Shared Ownership is an affordable home ownership scheme designed for people who are unable to afford to purchase their home outright on the open market. Primarily for first-time buyers, it allows you to buy a share of the property and pay a reduced rent on the remaining share. It is a Part Buy/Part Rent Scheme, making you an owner-occupier, not a part tenant.
How does it work?
- You buy a share of a property at a price based on the current market value and you pay a subsidised rent on the remaining share still owned by Estuary Housing. The combined monthly cost of mortgage and rent will normally be less than if you were purchasing the property outright.
- Flexible purchasing from as little as 25% or up to 75% on the first purchase.
- In the future you can simply sell your share for its value at the time or alternatively you can purchase further shares in your home.
- The more you own, the less rent you pay.
You will need to be...
Approved by the Help to Buy Scheme
Am I Eligible?
Your annual household income can be no more than £80,000
You should be unable to purchase a home suitable for your needs without assistance
You cannot be a current home owner (or be named on the deeds of another property)
You must not have any outstanding credit issues (i.e. unsatisfied defaults or county court judgments)
How do I buy further shares in my home?
Additional shares in your property can be purchased through a process known as ‘staircasing’. Your Lease will specify the staircasing provisions and circumstances – for example, some Leases allow you to staircase after three months, whereas other Leases allow you to staircase after the first 12 months. You can usually staircase up to three times, with the final stage giving 100% ownership. Should you wish to proceed with this process you will need to inform Estuary Housing Association formally in writing. The value of the additional share which will be determined by a RICS approved surveyor's report obtained by you at the time of your application to staircase.
Can I make improvements or alterations to my home?
If you wish to improve your home or make alterations to it, you must request Estuary Housing Association’s written agreement before you start. Most non-structural work is usually agreed and permission is not required for redecorating and simple repairs.
Do I need to sign a Lease?
Yes. The Shared Ownership Lease will normally be for a term of 125 years for the first owner, but may be less if you are buying a resale property. The Lease also specifies how the rent is calculated in relation to the property you are buying. It will explain all the things that you and the Association can and cannot do. Your solicitor will receive a copy of the Lease and will explain anything you do not understand.
What if I fall behind with my mortgage repayments?
The mortgage contract is between you and your mortgage lender. If you begin to have financial problems, which may mean that you can’t pay your mortgage, you should let them know as soon as possible. If you do fall behind on your payments and cannot agree on a solution with your mortgage lender, there is a risk that they will take possession of your home and sell it. You would be entitled to your share of the money received, after all your debts have been paid.
What do I do when I want to sell?
If you have become the outright owner (i.e. you have staircased up to 100% ownership), you can of course sell the property on the open market in the usual way. If you are a Shared Owner, you may sell at any time, but you must inform Estuary Housing Association in writing that you want to sell. This process is known as a ‘Resale’ or ‘Assignment’. You can either sell the part that you own, or you can buy the remaining share, through the process of staircasing, then sell the property outright. Please refer to the Lease for provisions and clauses as staircasing restrictions may apply to some properties.
Re-mortgaging and other loans secured against the property
If you wish to borrow money against your share of the property you must first obtain consent from the Association. Under the Mortgagee Protection Clause contained within your shared ownership Lease we will only provide protection for further advances we have approved and that are:
- To allow you to buy extra shares in your home
- To comply with other conditions of the Lease (e.g. repairs or improvements)
- To allow one joint leaseholder to buy out the interest of the other joint leaseholder.
Resident involvement and Federation of Estuary Residents
We encourage all residents to become involved in our activities. As a Shared Owner you would be entitled to become a member of a local residents association and to attend meetings with Estuary staff. We also operate an Estate/Block/Street Rep scheme which allows residents to act as a local liaison between their neighbours and the Association. As an Estuary resident you would also be eligible to join the Federation of Estuary Residents (FER), an independent residents group set up to represent residents in discussions with the Association.
What happens to my home if I die?
Whether you own a part-share or have become an outright owner, if you die your home (or your share) will pass in the usual way under the terms of your Will. If you have not made a Will the normal rules of intestacy would apply. Your solicitor can advise you further when you buy your share.