Soaring house prices in London are putting millions of people off home ownership and dream of owning home seems to get further out of one’s reach.
If you are fed up with paying your landlord’s rent & want to buy your own home, but just cannot afford in expensive London, then shared ownership may be the answer. Shared ownership has nothing to do with buying a house with friends, a spouse or your family. Instead in shared ownership you buy a percentage amount of a property’s value from a housing association and pay the rent on the remainder.
Shared Ownership works on a part-rent, part buy basis so your monthly housing costs are kept manageable and affordable usually 20% less than if you were buying the same home outright or renting privately.
One has the option to buy more until you own it all. This way one can get on the property ladder at a fraction of the price. You can buy a further share in your home when you can afford to (this is called ‘Staircasing’ and you can usually do this until you own a 100% share and own your home outright).
Shared ownership are affordable. Although you need to pay a deposit to the bank or mortgage lender but it will only be on the share that you are purchasing and not on the whole amount of the property.
The shared ownership schemes are offered by various housing associations across the whole of the UK. Generally the properties are leasehold ones,
so one is also expected to pay a service charge.
Housing Association: Housing associations are non-profit organisations set up to provide & manage low-cost housing for rent and for sale to people that cannot afford housing otherwise.
Eligibility criteria: You need to be earning enough to pay the costs of owning a home though may not be able to afford to buy a suitable home without help on the open market. Your household income must be under £60,000 per year (in London £66,000 for 1 to 2 bedroom homes and £80,000 for a 3+ bedroom home).
Who don’t qualify for Shared Ownership: If you
- are not a British, EU or EEA citizen, or your passport is not stamped with ‘Indefinite leave to remain’ or you cannot prove that you can raise a mortgage with an acceptable lender and afford to keep a home in the long term
- have a county court judgement (CCJ) registered against you unless this has been satisfied (paid back) and you can provide a certificate of satisfaction from the court
- have a household income of more than £60,000 a year for one- and two- bedroom homes and £80,000 for three-bedroom homes.
- have had a home repossessed in the past five years
- have been made bankrupt in the last six years
- are self-employed & don’t have audited accounts for the last two full years OR copies of your last three years’ tax returns.
Priority is given to:
- Public sector tenants & eligible Ministry of Defence personnel.
- Applicants considered by the Local Authority as being in priority housing need (Example: Housing waiting list applicants or key workers such as Police personal, Teachers , Nurses etc.)
- First time buyers with a local connection those living or working in the area who for a year.
Restrictions on Shared Ownership homes:
In most Shared Ownership homes, there are restrictions on:
- Keeping pets
- Having satellite dishes
- Laying wooden floors or changing anything major or any structural change
- Owners are not permitted to rent out their property
P.S. : One has to keep lots of patience while aiming for well located shared ownership properties as demand is very high in London and it can easily take couple of years when aiming for a good location because rarely people who are 3rd or 4th on priority list get the opportunity to make an offer unless somebody in the first or second place can’t afford for some reason.