Shared ownership is a gateway to ownership of a property where you are unable to afford the full cost of purchasing a property. With Lloyds Banking Group recently pledging £6.5billion towards helping first time buyers in 2013 and lenders now beginning to be prepared to lend up to 90% of the value of a property according to a report from Rupert Jones on The Guardian website (21st January 2013), it seems that you may now have a chance to buy your first home.
Before you buy a shared ownership property though, you should check your income is enough to cover the monthly mortgage, rent and service charge payments you will have to make.
Shared ownership properties are generally only available to certain people. If you are buying a property for the first time or if you are currently renting a council or housing association property then you are likely to have the chance to buy a shared ownership property.
When you buy a shared ownership property, you will usually hold the property under a long term lease from a housing association. The housing association will keep a percentage of the ownership of the property and you will buy the remaining percentage. You should be aware that you will pay a rent to the housing association that relates to their percentage of the overall ownership of the property. You are effectively part buying and part renting your first home.
When you sell your shared ownership property, you will have to inform the housing association. The housing association will then generally have a period of time to find a buyer for the property before you can market the property for sale yourself.
During the time you own your shared ownership property, you can decide to buy some or all of the remaining percentage in the property that the housing association owns. You are not required to buy a further percentage in the property but if you are intending to stay in the property for a long period of time then it may be advisable as it will reduce your monthly rental payments to the housing association.
The position concerning Stamp Duty Land Tax (SDLT) on shared ownership property purchases is more complex than if you were buying a full share in a leasehold flat or a freehold house. In some circumstances, you can pay SDLT on both the initial purchase of a share in the property and also further SDLT when you buy a further share in the property. For this reason, it is important to instruct a solicitor who specialises in shared ownership property work so that you receive accurate advice on your best course of action taking into account your needs.
We have specialist solicitors in our Property Department who can provide you with this tailored advice.