FAQ’s – Shared Ownership

Not everyone is familiar with the concept of Shared Ownership – and not all of the information out there is accurate. So, to help you better understand Shared Ownership, we’ve created a list of the most common Shared Ownership questions and answers.

Q: Will I be sharing my home with someone else?
A: Only you and your family will be living in the house; it is not a house share scheme. You initially purchase a share in your home; this can range from 25% – 75%, the remaining share will be owned by the housing association and you pay rent on their share.

Q: Is it cheaper to just rent than pay for a Shared Ownership mortgage and rent each month?
A: The combined Shared Ownership monthly mortgage and rent payments often work out cheaper than private rent costs. The added benefit of Shared Ownership, is that your monthly payments are also contributing towards paying off your mortgage and, you could gain equity in the percentage owned.

Q: Will I ever be able to fully own the home?
A: You can buy 100% of the vast majority of Shared Ownership homes by staircasing in the future.  Although, if the home you wish to purchase is in a Designated Protected Area, the share you can own may be restricted to 80% – if this is the case, it will be highlighted in the marketing.

Q: Will my ground rents double and treble in the future?
A: A lot of our schemes do not have ground rents that are applicable, wherever we own the freehold of the property we do not charge a ground rent on the home.

Q: Is Shared Ownership only available to first time buyers?
A: As long as you meet the eligibility criteria and do not own another home (an agreed sale needs to be in place if you do have a current property to sell) then Shared Ownership scheme is open to anyone over the age of 18 and the household earns less the £80,000.

Q: Will I be able to decorate or carry out any DIY on my Shared Ownership house?
A: You are the home-owner through Shared Ownership, you have the right to decorate your homes as you wish.  However, for any structural improvements such as fitting a new kitchen or bathroom, you will need written consent* from the housing association. *There is a small fee for this.

Q: Will I be be able to sell my Shared Ownership home in the future?
A: You can sell your share in your home at any time – you will need to inform the housing association as they own the remaining share and you place with an estate agent as with a normal resale.

Q: Do I have to pay Stamp Duty on the full amount or just on my share?
A: If you are a first time buyer you can defer the stamp duty amount payable until you purchase the property outright in the future.

Q: Do I have to buy more shares in the home as time goes on?
A: You can buy more shares in your home or, buy your home outright whenever you can afford to, however, it isn’t compulsory.  The amount you pay for additional shares will be based on the value of your home at that time.  When you buy more shares your rent will reduce – and if you buy your home outright, you will no longer be required to pay rent.

Q: Is it difficult to find a lender for a Shared Ownership mortgage?
A: There are several lenders that specialise in Shared Ownership mortgages all with very competitive APR’s.  It is no harder to get a mortgage for a Shared Ownership property than any other property.  The Mortgage Market Review have laid down guidelines for all customers applying for mortgages of all types – this is to ensure that purchasers can comfortably afford their repayments.

Q: Can I apply if I own my current home?
A: If you are a home owner you will need to have an agreed sale on your property and provide proof of sale before your application can be considered. If you can afford to buy the property outright without government assistance, you will not be considered.

Q: Do you still have to pay rent when you staircase to 80%?
A: Yes the leaseholder would still pay a rent charge on the remaining 20% unsold equity.

Q: What is cascade provision/priority
A: A cascade provision is a planning condition to stipulate who or what areas receive priority when applying for the properties. For example, only applicants that are from X Parish can apply for X development.  This is normally accompanied by a timescale of how long this stipulation is in place before the application area can be widened.  If you are unsure if the property you are interested in has a cascade provision – check the Snugg Homes brochure for the site in question. It will advise of any cascade provisions/priority, it will also advise if the stair casing is restricted to 80% which it can sometimes be in rural areas.

Q: Who is responsible for the maintenance of the property?
A: As the shared owner, you are responsible for the maintenance of the property and any repairs. The maintenance and repairs of communal area’s are the responsibility of of the housing association – this is paid for from the service charges (which includes a sinking fund).

Q: What if the property has defects?
A: If the property is a new build and defects are discovered within the Defect Liability Period (DLP) these should be reported/attended to by the contractor.

Q: Can I buy a Shared Ownership property for my daughter/son? If so, whose name would it go in?
A: You cannot apply for a Shared Ownership property if you own your own home, or, if you can afford to buy the house outright. However, you can gift the deposit, so that a family member/friend can take their own mortgage out (you would need to check this with your financial adviser/lender as each lender has their own rules). If the money is gifted to cover a share of the property, this would be taken into account and assessed during the financial assessment (including any repayment terms on the money gifted/loaned).

Q: My partner can’t get a mortgage – but can he/she still be named on the house, or does it have to go in my name alone?
A: Your partner can be named on the mortgage, however, on the Help to Buy Agent of the North application, you will be asked if this is a joint or single application – if you have to change this during the process, then you will have to restart the whole application again and this could affect your purchase of the property.

Q: Can I rent out the property if I need to?
A: No. Your lease will prohibit you from subletting the property, unless you have compelling social reasons. You would need to discuss this with the housing association.

Q: What initial costs would I incur with a Shared Ownership property?
A: You would need a minimum level of income/savings depending on the value of the home you want to buy.
During the sales process you will need to pay for:

  • Reservation fee to hold the property – £350
  • Mortgage valuation and survey
  • Financial adviser
  • Legal costs
  • Deposit for your mortgage (5 – 20%)
  • Moving costs

Q: What are the monthly costs?
A: Every month you will need to make the following payments:

  • Your mortgage repayments to your lender
  • Your rent to the housing association– (based on 2.75% of unsold equity)
  • A service charge and management fee for services you receive – this is inclusive of buildings insurance

Q: What is the service charge for?
A: The service charge is for the maintenance of any communal areas and any services you receive.

Q: Does the rent go towards anything?
A: It is for the share they do not own, the unsold equity. This is a contribution to AHA/CCH loan/mortgage.

Q: How do I apply for a property?
A: You will need to complete an online low cost home ownership application form with Help to Buy North West (www.helptobuytnw.org.uk).
Your application will then be passed to Snugg Homes. As part of the approval process, you will be asked to complete a Financial Assessment and will be asked for the following information:

  • 3 months wage slips/most recent P60
  • Proof of savings you may have
  • Photographic ID
  • Proof of address, recent utility bill etc.

Q: How long does it usually take to for Help to Buy NW to reply to an applicant?
A: Approximately 4 working days, however it’s often confirmed within 2 days  – unless it is a busy period.

Q: How do you reserve the property?
A: You will need to pay on legal completion non-refundable deposit of £350 which is deducted from the total purchase price. Once you have reserved the property, this will be taken off the market.

Q: How do I reserve off plan?
A: This reverts back to the sales process and all dealings would be with Snugg Homes directly.
We advertise some of our properties 6-9 months before they are built.

Q: How do I work out the rent?
A: An example:
House price = £135,000
Purchase share = 25%
Unsold equity = 75%
£135,00 (100% of the property value) x 75% (unsold equity) x 2.75% = £2,784.37 /12 (months) = £232.03 (per month)

To find out more about Shared Ownership go to https://snugghomes.co.uk/buying-with-snugg/shared-ownership/