Knowledge Guides

New Shared Ownership Model Guide

Posted May 9, 2024
New Shared Ownership Model Guide

The UK government continues to address housing affordability through initiatives like the Affordable Homes Programme (AHP). The latest phase, covering 2021-2026, introduces several updates aimed at making home ownership more accessible.

What is the Affordable Homes Programme 2021-2026?

The AHP is a key government initiative managed by Homes England. It’s designed to boost affordable housing availability in England. With a budget of about £11.5 billion for 2021 to 2026, this programme aims to support the construction of up to 180,000 new homes, though actual numbers may vary with economic conditions.

One major update in this phase is the introduction of a new shared ownership model which broadens access to home ownership. This guide will explain how this model works and what it means for potential homeowners.

Key Features of the New Shared Ownership Model

The new shared ownership model under the AHP 2021-2026 brings several changes to make buying a home easier and more affordable.

What is the minimum share purchase now?

Previously, buyers had to buy at least 25% of their home. Now, you only need to buy 10%. This lower starting point helps more people begin their journey towards homeownership.

How has incremental buying changed?

You can now buy additional shares in your home in smaller increments of just 1% after the first year. Before, the smallest increment was 10%. Also, fees during this period are lower, making it cheaper and simpler to increase your share in the property.

What about repairs and maintenance?

For new homes under this scheme, landlords will handle essential repairs and maintenance costs for ten years. This change takes away some financial stress from new homeowners.

These updates aim to make owning a home more accessible by lowering upfront costs and reducing financial burdens during early ownership stages.

What about lease length?

The new lease length for shared ownership homes has been extended from 99 years to 990 years.

What about information before buying?

KID (Key Information Documents) have to be provided that contain information on the property.

Benefits of the New Shared Ownership Model

  • Increased Accessibility – Lower initial costs make it easier for people with limited savings to buy a home.
  • Flexibility – Homeowners can buy more shares in small steps as their finances allow, increasing their ownership over time.
  • Reduced Financial Burden – Major repair costs are covered initially and the process to increase ownership is simplified, easing financial stress for homeowners.
  • Longer Lease – Leases are now 990 years, providing more security in the future.

Eligibility and Application

To be eligible for the shared ownership scheme, you typically need to meet certain criteria. This often includes having a household income below a set threshold and being either a first-time buyer or someone who can’t afford to buy a home without help.

Application Process:

  1. Registration and Eligibility Assessment: You must register with a housing association who will assess if you qualify.
  2. Property Search: Look for suitable shared ownership properties in your preferred area.
  3. Applying for a Property: Apply for the property you choose by submitting financial details.
  4. Getting a Mortgage: Arrange a mortgage for the portion of the home you are buying.
  5. Completion and Moving In: After all your paperwork is complete, finalise the purchase and move into your new home.

This process helps ensure that those who need support in purchasing their own homes have access through structured steps, from registration to moving in. This process may vary depending on the housing association and circumstances.

Challenges and Considerations

The new shared ownership model offers many benefits, but potential homeowners must think about several factors. These include ongoing costs such as mortgage payments, rent for the part of the property you don’t own, maintenance costs after the first 10 years, and how partial ownership might affect your ability to move house.

Challenges and Considerations

The new shared ownership model offers many benefits, but potential homeowners must think about several factors. These include ongoing costs such as mortgage payments, rent for the part of the property you don’t own, maintenance costs after the first 10 years, and how partial ownership might affect your ability to move house.