This means you buy part of the value of a house and pay rent on the rest. Local estate agents, housing associations and newspapers occasionally advertise such properties.
What is Shared Ownership?
Shared ownership is a "stepping stone" between renting and outright ownership provided by housing associations. You can buy a home to suit your needs by purchasing a share of the market value of the property and pay rent on the part you do not own. In the future if your circumstances change you can apply to purchase further shares until you own the freehold of the property.
Shared ownership means that your monthly mortgage and rent payments can be at a price you can afford and not much more than just renting a property. In addition you will have a capital stake in your home which may increase in time.
Who is eligible for shared ownership?
Existing housing association tenants or applicants on the South Hams Housing Register who wish to buy a property but have insufficient income or resources to buy a property outright. Generally you should be a first-time buyer.
How does shared ownership work?
The purchaser buys a share of the property for a sum representing a percentage of the full purchase price, i.e. 25%, 50% or 75%. The balance is owned by the housing association. The typical purchase share is 50%.
Rent is payable to the housing association for the share of the property which has not been purchased i.e. if you buy a 25% share, then you will 75% of the rent which the housing association would normally charge for the whole property. You will need a minimum income of £15000 per annum to be able to afford a shared ownership home.
Here are some approximate examples of costs:
(These figures are a guide only and will vary according to the circumstances of your purchase).
| Cost of House |
£45,000 |
£50,000 |
£55,000 |
| Cost of 25% share |
£11,250 |
£12,500 |
£13,750 |
| Typical mortgage cost |
£19.00 p.w |
£21.00 p.w. |
£23.00 p.w. |
| Typical rent |
£38.00 p.w. |
£41.00 p.w. |
£45.00 p.w. |
| Total you pay |
£57.00 p.w |
£62.00 p.w |
£68.00 p.w |
Please Note: The rent, but not the mortgage, is eligible for Housing Benefit subject to your income.
Who is responsible for the insurance maintenance and repairs?
You will be solely responsible for the maintenance of your home as are owner occupiers. Indeed you must remember these additional costs when considering your purchase.
Will I get a mortgage?
You should consult a financial advisor and/or building society for advice. The amount which the mortgage lender will let you borrow will depend on your income and circumstances.
How much will it cost me to purchase a property on shared ownership terms?
Initially at the time of purchase
- Legal costs of conveyance
- Valuation and survey fees
- Stamp Duty on the full value of the property (if applicable)
- A deposit (if required by your Building Society)
You must also remember that as a Shared Owner you will have to make the following regular payments:
- Rent
- Mortgage payment if you have a mortgage
- Other domestic bills such as water, gas and electricity
- Home contents and building insurance
What happens when I want to move?
If you have bought your property outright, then you may sell it on the open market in the normal way.
If you only own a share of your property, then you must first give the housing association the option to nominate a purchase for your share. If the housing association does not wish to nominate a purchaser, then you can sell the property on the open market, through an estate agent.
The housing association will rarely repurchase your share.
The housing association will confirm whether they wish to nominate a purchaser, or if you are free to sell the property on the open market.
If the housing association is nominating a purchaser, arrangements will be made for the property to be independently valued. The housing association then have to ensure the valuation is acceptable to you after which contracts will be drawn up and exchanged.
How do I purchase further shares in the property?
You have to write to the housing association stating your wishes. Some housing associations may require a non-refundable administration fee.
The housing association will arrange for the property to be valued, and if the valuation is acceptable, you will then be given a specific time limit in which to complete your purchase. Again the time limits may vary depending on whether the property is with the Council or a housing association.
What shared ownership opportunities are available?
There are three main types of shared ownership schemes which are as follows:
- Housing Association New Shared Ownership
Housing associations will build a development on a new estate and will offer properties to first-time buyers who are on the Council's housing register or on the association's waiting list. These are usually available to buy at a minimum 50% share.
- Homebuy
Is a new scheme in partnership with Devon and Cornwall Housing Association through which you could be eligible for an interest free loan for 25% of the purchase price of a property. You will have to secure a mortgage for the remaining 75% and will have to repay the outstanding 25% when you sell your property.
- Housing Association - Do- It- Yourself Shared Ownership (DIYSO)
Through DIYSO you select a property of your choice, subject to localised price limits and availability of funding, buy a share of the property and pay rent on the remainder to the Housing Association.
Who do I contact if I am interested in shared ownership?
In the first instance you should contact South Hams District Council Housing Advice Office on 01803 861234 or 0345 419991 who will be able to advise you as to whether or not you qualify to be considered for Shared Ownership.
