Shared Ownership
Shared Ownership - would you like to own your own home?
Are you considering shared ownership?
Working in partnership with housing providers Peterborough City Council is able to offer (to eligible people) the opportunity to purchase a home through a 'shared ownership' scheme.
What is shared ownership?
Shared ownership property is a home that has been built, usually
by a Registered Social Landlord (a housing association)
specifically to sell on a shared ownership basis. Shared ownership
is for people who are unable to afford to purchase a suitable home
outright on the open market. Instead, purchasers buy a
percentage (usually 50%) of a property. This is financed by a
mortgage. Rent is usually payable to the 'landlord' (usually a
Registered Social Landlord) on the remaining 50%.
With shared ownership you will only have to raise a mortgage for
part of the value of the property. In addition to this, shared
ownership schemes do not normally require large deposits. The
schemes, therefore, help people into home ownership.
You do not 'share' the occupation of your home with anyone! It is
the ownership, or 'equity', that is shared. As property prices have
increased in Peterborough it has become harder for first time
buyers to buy a home. We believe shared ownership will be able to
help many local people onto the property ladder.
What rights and responsibilities would I have?
When you purchase through shared ownership you would normally be granted a Lease and (until you purchase your property in full) you become a 'Leaseholder'. The Lease clearly sets out your rights and responsibilities. As a shared owner you will enjoy the benefits of home ownership, but will also be responsible for payment of all household expenses including mortgage and rent, repairs and maintenance to the property and other utilities and services (Council Tax, water rates, gas, electricity etc).
Can I buy more shares in my home?
Sometimes. It depends on the kind of shared ownership scheme you
choose. Shared ownership schemes normally allow for purchasers to
increase their share of ownership in the property. The process is
called 'staircasing'. Shares can be sold in 'tranches' of as little
as 10% (more commonly 25%) until the home is owned outright. Some
schemes (usually in rural areas) will restrict ownership to a
maximum of 80%. This is to ensure that low cost homes are kept for
local communities.
Once you own your home outright (that is you have 'staircased' up
to 100%) you become a 'freeholder' and you are no longer subject to
the Lease and will no longer have to pay any rent.
If I buy more shares will my rent change?
You normally only pay rent on the percentage owned by the Registered Social Landlord so, if that percentage goes down, your rent should decrease.
What happens if I want to sell my home?
You can sell your home and will benefit from any increased value
in your property at the time of sale, according to the percentage
you own. However, you should remember that house prices can go down
as well as up!
You will need to notify the Registered Social Landlord (RSL) in
writing if you decide to sell. If you do not own your home outright
your Lease will include a clause which will give the RSL the chance
to find a purchaser. This way the property will remain available
for those people who really need the help of shared ownership
schemes.
Who is eligible for shared ownership?
Shared ownership schemes are for people who would like to own their own home but are unable to afford to purchase outright on the open market, usually first time buyers. People are usually either RSL tenants, or registered (or are eligible to register) on the Peterborough Housing Register.
To find out more about joining the Peterborough Housing
Register, visit the Housing Options pages on this site.
Importantly, individuals must be eligible to get a mortgage to
finance the purchase, have sufficient savings to afford the initial
costs and then sufficient income to maintain payment of household
expenses (mortgage, rent, maintenance etc).
When buying a shared ownership home you will need to take the
following costs into account:
Mortgage Valuation - this will usually cost around
£250, although some lenders may reduce or
waive this fee to persuade you to take a mortgage with them.
Mortgage Deposit - most lenders will expect you to
put down a deposit of at least 5% of the
value of your share. Some lenders do provide 100% mortgages,
although the rates offered tend
to be less attractive.
Legal fees - you will need a solicitor to act on
your behalf. It is worth asking for an estimate,
as fees vary.
Searches/Land Registry - your solicitor will
organise these for you, they are likely to cost around £150
each. You will have to pay these fees up front and they are in
addition to your legal costs.
Hidden costs - these might include removal costs
and buying furniture and appliances.
What are the properties like?
Mostly shared ownership schemes give people the chance to buy a brand new home. Registered Social Landlord homes are built to a high specification. A variety of home designs and types exist and include flats or houses. Things like central heating and double glazing are provided as standard. The homes also have very good energy ratings and are built to police inspired 'secure by design' standards.
What are the costs?
| THREE BEDROOM HOUSE - FULL PRICE | £100,000 |
| 50% Share | £50,000 |
| Monthly mortgage on £50,000* | £295.63 |
| Monthly rent on 50% share* | £125.00 |
| TOTAL | £420.63 |
Rent based on 3% of the 'unsold equity'
Please note this guide is not intended to be a legal document or to be providing legal advice