Summer school is here: Shared Ownership 101

Summer school is back in session, so grab your notebooks as we delve into the world of Shared Ownership! Teaching you everything you need to know to get on the property ladder sooner than you thought possible with Legal & General Affordable Homes.

Shared Ownership is here to help you to own a slice of the property pie without breaking the bank. So, sharpen your pencils as we explore what Shared Ownership is, how it works, the costs involved, eligibility criteria, decorating your home and even selling a shared ownership property. 

What is Shared Ownership? 

Shared Ownership is an exciting opportunity for first-time buyers to step onto the property ladder. It offers a more affordable way to get on the property ladder, particularly in areas where property prices are high. It is a government-backed scheme that allows individuals to purchase a share of a property and pay rent on the remaining share. The shares are usually between 25% and 75% of the property’s value, and buyers can increase their share over time through a process called “staircasing”. 

How Does Shared Ownership Work? 

Shared Ownership allows individuals to take their first steps onto the property ladder without needing a large deposit. Here’s a breakdown of how it works: 

• Finding a Property: Start by browsing the available Shared Ownership homes offered by Legal and General Affordable Homes. These properties are typically contemporary new-build homes
  
• Eligibility Criteria: Check if you pass the test for Shared Ownership. Factors such as income, residency status, and whether you’re a first-time buyer are taken into account
  
• Mortgage and Deposit: Apply for a mortgage to cover the share you wish to purchase. The deposit required is usually a percentage of the share you’re buying, rather than the full property value. 

• Legal Process: Once you’ve passed the test and your mortgage is approved, you’ll need to appoint a solicitor to handle the legal aspects of the purchase. They will guide you through the process and ensure everything is in order
  
• Staircasing: Over time, you have the option to increase your share of the property through a process called “staircasing.” This allows you to buy additional shares and eventually own the property outright if you choose. 
  
• Rent and Service Charges: In addition to your mortgage payments, you’ll also need to pay rent on the share you don’t own, as well as any service charges for the maintenance of shared areas. 
  
• Selling Your Share: If you decide to sell your Shared Ownership home, Legal and General Affordable Homes will have the first opportunity to find a buyer for your share. If they’re unable to do so, you can sell it on the open market. 

Costs Involved in Shared Ownership 

It’s time for maths class! When considering Shared Ownership, it’s important to understand the costs involved. Here are some key expenses to consider: 

• Mortgage Payments: Your mortgage payments will depend on the share you own and the mortgage deal you secure. It’s crucial to budget for these monthly payments
  
• Rent: You’ll also need to factor in the rent on the share you don’t own. This will be payable to Legal and General Affordable Homes
  
• Service Charges: Shared Ownership properties often have service charges to cover the maintenance of communal areas, such as gardens or shared facilities. These charges vary depending on the development
  
• Legal and Survey Fees: When purchasing any property, you’ll need to cover legal fees and, if required, survey fees. These costs can vary, so it’s important to get quotes from different solicitors and surveyors

• Stamp Duty: Stamp Duty Land Tax (SDLT) is a tax payable on properties above a certain value. The rates and thresholds vary depending on whether you’re a first-time buyer or have owned a property before. It’s advisable to consult with legal advisers to determine how much SDLT you may need to pay

Shared Ownership Eligibility 

Once you’ve decided that Shared Ownership is right for you, you’ll have to pass a few tests. Here are some key criteria that determine your eligibility: 

• Income: Shared Ownership is designed to help individuals with a certain level of income. The specific income thresholds may vary depending on the property and location
  
• Residency Status: You must have the right to reside in the UK to be eligible for Shared Ownership. Different rules may apply if you’re not a UK citizen
  
• First-Time Buyer Status: Some Shared Ownership properties are exclusively available to first-time buyers. If you’ve owned a property before, you may still be eligible, but the options could be limited
  
• Local Connection: In some cases, priority may be given to individuals who have a local connection to the area where the property is located. This could include living or working in the area. 

Teacher’s tip: It’s important to note that eligibility criteria can vary between different Shared Ownership schemes and developments. Therefore, it’s advisable to check the specific requirements for the property you’re interested in. 

Decorating Your Shared Ownership Home 

Once you’ve passed the tests with flying colours, figured out the maths and graduated to getting on the property ladder… it’s time for art class!

Unleashing your creativity is the fun part and will help to make your new place feel like home, but much like art class, you’ll likely have to stick to a few rules. Here are some tips for decorating your Shared Ownership home: 

• Check Leasehold Restrictions: Before making any major changes, review your leasehold agreement to understand any restrictions or permissions required for alterations
  
• Focus on Portable Improvements: Consider investing in portable improvements, such as furniture, artwork, and soft furnishings. These can easily be taken with you if you decide to sell your share or move to another property
  
• Temporary Changes: If you’re not allowed to make permanent alterations, explore temporary options like removable wallpaper, adhesive hooks, or stick-on tiles to add a personal touch

Remember, while you have the freedom to decorate your Shared Ownership home, it’s important to follow the rules and avoid getting in trouble 

Selling a Shared Ownership Home 

At some point, you may decide to sell your shared ownership property. Here’s a crash course of the process: 

• Notify Legal and General Affordable Homes: If you wish to sell your share, you must first notify Legal and General Affordable Homes. They will have the first opportunity to find a buyer for your share
  
• Open Market Sale: If Legal and General Affordable Homes is unable to find a buyer, you can sell your share on the open market. In this case, you’ll need to appoint an estate agent to market your property
  
• Valuation and Offers: Your estate agent will arrange for a valuation of your share, and potential buyers will submit offers. You can choose to accept an offer or negotiate with interested parties
  
• Legal Process: Once you accept an offer, appoint a solicitor to handle the legal aspects of the sale. They will ensure the necessary contracts and paperwork are completed

• Staircasing or Selling the Full Property: If you’ve increased your share through staircasing, you have the option to sell either your share or the full property. 

Congratulations, graduates. You’ve successfully completed Shared Ownership 101.  

Shared Ownership with Legal and General Affordable Homes provides an accessible path to homeownership for first-time buyers. By learning the basics, the costs involved, eligibility criteria and the processes of decorating and selling, you can make informed decisions and graduate with confidence and excitement for your new chapter on the property ladder!