The UK government has come up with various home ownership schemes that enable low-income earners to own homes. One such scheme is the part buy part rent scheme. This system is also known as shared ownership scheme. Part buy part rent involves paying a percentage of the cost of a house, with the balance of the total cost being catered for by a housing association. The buyer must pay a given amount of rent to the housing association with which he co-owns the house. The rent is usually 3% of the share that is owned by the housing association.
Criteria for inclusion
Part buy part rent scheme is not for everyone. This scheme, like many other, target low-income earners as well as people working in certain fields. Those given first priority include council and housing association tenants, key workers such as policemen and teachers, and new home buyers. Those who previously owned a home with their partners but got divorced are also invited into the scheme. You can also apply for shared ownership if you have been transferred by your boss and must relocate to a new town.
What do you get with Part buy part rent scheme?
Part buy part rent is a form of leasehold ownership. A buyer enters into a contract with a housing association that allows him to own a given amount of shares in the property for a given duration of time. The buyer can increase his share of the property by staircasing. Staircasing refers to the process of increasing shares by gradually purchasing the shares through the housing association. The buyer becomes the sole owner of the property if his shares reach 100%. He can then claim total control of the property. Till then, he will be bound by the agreement that he entered into with the housing association.
Apart from the mutual agreement that the buyer and the housing association enter into, there are state laws that also govern shared ownership schemes. These laws may or may not be included in the agreement. Either way, they must be fully complied with by all the parties to a shared ownership scheme. It is important to ask a solicitor about the laws that govern shared ownership schemes in the area.
Requirement, after being approved
The most important requirement of shared ownership is the one that determines how the property can be sold. This is because this law can lead to severe financial losses and legal battles between a buyer and the housing association. A buyer cannot sell the house without the consent of the housing association. This right is called the right of first refusal. It protects housing associations from financial losses that they could incur if the property is sold behind their backs. A buyer who breaks this law can be prosecuted in a court of law.
The right of first refusal does not prevent buyers from initiating property sales. It only obliges them to inform their housing association before selling the property. The housing association can then put the property on the market for a given period of time. If it fails to find a buyer, then their tenant can go ahead and sell the property.