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Conventional shared ownership

This content applies to England & Wales

Conventional shared ownership schemes involve the applicant buying a share in a property and paying rent on the remainder.

How the scheme works

Applicants for conventional shared ownership usually buy a 50 per cent share of a property from a private registered provider of social housing (PRPSH) such as a housing association. Some schemes allow the purchase of anywhere between 25 and 75 per cent. The purchaser will need to arrange a conventional mortgage through a bank or building society for this share of the property (see the section on Buying a home for more information on mortgages). They will then pay rent to the PRPSH on the remainder. Generally, the larger the share of the property purchased by the applicant, the lower the rent they will have to pay, as the rent is calculated on the proportion of the share not owned by the applicant. The rent should also take into account the fact that many applicants will be responsible for repairs. If the applicant buys a leasehold flat, s/he will also have to pay a service charge.

After the initial purchase, applicants can buy further shares in the property, though as prices may rise, additional shares could cost more. In some rural areas, there may be a restriction on the option to buy further shares (see below under Types of property available). Eventually, many applicants can own the property outright - for more information see the page on Staircasing.

Who can apply?

Applicants must be unable to buy a home outright and in a position to raise a mortgage. Priority is often given to existing social housing tenants, those who have applied for an allocation of such accommodation, key workers or first-time buyers.

Types of property available

Properties available to buy through conventional shared ownership will usually be properties that have been either newly built, or bought and refurbished, by an PRPSH. The purchase price of the property will vary according to type and location. The property must be suitable for the applicant's needs, for example, it should not be considerably larger than needed for the applicant and her/his household.

Rural Repurchase scheme

In some rural areas, the ability to buy further shares may be restricted or the PRPSH may reserve the right to buy back the property, at full market value. These arrangements are limited to rural areas and are intended to provide a means of keeping low cost housing for rural communities. The social landlord should inform the leaseholder if these restrictions apply. For more information about the Rural Repurchase scheme see the Homes and Communities Agency Affordable Housing Rural repurchase information.

Designated protected areas (England only)

Shared ownership leases in designated protected areas[1] are either excluded from enfranchisement (ie the right to buy the freehold of the property) because they allow staircasing only up to 80 per cent, or, if they allow staircasing beyond 80 per cent, must contain a requirement for the leaseholder to sell her/his property back to the landlord freeholder when s/he wishes to move out.[2]

Rent and security of tenure

Shared ownership properties are usually a combination of assured tenancy and leasehold owner-occupation. The assured tenancy has no rent controls applicable, apart from a few limited exceptions.[3] The PRPSH sets a rent for the property, which is subject to annual increases. Applicants are also granted a lease of the property, usually for 99 years. 

See the sections Leasehold property and Assured tenancies for more information.

The lease

The lease will include terms and conditions, if the lease is for a house then the leaseholder will be responsible for all repairs and redecoration inside and out. The rent will include a service charge covering the costs of insuring the building, rent collection and a share of the cost of maintaining any other common areas.

If the lease is for a flat, the PRPSH will be responsible for all external maintenance and repairs, including exterior paintwork. The leaseholder would pay for this through the service charge, which would include her/his share of the cost of maintaining all common parts, and s/he may be liable for extra charges to pay for major repairs. The leaseholder is responsible for all internal redecoration, and will often be responsible for internal repairs, though the lease will set out all the leaseholder's obligations.

The Homes and Communities Agency has issued sample shared ownership leases, one for flats and one for houses. The leases can be adapted by PRPSHs.

The mortgage

Most applicants buying a share of a property will need to take out a mortgage. The mortgage is a contract between the leaseholder and the mortgage lender and is entirely separate from the lease. The mortgage lender and the terms of the mortgage must first be approved in writing by the PRPSH who must be provided with full details of the original mortgage and any subsequent loans. Both parties should liaise closely to deal with any problems quickly and avoid misunderstandings.

Selling the home

An applicant who wishes to sell the property can sell the lease at any time, but s/he must inform the landlord in writing that s/he wants to move. The applicant can either sell the share that s/he owns or buy the remaining share and then sell the property outright. The leaseholder will benefit from any increase in the value of the property according to the share s/he owns.

In some cases, it is possible to sell the property on the open market in the normal way through an estate agent but often there is a clause in the lease that prohibits this, and enables the social landlord to nominate prospective buyers and restrict the sale price to an independent valuer's valuation at the time of sale.

Moving house

Applicants who need to move to a more suitable property because of a change in household circumstances may be able to move to another shared ownership property, provided they are still eligible.

[1] Housing (Right to Enfranchise) (Designated Protected Areas) (England) Order 2009

[2] Housing (Shared Ownership Leases) (Exclusion from Leasehold Reform Act 1967) (England) Regulations 2009 SI 2009/2097.

[3] s.35 Housing Act 1988.

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