If you are looking to get on the property ladder, a shared ownership property may be right for you. It allows you to buy a share of a home and rent the rest.
Shared ownership properties are sold through housing associations. At the time of the purchase, you buy a percentage of the property (between 25% and 75%). You will still pay a deposit and can take a mortgage, just the same as if you were purchasing a property outright.
The remaining share will be owned by the housing association and you will pay rent to the housing association on that percentage.
Once you have owned your shared ownership property for a certain period of time (this will be stipulated by the housing association) then it is possible to buy a greater share of your property from the housing association – this is called ‘staircasing’. The cost of increasing your share will depend on the market value of the property at the time.
To staircase, you’ll need to pay for the housing association to carry out a valuation of the property and make sure you have the cash or mortgage finance in place to pay for the extra share.
Each housing association will have different rules, but you’ll generally have to buy a 10% share as a minimum when staircasing. If you wish to buy a share of more than 10%, that’s usually acceptable provided it’s in 5% increments (eg. 15%, 20%, 25% and so on).
Many housing associations will only let you staircase up to three times. Some will only let you staircase a third and final time if you intend to buy the entire remaining share of the property, taking your ownership up to 100% and effectively buying the housing association out.
You can sell your shared ownership property at any time, but the housing association has the right to try to find a buyer before you put it on the open market.
The amount of cash you and the housing association will get from the sale will depend on the market value of the property at the time.
We understand that taking that first step onto the property ladder can be daunting so our team takes the time to listen to your concerns and explain each step of the transaction in straight forward language. At the same time, we work closely with you to ensure that completion is achieved quickly and efficiently.Contact our Conveyancing team for more information