Shared Ownership - new homes
What are Shared Ownership - new homes?
Shared Ownership Homes are available through different housing associations. You can buy shares worth between 25% and 75% of the property's market value and you pay a subsidised rent on the remaining share. You may need to raise a mortgage to purchase your share. If you have a large deposit or equity from the sale of a property, this can also be used towards purchasing your share. For more information on buying or selling shared ownership homes see:
Second-hand shared ownership properties are also available from existing owners. These are called shared ownership resales. More information can be found in the resales section.
How do I Buy through Shared Ownership - Use our affordability calculators to see the mortgage you qualify for.
To buy through shared ownership you will need to do what is known as 'maximise your affordability', why not try our affordability calculator. What this means is that you will be required to take out a mortgage in addition to any deposit you may have. Even if you can afford to buy the minimum share of the property in cash, you will still be required to take out a mortgage. The rule may be waived for people who can't get a mortgage due to age or disability.
The benefits of buying a brand new are as follows:
- You can buy chain free
- Obtain a 5 year guarantee from National House Builders Council (NHBC)
- Have access to buy an affordable quality home in an area you want to live
Who can apply for this scheme?
Whatever the scheme - all the HomeBuy options available require you to fulfil the same basic eligibility criteria. These include:
- You have a gross household income of no more than £66,000 per annum when eligible to purchase or rent a one or two bedroom home or no more than £80,000 per annum when eligible to purchase or rent a family sized home (three or more bedrooms). A Lower income threshold may apply to some developments, and please not bonuses and other sources of income will count towards your total income.
- Applicants should be buyers looking to buy for the first time, although if you are looking to buy a new home after a relationship breakdown you may also be considered
- You must be in full or part time employment or be able to demonstrate you can afford to maintain the costs of owning the home long term. Student loans, bursaries or similar funding sources are not accepted.
- Priority will be given to armed forces (MOD) employees, and social tenants
- You should ideally have either family or work connections to the area in which you want to buy
- If you wish to purchase a property in London often priority for particular properties is given to those who currently reside in the same borough as the development, property details will stipulate this.
- You should be a British or EU/EEA citizen, or have indefinite leave to remain in the UK. If you do not have indefinite leave to remain it is possible to apply by be aware that you may have difficulties in obtaining a mortgage. If unable to be approved for a mortgage you will NOT be able to proceed with the purchase.
Before purchasing you will need ensure you have:
- A good credit history, so you stand a good chance of being approved for a mortgage.
- Have the funds required for the deposit, the amount will be depedant upon the cost of the share you buy, your credit rating and your mortgage lender's requirements.
- Be able to raise around £4000, which is the average cost of buying which covers the additional costs of mortgage arrangement fees, solicitor's fees, moving costs etc.
For further Eligibility Criteria and aplication details click here.
How much will it cost at the start?
You will need to be able to pay the cost of the mortgage valuation or survey and legal fees for any shared ownership property. The minimum savings you need depend on the property and the percent of shared ownership you want to buy into. You may also need to pay the cost of moving home and connection charges for gas and electricity supplies. In most cases, buying a shared ownership home involves paying a deposit.
What are the ongoing monthly costs?
- Your mortgage repayment
- Your rent
- A service charge and management fee for services you receive
- Buildings insurance
How Do I Increase the share in my Home - Staircasing?
If you have purchased a share of your home under the Shared Ownership or previously the NewBuild HomeBuy scheme, you are entitled to buy further shares if you can afford to until you own 100%, if you wish to (however some shared ownership schemes restrict maximum ownership). This is called 'staircasing' and the cost of the additional shares is based on the market value of the property at the time that you purchase the shares. If you increase your share in the property, your rent is re-calculated and reduced proportionately.
You can staircase until you own your shared ownership home outright likewise if you are in financial difficulties you can also staircase downwards to own a lesser % share of the property. By buying an additional share through staircasing, you will reduce the amount of rent you pay. If you staircase to the point where you own outright, you will no longer have to pay rent on the shared ownership home. Buying outright may not cost as much as you think. In many cases, the cost of monthly payments on a 100% mortgage are only marginally higher than the combined shared ownership mortgage and rent you currently pay. With some schemes you may have to live in your home for a year before you can buy more shares. For more information see our detailed explanation of Staircasing here.
What happens when I want to sell?
You can sell your share of the shared ownership property at any time and an independent survey will decide what your property is worth. The property will be sold at the current market valuation. Housing Associations will help you do this by looking for a potentialy buyers that qualify for shared ownership on their waiting list and also undertaking marketing they see fit. This should reduce the cost of selling your share. If you wish to sell your property, your share is marketed for sale by your housing association to allow other people in housing need to benefit from low cost home ownership. The property is resold at the market value of the property at the time of resale. Please click here for further information on our shared ownership sellers guide.