A guide to shared ownership (part buy - part
rent)
Shared ownership is a low cost alternative route to home ownership
aimed at people who cannot afford to buy their own home
outright.
You can purchase a share in the property (normally 50%, but this
varies from scheme to scheme) and pay a subsidised rent on the
remainder of the property.
To find out more about shared ownership and the types of properties
available, please call the Sales and Marketing team on
0845 600 4663.
Who can buy through the shared ownership
scheme?
Most first time buyers can apply to purchase a property through
shared ownership, however priority will be given to:
• Council and housing association tenants
• People on their local council's housing register
• Key workers, for example police officers, nurses and teachers.
Please ask your local council for a full list of key worker
occupations in your area.
If you live with family or friends or in privately rented
accommodation, you can still apply. Even if you have owned your own
home before you may be able to buy through shared ownership if:
• You owned a home with a partner and the relationship broke
down
• You need to move because of job relocation
• You are an existing shared owner who needs to move and you fulfil
all our criteria.
You can buy with up to four other people, but all applicants
must fulfil eligibility criteria and live in the property.
Eligibility criteria
In order to qualify you must meet the following criteria:
1. You must have been employed on a permanent contract for at
least six months.
2. If you are self employed you will need at least two years
audited accounts.
3. If you have ever had a County Court Judgement against you it
must be satisfied.
4. You must be a UK resident or have the
'right to remain' clearly established and shown in your
passport.
5. You will need to meet the minimum income requirements. These
vary from scheme to scheme. We will also take into account any
financial commitments you have, such as bank loans, to make sure
you can afford the property.
6. You must have sufficient savings to cover legal fees and moving
costs.
We will not be able to assist you if you can afford to buy the
property outright on the open market.
Types of property available
Sutherland develops mainly one and two bedroom apartments and
houses for sale. They may be newly
built or existing homes that have been renovated. We
also have a number of properties available where an existing shared
owner wishes to sell their share and move on. These are known as
re-sale
properties.
The cost of buying your home
In order to buy your home you must have savings or access to
sufficient funds to cover the following. We estimate this amount to
be approximately £3000
• The bank or building society survey. The amount you have to pay
varies. We can supply you with the details of some Financial
Advisers who can help you make a decision regarding your mortgage.
Alternatively you can approach your own or any other bank or
mortgage provider directly.
• Legal fees. We can supply a list of reputable solicitors who are
familiar with shared ownership. It is advisable to ask for an
estimate before engaging your representative as fees vary.
• Stamp duty. This is a form of tax on transfer of the property.
You can either pay duty on your share and on the rent or on the
full value of your property. Your solicitor or legal representative
should be able to advise you on which option to take.
• A deposit of £1000. This is refundable on completion.
• Removal costs. You will need to consider the cost of moving as
they can sometimes be quite high
• £200 reservation fee. This is refundable on completion
On going costs
• Mortgage repayments. Your financial adviser or bank/building
society will calculate your repayments.
• Rent. The rent is calculated on the proportion of the property
you do not own. For example if you own 40% of the property you will
pay 60% of the total rent. This is also subsidised by Government
grants. The rent will be reviewed every year from the 1st of
April.
The share you can buy will vary from scheme to scheme, 50% percent
is usual, but sometimes it's possible to buy between 25 - 75
percent. The amount of rent you pay will depend on the share you
own.
Other expenses to consider:
• Council Tax - you pay this direct to the local authority.
• Household bills - you are responsible for all of your household
bills including water rates
• Contents Insurance - you are responsible for supplying all of
your own furniture and fittings and insurance of the contents of
your home.
Repairs, insurance and services charges
If you purchase a house you will be responsible for all repairs and
redecoration both inside and out. You may also have to pay an
estate service charge if there are common areas on the estate. We
will arrange buildings insurance and you will have to pay the
premium.
If you purchase a flat - A service charge will be payable which
will include some or all of the following:
Building insurance cover
Repair and maintenance of structure and common parts
Landlord's lighting (lighting of communal areas, confirm)
Cleaning of communal parts
Gardening and general maintenance
Management fee
The service charges will also usually include a contribution to a
sinking and cyclical fund (a reserve fund to cover all or part of
any periodic or necessary major works such as roof repair or
external painting).
The service charges are reviewed annually and you will be provided
with a breakdown of the items in the estimate. You must pay your
service charges monthly in advance with your rent.
Buying further shares in your home or
'staircasing'
You can usually buy further shares in your home after 12 months or
when you can afford to. You can buy shares in multiples of 10% or
15% (with a minimum of 10%.)
You need to let us know in writing that you would like to purchase
more shares and we will obtain a valuation.
We will calculate how much your additional shares will cost and
then if you would like to continue with the purchase you can then
instruct your solicitor to proceed. You will be responsible for the
valuation fee and the legal fees (which may include further stamp
duty) as well as any charges made by your mortgage lender. Full
details will be set out in your lease.
You will be given three months to complete the purchase of the
further share. If the purchase takes longer for any reason it will
be necessary under the terms of your lease to obtain an up to date
valuation for which there may be a charge.
Sutherland can advise you on anything that you are unsure of.
You do not have to increase your share at any time.
When you want to sell
You can sell your share at any time but you must let us know in
writing that you would like to move. Your lease may say that you
have to offer to sell the property back to us. If we want to buy it
we will have to pay you the current value. If we do not want to buy
you can either sell the part that you own or buy the remaining
share and sell outright.
You will benefit from any increase in market values but you must be
aware that you may be affected by any fall in values. Unless you
have owned the property outright (ie 100%) for at least three
months the price you may sell for is restricted by the valuation
(the valuation is provided by either the District Valuer or an
independent valuer which you are required to pay for).This
condition applies in order to prevent profiteering from shared
ownership and to ensure that public funds are protected.
Sutherland also has a period of time, set out in the terms of your
lease, in which to nominate a buyer. The reason for this is that we
wish the properties to remain available to those for whom shared
ownership was intended. If we fail to nominate a buyer in the given
time, usually two months, or if the person we nominate does not
exchange contracts within a specified period (usually 12 weeks)
then you may sell your property to whom ever you wish on the open
market.
If we do nominate a buyer we will charge a fee of 1% of the value
of your share* on completion e.g. if the property is valued at
£150,000 and you own 50% (£75,000) the fees will be 1% x£75,000 =
£750.00. Estate agents will normally charge a higher percentage of
the whole value which will be considerable more.
* Please note that this will increase to 1% of the market value of
the whole property for leases created after 1st February 2005.
What does a shared ownership lease entitle me
to?
Whether you buy a house or a flat we will grant you a lease. The
lease is normally for 99 years but the terms can vary. Your
solicitors will confirm this with you. It will entitle you to live
in your house as an owner-occupier. It will also allow you to buy
further shares in your property and sets out how you can do this.
It also states that you can sell your property. Other points
covered in the lease set out your responsibility for repair and
payment of rent and service charges. Although you have not bought
the property outright you have the same rights and responsibilities
as a full owner occupier.
It is your legal adviser's responsibility to make sure you
understand your obligations under the terms of your lease and we
strongly urge you to clarify any points you may be unsure of with
them.
Making improvements or alterations to your
home
If you wish to improve your home you will need our consent if the
work involves non-structural alteration.
You are not allowed to make any structural alterations to the
property. If you make significant improvements that affect the
value of your home then these will be taken into account when you
sell the property so that you will benefit from the increase in the
value that your improvements have made. When you staircase,
increase the percentage of your home which you own, any increase in
value as a result of your improvements will be ignored. However,
not all works that you carry out will be improvements for the
purposes of the valuation.
If you get into financial difficulties
The mortgage contract is between you and your bank/building
society. If you begin to have financial problems and you cannot pay
your mortgage you should let them know as soon as possible. If you
do fall behind and cannot agree a solution there is a risk that
they may take possession of your home and sell it.
If you fall behind with your rent or service charge it is very
important that you get in touch with us as soon as possible to
discuss the options available.
What next?
Download an application
form, following the instructions and return to
Sutherland for consideration.
If you are eligible for shared ownership we will register your
details on our database and notify you of any suitable properties
which may become available.
All applications are required to complete an equal opportunities
questionnaire when they apply to join our register. Although we do
not make offers based on ethnic origin, we are obliged to keep
these records and to provide statistical information to the Housing
Corporation. This information we collect enables us to monitor how
well we are doing at reaching all sections of the community.
About Sutherland
Sutherland Housing Association (SHA) is a subsidiary company of
the Genesis Housing Group and has been operating for over 20 years.
Sutherland is a Registered Social Landlord and operates mainly in
Barnet, Brent, Ealing, Haringey, Harrow, Tower Hamlets,
Westminster, and across Essex and Hertfordshire.