Shared Ownership Housing
Shared Ownership And Shared Equity House Purchase
Many people find it difficult to raise a mortgage to buy a property outright given larger deposits demanded by lenders and a still high price for properties in some parts of the UK. To help alleviate this, a succession of affordable housing schemes have been set up by successive governments. Intended to encourage people to own their own home through shared ownership (also known as shared equity). Such initiatives allow people to buy a share of a property now, with the option to purchase the remaining share when their finances allow and own the property outright. In the meanwhile, they enjoy all the benefits of home ownership without the crippling mortgage repayments required to buy outright.
Shared Ownership – New Build HomeBuy
Very recent government-backed affordable housing shared ownership scheme is called New Build HomeBuy. The eligibility criteria under this scheme include all key workers, existing social housing tenants and those in priority housing need.
Who Is A Key Worker?
To ascertain whether you fall into the criteria of a key worker, you should contact your local HomeBuy Agent. In general terms a key worker is anyone in a job considered to be essential to their community, but who does not earn enough to afford to buy a property in the community in which they provide those vital services and this could include police, fire and prison officers, nurses, midwives, occupational therapists or social workers and members of the armed forces in the lower, non-commissioned ranks.
Buying A Property Under New Build HomeBuy
Having satisfied the eligibility criteria, you can initially buy 25%, 50% or 75% of the property value with the benefit of mortgage finance. The outstanding share is then rented from a registered social landlord – typically a housing association or local authority – for an affordable rent. You can buy additional shares (known as ‘staircasing’) until eventually you own the property outright. The proportionate cost of those additional shares will be determined by the market value of the property at the time you decide to buy and the number of additional shares you wish to purchase.
Selling A Shared Ownership Property
If you decide to sell your shared ownership in the property there is generally a requirement to offer it to another household nominated by your landlord (the council or housing association) for the agreed market rent. If you have fully ‘staircased’ your property and now own 100%, you should be free to sell it like any private property owner. The selling price is not fixed by your landlord and the property is sold at market value, so you will benefit from any equity built up on the share you do own.
What Is Staircasing?
Staircasing is the conveyancing term for increasing the share of your equity interest in a property which you hold an equitable interest typically in a leasehold flat or house where the freeholder is a housing association or equivalent registered social landlord.