Shared Ownership

What is Shared Ownership?

If you can’t quite afford the mortgage on 100% of a home,  Shared Ownership offers you the chance to buy a share of your home and pay rent on the remaining share. Later on, you can buy further shares or purchase your property outright. Buying a larger share is called stair-casing, and as you buy more shares you pay less rent. In some instances you may have to live in your home for a year before you can buy more shares and in rural areas stair-casing can sometimes be restricted.

You will need to take out a mortgage to pay for your share of the home’s purchase price, or fund this through your savings. Shared Ownership properties are always leasehold, however upon final staircasing the freehold is transferred to you.

Are you eligible?

You could buy a home through Shared Ownership in England if:

  • Your household earns £80,000 a year or less
  • You are a first-time buyer, you used to own a home or have now sold your property and can’t afford to buy one now without assistance
  • You are an existing shared owner looking to move

Only military personnel will be given priority over other groups through government funded shared ownership schemes. However, councils with their own Shared Ownership home-building programmes may have some priority groups, based on local housing needs.

Currently a home owner?

Shared ownership is ideal for people wishing to down-size or if your circumstances have changed. If you are currently a home owner, you will need to have an agreed sale on your property and provide proof of sale before your application will be considered

If you can afford to buy the property outright without government assistance, you will not be considered eligible.

How much will it cost?

You will 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
> Mortgage valuation and survey
> Financial advisor
> Legal fees and searches
> Deposit for your mortgage
> Moving costs

What are the monthly costs?

Every month you will need to make the following payments:
> Your mortgage repayment to your lender
> Your rent to Jigsaw Homes Group
> A service charge and management fee for services you receive

Applying for one of our homes?

Once you have found the right property on our website you will need to complete an online application form. As part of the approval process, you will be asked to complete a Financial Assessment, which is undertaken by our external partners Metro Finance. You 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.)

New Shared Ownership Model Lease

New legislation introduced in 2021, allows you the option when buying your initial share to buy 1% extra share each year for up to 15 years, the price of each years 1% increase is based on the initial value with an increase based on the RPI – there are no legal fees attached to the 1% purchase price.

The minimum share purchase amount has also been reduced to 10% – the maximum initial share purchase amount remains at 75% of the full priced property.

There is also new legislation for repairing obligations – Shared Owners under the new model lease will have the benefit of a new 10-year repair warranty under which the landlords/housing associations are required to pay towards certain essential repairs (e.g plumbing/gas), up to an annual limit of £500 (any unused element can be carried over to the next year – only 1 year can be carried over).

The new lease term has been extended to 990 years.

2016 – 2021 Shared Ownership Model Lease

The minimum purchase price is 25% of the full priced property and 75% is the maximum purchase price.

The lease term is 250 years. 250 years is the maximum lease length, leases will commence from the first legal completion on a development scheme.

Repairing obligations outside of the defect period are the responsibility of the leaseholder.

The minimum staircasing amount is 10%.

Reserving your dream home

Once your financial assessment has been approved, you will be able to reserve your home. You will need to pay a refundable deposit of £350 (which is deducted from the total purchase price on legal completion) and sign and return our reservation agreement.

Once you have reserved a property, this will be taken off the market.

If you need to obtain a mortgage to buy your home you will need to speak to an Independent Financial Advisor (IFA), bank or building society. To buy a home, you will need to appoint a solicitor to act on your behalf.

There are now 27 active SO lenders with 15 offering 95% lending.

The solicitor will handle the conveyance for you (transferring the title to you legally), explain the terms of your lease and deal with the seller’s solicitor on your behalf. The solicitor will also check contract documents and carry out legal searches.

Exchange of contracts

About eight weeks after reservation, subject to legal and mortgage arrangements being in place, contracts will be exchanged. The balance of the deposit is normally paid at this stage and the whole transaction becomes legally binding. Exchange and completion can be simultaneous or exchange with a fixed completion date up to 14 days. If the exchange does not take place on the agreed date, the property can be put back onto the open market.

Completing the sale

Now comes the final step of the buying process… the legal completion. This is when your lender releases the funds to pay for your home, at your solicitor’s request.

On the day of completion, a Property Sales Coordinator will attend the property, take meter readings, then leave the keys and handover pack. Once legal completion has taken place, you will receive the code to the key safe for you to collect your keys to your new home.

And that’s it…congratulations!…you are now the proud owner of your new home!

Leasehold and Shared Ownership

As a Shared Owner you buy a lease (becoming a leaseholder) that gives you the right to occupy and own a percentage of a property for a given period of time (typically 999 years).

You have the right to occupy the property provided that the agreed rent and service charges are paid as set out in the terms of the lease and all other terms specified in the lease are adhered to.

When you buy your ‘share’ of a Shared Ownership property you are buying a lease based on that percentage of the market value of the property. You are not buying a share of the freehold. You would only acquire the freehold interest in the property if you could and chose to ‘staircase’ to 100% ownership (see below). There are some properties that cannot be staircased up to 100% and owned outright and this will be stipulated in the Lease.

A leaseholder in a Shared Ownership property will also pay rent to the Association based on the percentage of the market value of the property not covered by the lease. For example, if you buy a lease based on 50% of the market value, you will pay rent based on the other 50% that remains in the Associations ownership.

If the Association owns the freehold.  No ground rent will be charged.

If you ‘staircase’ and buy 100% share of a house the freehold will be transferred on completion provided the Association owns the freehold. The Association would then have no further legal interest in the property. You will no longer need to pay rent to us although we may levy a service charge for services we provide to external communal areas that benefit property such as grounds maintenance of the estate. You would also need to source and pay for your own buildings insurance.

Leases can be bought and sold on the open market. If you sell your ‘share’ of the property you are selling your interest in the lease. A purchaser may buy your ‘share’ and the Associations ‘share’ at the same time. This is called back to back staircasing.