Shared ownership is a way to part-buy and part-rent a home. It's aimed at people who can't afford to buy on the open market.
How shared-ownership schemes work
Shared-ownership schemes allow people to part-buy and part-rent a home. Schemes are usually operated by housing associations. There are also privately operated schemes.
You buy a 25% to 75% share of a property and pay rent on the remaining share. You pay a deposit of at least 5% of your share.
You would usually have to get a mortgage to fund the remainder of your share.
You can increase your share of the property to 100% over time by buying extra shares. This is known as staircasing.
Shared-ownership schemes for older people usually allow a maximum of 75% to be purchased. You no longer have to pay rent when you own 75% of an older person's home-ownership property.
Who can apply for shared ownership schemes?
You may be eligible for a shared-ownership scheme if you:
- earn up to £71,00 in London (if you want to buy a one or two-bedroom home)
- earn up to £85,000 in London (if you want to buy a three-bedroom home)
- earn less than £60,000 outside London
- don't already own a home
- are a British or EU/EEA citizen or have indefinite leave to remain
Some schemes ask you to have a minimum household income of £20,000, or more if you have children or dependents living with you.
Benefits aren't counted as income.
Some schemes also ask that you have a permanent job and have savings of at least £4,000 to cover legal costs.
Each scheme has its own criteria for who is eligible. Some prioritise council and housing association tenants or key workers such as firefighters, police, teachers and nurses. Some accept applications from private tenants.
You won't usually be able to become a shared owner if you are facing eviction.
Find out more from Gov.uk about shared-ownership schemes.
Shared homeownership for people with a long-term disability
If you have a long-term disability, you can apply for a scheme called homeownership for people with a long-term disability (HOLD).
You can buy between 25% and 75% of your home through a HOLD scheme.
Find out more from Gov.uk about HOLD.
Find out more from Money Advice Service about getting a mortgage if you're ill or disabled.
How to apply for shared ownership
New applicants can apply to schemes including:
- Social homebuy
- Help to buy shared ownership
- Home ownership for people with long-term disabilities (HOLD)
- Older people's shared ownership
Contact your local help to buy agent for more information.
Costs of shared-ownership schemes
You must pay:
- repayments towards any mortgage loan for the share you are buying
- rent for the share owned by the scheme provider
If you get into arrears on your rent or your mortgage, you can be evicted.
You have to pay valuation fees each time you buy more shares.
Responsibility for repairs in shared ownership
You are responsible for the cost of all repairs and home improvements in a shared-ownership home. You may need your scheme's permission for major improvements, such as installing a new kitchen or knocking down a wall.
Shared-ownership homes are leasehold properties. The scheme may be responsible for the maintenance and repair of the building, but the costs can be passed on to you and other shared owners through service charges.
Get advice if there is any dispute about who is responsible for maintaining the building.
Use Shelter's directory to find an adviser in your area.
Eviction for rent arrears
You part-rent and part-own your shared-ownership home. If you don't pay your rent you can be evicted for rent arrears.
As a last resort, the scheme may buy back some or all of your shares in your home. This is called downward staircasing.
Contact the National Debtline for debt help and advice if you have payment problems.
Benefits to help pay the rent and mortgage
If you're out of work, there is limited help available to help you pay for your home.
Support for Mortgage Interest could help you with your mortgage for a limited period if you claim income support, jobseeker's allowance, employment and support allowance or pension credit.
You can claim housing benefit to help pay your rent if you are out of work or if you are in work but have a low income. This help is not time limited.
Once you own 100% of your home, you can rent out your home providing your mortgage provider agrees.
If you part-own your home, you are not usually allowed to sublet or rent it out. You will be in breach of your shared-ownership lease and could be at risk of losing your home if you sublet without the scheme's written agreement.
Some schemes say they may allow you to rent out your home in exceptional circumstances only. You'll need to ask your scheme to consider your request and get permission in writing.
Lodgers in shared-ownership homes
You are usually allowed to rent out a room to a lodger. Check if you need your scheme's permission.
Find out more from Gov.uk about renting out a room in your home.
You must carry out a right to rent immigration check on any lodger who moves in after 31st January 2016.
Find out more from Gov.uk about right to rent immigration checks.
How to buy more of your home
After you have bought a shared ownership home, you can buy more shares in it. This is called staircasing.
The cost of the extra shares is based on the value or your home when you buy more shares.
You pay valuation and legal fees each time you buy more shares.
Housing associations in some areas don't allow you to buy 100% of your home.
How to sell your shared ownership home
You can sell your shared-ownership property at any time.
For some schemes, you may have to pay back some or all of any discount you received if you sell within the first 5 to 10 years.
The scheme has the right to find a buyer for your home or to buy it back itself if you don't own 100% of the shares in your home. Even if you own 100% of your home, you may still need the scheme's permission to sell.
You may only be allowed to sell to people living or working in the local area.
Succession in shared-ownership homes
If you die and the lease for your home is in joint names, the lease transfers to the other joint owner.
If the lease is in your name only, you can leave it to someone in your will.
Get advice from a solicitor if you are not sure who can succeed to a shared-ownership home.
Use the Law Society directory to find a solicitor in your area.
Last updated 30 Mar 2016 | © Shelter
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