In this blog, we’re dispelling common myths surrounding Shared Ownership, a property scheme often misunderstood by prospective homeowners. From decoration rights to selling your share, we clarify the realities behind these misconceptions. Join us as we explore the truths of Shared Ownership, offering valuable insights for anyone considering this route to owning a home.
You can’t decorate your own home
Any major structural changes will need the permission of the Housing Association (e.g. if you were wanting to remove an internal wall) but most things such as painting walls, updating carpets etc do not require prior permission.
The Housing Association can take back the Property at any time
This is not true.
However, if you are having trouble paying your rent, then there are measures that the Housing Association can take in order to regain possession.
If you find yourself in this position, it is best to speak directly with the Housing Association as early as possible so that you can discuss what steps may be able to be taken in order to rectify the situation.
You have to share the Property with others.
The term “Shared” comes from the financial stakes you have with the Housing Association rather than having to share the Property with anybody.
The share you own is yours alone – you have sole rights to live in it and no one else does.
You can never own 100% of the Property.
With Shared Ownership, you can do what is known as “staircasing” – this means you are able to purchase more shares in your Property as you go along.
You usually initially buy a share that is between 25% to 75% and then increase (by staircasing) as and when you are able to afford to do so.
However, if you buy in an area that is known as a “Designated Protected Area”, you will only be allowed to buy up to a maximum of 80%. This is so that the availability of affordable homes is protected going forward to people who live and work in a particular area and this restriction is imposed by the local Planning Authority.
A lot of lenders are not keen on providing mortgage finance in this situation so your broker will need to be made aware of this as soon as possible. They can then check this for you.
Once you have purchased 100% of the Property, then you will own the Property outright and no longer have to pay rent on any part of it. However, it is important to remember that any restrictive covenants on how you can use and enjoy the Property, perhaps no pets or no alterations without Housing Association consent, will stay and will remain valid, regardless of whether you own a share or if you have purchased 100% of the Property.
It’s only for first-time buyers.
Shared Ownership is open to everyone, not just first-time buyers. For instance, older people who wish to downsize in later life or people who have had relationship breakdowns often choose this route.
It is usually thought of as popular with first-time buyers as there are lower up-front costs in terms of deposit and this is helpful when you are first starting out on the property ladder.
You cannot sell your Property.
You are always allowed to sell your share in the Property. However, there are some differences between selling a shared ownership property and one where you might own the property outright in a more conventional case.
If you are thinking about selling a shared ownership property, here are some things to consider:
- The Housing Association involved usually has a right of “first refusal” – this means that they are allowed to try and find a buyer before you can put it on the open market with an estate agent. They usually have 8 weeks to do this and this period is often referred to as the “nomination period”.
- You will be required to have a valuation carried out on the property to determine the value of your share. This will be at your cost in most cases.
- You will still have the usual other associated costs, i.e. estate agent fees if you are selling after the nomination period has come to an end and legal fees for example.
Most people do not meet the eligibility criteria.
Whilst it is generally believed that Shared Ownership properties are only available to a small number of people, this is not true as the various criteria have widened over time. The criteria you might see now typically include the following:
- You must be over the age of 18,
- Your annual household income must be less than £80,000 (£90,000 in London)
- If you already own a home and need to move but cannot afford to, you may also be a candidate.
You cannot keep pets on the Property.
Details of whether you are allowed to keep a pet at the Property will be in the Lease Agreement so do check carefully at an early stage.
If you are purchasing a house then you are usually allowed, with the prior permission of the Housing Association, to keep a pet but please be aware, there is no one rule on this. As a result, Housing Associations do sometimes differ in their approach to pets, so it is best to always ask `early doors’ if this is likely to be a deal breaker for you.
Shared Ownership properties are only available as new build properties.
Although large numbers of shared ownership properties are purchased as new builds, you can buy existing properties through the Shared Ownership scheme.
These are known as “Resale Properties” and cover the situation where the current owners bought through Shared Ownership and now want to sell on. You are also able to purchase further shares in the Property.
Quite often, if you are assessed as being able to afford more than the share that the seller can sell to you, you would be able to purchase a further share directly from the Housing Association at the same time.
Houses are in less desirable areas.
More recently, Planning Authorities across the Country are making sure that more affordable housing is available where they can. If a housebuilder or developer is wishing to build a new development, a proportion of the new houses to be built would need to be affordable housing. The result of this is that shared ownership properties are now built all over the country in all manners and number of different locations.
For further information, please contact Gill Bratcher on 01803 407663 or email gillbratcher@wbw.co.uk.
WBW Solicitors has offices in Axminster, Bovey Tracey, Brixham, Chard, Exeter, Exmouth, Honiton, Launceston, Newton Abbot, Paignton, Seaton, Sidmouth, and Torquay.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.
