buy extra shares using either savings or with the help of a mortgage. If you decide upon a mortgage, then generally two options are open to you: a further advance or re-mortgaging.

  • Am I eligible for Shared Ownership?

    Find out whether you’re eligible via your local Help to Buy agent.

  • What is Shared Ownership?

    Shared Ownership is a government scheme that means you can buy between 25% and 75% of a property, whilst paying rent on the remaining share.

What our customers say

  • I would definitely recommend New Homes Law. They were all approachable and friendly, and I was comfortable they would be able to deal with my transaction well.
  • As a first-time buyer I'd had no experience before; I didn't know the difference between solicitors and conveyancers. But dealing with New Homes Law was easy, convenient and seamless.
  • The level of communication from New Homes Law was by far the best I've ever had with any company I've worked with. They were professional and transparent about everything.

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