What are Shared Ownership Properties?
Posted on 12th August 2019
First of all, for those of you who might not have heard of the concept before, when you buy a shared ownership property, you buy a share in a property, usually a new build, for a smaller sum than the whole value. For example, if a property was worth £200,000.00, you would buy a 25% to a 75% share, for between £50,000.00 and £150,000.00.
To be eligible to purchase a shared ownership property, you have to meet certain criteria, which our team of property solicitors Preston have set out below:-
You must be a first-time buyer, so you can’t own any property either abroad or anywhere else in the UK, whether that’s a buy-to-let, inherited property or a holiday home.
If you are a previous homeowner, you must now no longer be able to afford to purchase a property. For example, you may have divorced from your spouse, and you need to re-house yourself and your children. In this case, after taking some advice from your local family law solicitors, you may decide to enquire about shared ownership properties.
Your household’s income must be less than £80,000.00 per year – or £90,000.00 if you’re one of our clients living in the London area.
So, what are you getting?
Well, depending what is available in the area you’re looking, you will usually be able to get anything from a 2 bed to a 5 bed, although bigger homes may be available in some areas.
The homes are generally new build, although when they are being sold on by an individual, they may not be new. The properties are also leasehold, which means that you only own the property for a fixed amount of time. Now, don’t panic, it doesn’t mean that you can only own the property for a year, usually leases can range from 90 years to 999 years. If you’re unsure what the lease would be on your new property, ask the developer, or contact your property solicitors Preston, here, who can make enquiries on your behalf.
If you’ve never bought a property (or even if it’s been a really long time since you last had to deal with anything like this), you may be wondering what a leasehold property means to you. Well, generally the leases can include provisions whereby you have to obtain permission to make any alterations, you usually have to pay a service charge or ground rent on the property (which, again, varies on a property-by-property basis, so don’t get caught out – ask your property solicitors Preston to look into this for you if you’re unsure), and the lease will also include information about who has responsibility for maintaining what i.e. who is mowing that massive common green you share with your neighbours!
There are many more elements involved with purchasing a leasehold property, so make sure to consult your property solicitors Preston before taking the plunge!
Are there other schemes available?
In a bid to help make homes more affordable, there are a range of schemes which you may be eligible for, including:-
Equity Loans – Homes England pays the value of up to 20% of the property on a loan, which you do not pay any interest on for the first five years of the loan term. After this, the equity loan is subject to a 1.75% interest charge on the outstanding amount, increasing yearly by the RPI plus 1%. You are expected to contribute a 5% deposit, or more, depending on your circumstances.
HOLD Scheme – this scheme is for people with a long-term disability (home ownership for people with a long-term disability [HOLD]), you can own up to 25% of your home.
OPSO Scheme – the Older Person’s Share Ownership scheme aims to help those over the age of 55 years to purchase a property, again with shares ranging from 25% to 75%.
Can I own my full home?
Well, if you can afford to purchase the full home upfront, you likely wouldn’t be eligible. However, once you have purchased your initial share, the concept of ‘staircasing’ comes into play. You would normally be offered to buy further shares in your property, sometimes in increments of 25%, and other schemes offer smaller increments. The prices aren’t fixed; if the property values in the local area have increased or decreased, so will your new purchase price. You may need to get a mortgage on the property. If there’s more than one of you living at the property, make sure you contact our local family law solicitors to see whether you need an agreement in place. You can find contact details for your local office, here.
Can I sell my share?
Yes! Sometimes the other owner (i.e. the shared ownership company) will have first refusal – so they can offer to buy the property first – or they will be within their rights to find a new buyer, however you can sell. If you’ve managed to purchase 100% of your home, you can sell it yourself through whichever estate agents you chose. Don’t forget, if you’re selling a property, contact our expert team of property solicitors Preston on 01772 783 314.
So, if you’re intent on getting on the property ladder, and you need some more advice about what homes are available in your area, visit https://www.helptobuy.gov.uk/equity-loan/find-helptobuy-agent/.
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