The GLA (Greater London Authority) has said that it will be adding more funds to it’s shared ownership schemes aiming to help people living in London to attain affordable home ownership while boosting the building of new homes at the same time.
Shared Ownership Explained
Shared ownership is a way of part-owning and part-renting a property. Aimed at people who can’t afford to buy their home immediately, shared ownership allows you to buy stake of 25% to 75% in the property with a mortgage, and you can then pay rent on the remaining share that remains owned by your local housing association.
The amount of rent you pay is calculated on the share of property retained by the housing association but is capped at 3%.
For example if you bought a property valued at £100,000 and it was bought on a 50% share, the initial rent would be £50,000 x 3 per cent = £1,500 per annum, paid monthly at £125.
You would then pay the mortgage payment for the £50,000 you have purchased on top of the rent.
Who qualifies for Shared Ownership?
You will be eligible to buy a home through a shared ownership scheme if your household income is less than £80k outside London and £90k in London. You will need to be either a first-time buyer, a previous homeowner who can’t afford to buy now or already a shared owner . If you have a long-term disability, you could qualify for a shared ownership scheme under the government’s Home Ownership for People with Long-Term Disabilities (HOLD).
Buying More Shares Down the Road
It’s called staircasing. You can keep buying chunks of the rented part of your home from the housing association, until you own all of it.
Can I Sell My Home?
Yes. When you get to 100% ownership of your home, you can sell it. However, the housing association has the right to “first refusal’ for 21 years after you first purchased it. This means it can choose to buy the property back before you sell it. If you don’t own 100% of the property, the housing association can choose to find its own buyer.
The Advantages & Disadvantages of Shared Ownership
The advantage is you can buy a bigger home than you would have otherwise been able to afford. Also, as you’re saving on rent, you can afford to put some extra money away and buy more shares increasing your stake in the property. One of the main disadvantages is that if you do decide to sell up you could find your hands tied when it comes to buyers, complicating and slowing down the sale. And, as you don’t own the home outright, you may need to ask permission from the housing association for improvements done to your property.
If you have any more questions or need help, don’t hesitate to get in touch.