> >

All you need to know about what is shared ownership houses

The biggest question on the minds of most first time buyers considering shared ownership scheme is what is shared ownership houses. The reason behind this question is that shared ownership houses are cheap to buy and are at the same time rented. A buyer pays a portion of the price of the house and rents the remaining. The rent is paid to a housing association or the financial institution that paid the rest of the cost of the property. A buyer can own a minimum of 25% and a maximum of 75% of the house. He may increase his shares through staircasing.

Staircasing with shared ownership houses

A buyer is neither obliged to stay in a shared ownership scheme for long nor required by the law to the staircase. They can only staircase when their situation allows, for example, if you get additional sources of income and want to spend it on the property. Most buyers usually purchase their shares of the property by mortgaging. You must ensure that your mortgage instalments are taken care of before staircasing.

Can you sell shared ownership houses?

Shared ownership properties restrict owners power to the property. An owner of a shared property cannot sell his property before informing the housing association or financial institution with which he co-owns the house. Housing associations and financial institutions have the Right of First refusal that prevents a buyer from selling a house before informing them. They have the right to put the property in the market for a given period of time and can only allow a buyer to sell after the expiry of that.

Who’s responsible for shared ownership houses?

The authority of the housing associations and financial institutions come with obligations. These institutions must take responsibility for property maintenance. This is a responsibility that is bestowed upon them by the state. A buyer is not expected to pay for property maintenance. The cost of repairing floors and walls goes to the institutions. These institutions do not suffer losses despite such obligations. The rent that is paid to them is sufficient to pay for any expenses they incur during your stay. They are just like landlords but with a limited share to the property.

Institutions can own shared ownership properties as freehold or leasehold. You can find out about ownership schemes when you talk to a relevant financial institution. Shared ownership properties are available all over the UK. The number of properties that are owned by institutions differs. It is important to find out what an institution has before you buy.

Selling shared ownership houses

When you get to sell shares of your property, the shares you owned goes to a new buyer. The buyer then gets into an arrangement with the institution you co-owned the property with. The property has to be evaluated before it is sold. Valuation is conducted by the Royal Institution of Chartered Surveyors (RICS). Evaluation help mortgage lenders in calculating the amount of money a buyer needs to pay for a property. A buyer of a shared ownership property must be a first-time buyer. No pre-existing homeowners are allowed into the shared ownership scheme. A shared property owner may get into the scheme if he does not own any other property as a freeholder or leaseholder. 

< previous How porting a mortgage works

Becoming a member of the home owners alliance next >