Posted 30 October 2015 by Keith Osborne
When it comes to finding that dream home it is no longer a black-and-white decision between renting and buying. With Help to Buy and Shared Ownership proving increasingly popular, there are other options to consider when deciding on a property.
Jeanette Grady, sales and new business manager of Riverside Home Ownership, answers some of your most common questions about Shared Ownership. The company owns and manages over 4,000 properties across the UK.
What exactly is Shared Ownership?
Shared Ownership is a government-backed part-rent/part-buy scheme for first-time buyers which offers an affordable alternative to buying a property on the open market.
How does it work?
You buy a share of a property (usually between 25% and 75%) and then pay rent on the remainder, which is owned by a housing association such as Riverside Home Ownership.
What if I want to buy the entire property but can only afford a 25% share?
In most cases, if you want to increase ownership of the property, you will be able to buy further shares in the future and eventually own 100% of your home. This is a process called ‘staircasing’ and is designed to help you increase the percentage of the property you own when it is financially convenient for you. The more of the property you own, the less you pay in rent.
Am I eligible?
As long as you have a household income of under £60,000, and your monthly income is less than 45% of the monthly cost of using Shared Ownership (this figure will vary depending on the value of the property and the share you hold in it), you could be eligible.
What are the costs involved?
As you will own a percentage of the property, you will need to take out a mortgage for this amount. You will then need to pay monthly rent on the remainder which is owned by a housing association. There is also a monthly service charge which is used for building insurance, maintenance and any communal areas.
That sounds like a lot to pay out, isn’t it cheaper just to rent or buy?
Surprisingly, no. The rent element of Shared Ownership is reduced so the combined monthly costs are usually still on average 20% less than buying the same property outright. It often works out cheaper than renting it too.
Does the affordability element mean the design of the properties are of a lower standard?
Not at all. In fact, many people are surprised by the high quality of Shared Ownership properties. As they are new builds, Shared Ownership properties are built to Homes and Communities Agency standards and designed to high specification. The implications of this mean that Shared Ownership homes are sustainable and often run at a lower cost in terms of energy bills. Furthermore, many Shared Ownership schemes go that extra mile, providing interior features such as heated towel rails and garden landscaping. Affordability doesn’t have to mean compromising quality!
What are the size of the properties?
Properties will vary from bungalows to flats to family homes – there really is something for everyone. Furthermore, not all homes built as part of a Shared Ownership development will be identical; they vary in size and shape and each have their own character to offer.
Can I carry out home improvements?
Yes, you are free to decorate and carry out general home improvements. For major work, you should inform the housing association before you carry it out because they still own a portion of the property. .
How involved is the housing association?
It depends on the scheme and the amount of support you require. For example, Riverside Home Ownership offers Shared Ownership schemes which are specifically for the over 55s and, as such, offers a range of supportive services to accompany the property. The provider will be there to offer guidance and support, should you need it, but you are free to choose how much or little involvement you’d like them to have.
Are Shared Ownership properties more complicated to sell?
Not any more complicated than an average property. The only difference is that instead of selling your entire property to a buyer, you simply sell your share and the buyer becomes the replacement shared owner. The housing association simply retains the share it already had of the property and the new shared owner begins paying rent in your replacement. The new shared owner just needs to meet the same eligibility rules that you did when you first bought.
I meet the Shared Ownership eligibility criteria – what do I do next?
For brand new Shared Ownership homes, you must first apply through the regional Help to Buy Agent for the area the property is located in. You must complete the application with them first, so they can check you meet the main eligibility criteria. You would then browse properties that you are eligible for, contact the provider and then the buying process begins!
Find out more at www.riversidehomeownership.org.uk