First-time buyers who are looking to get their feet on the property ladder are turning in increasing numbers to the idea of buying through shared ownership; but this form of house purchase requires specialist residential conveyancing knowledge.
Although there are other means of jointly buying a property between two or more people, shared ownership is usually defined as the system of part buying and part renting a home in order to ease the financial burden if an outright purchase is beyond the budget of an individual or couple.
Homebuy is the Government’s term for shared ownership that, alongside many other schemes is run at local level by housing associations throughout the UK. Lists of available properties are held by the associations with details of the minimum share of the property which can be bought from them.
These shares can vary from 25% up to 75%. The householder then pays rent on the remaining share, which is normally set at an ‘affordable’ rate. The larger the share which is purchased, the less rent will be paid.
The other rented portion of a property continues to belong to the housing association. This will continue until either you own 100% of the property, in which case you either sell it back to the association or put it on the open market, or, if you want to move out, any increase in the value of the property since you bought it will be shared between you and the association.
A system known as ‘staircasing’ means that when buyers can afford to purchase a larger proportion of the mortgage, they can change the percentage of rent and mortgage payments paid out each month so that, eventually, the repayments are all mortgage instead of rent.
Although many shared ownership homes are built and run by housing associations, some are provided by private house builders who are part of a Government-backed scheme to help people afford their own homes, especially if they are key workers such as nurses or teachers. Others who may qualify are first-time buyers, previous home owners who cannot now afford to buy without help and housing association or council tenants.
Once a home available for shared ownership has been found, as with any property purchase involving a loan, a mortgage will have to be arranged for the ‘part buy’ element and a residential conveyancing solicitor chosen to draw up the relevant contracts.
From a legal point of view, shared ownership schemes are similar to buying a leasehold property and it is important to instruct a solicitor who has experience of this relatively new form of home purchase.