Shared ownership is a scheme that helps people buy a home if they can’t afford the full price. You buy a share of your home, usually between 25% and 75%, and pay rent on the rest. It can be a great option if you want to get a foot on the property ladder.
Guinness Homes is proud to provide award-winning Shared Ownership and private sale homes in areas you want to live.
What is the eligibility criteria for Shared Ownership?
To qualify for a Shared Ownership home, you must meet certain criteria. These aim to ensure that those who need assistance the most can access it.
Basic Eligibility Criteria
- Age: You must be at least 18 years old.
- Income: Your household income should not exceed £80,000 per year (£90,000 in London).
- Financial Capacity: You must demonstrate that you can afford the purchase and ongoing costs.
- First-Time Buyers: You should be a first-time buyer or unable to afford a home on the open market. If you’re selling your current property, you may still qualify.
- No Homeownership: You should not own another property at the time of buying through shared ownership.
Immigration Status
You’ll need to have the right to live permanently in the UK.
Local Connections
Some housing associations may prioritise applicants with a local connection to the area. This could mean living, working, or having family there.
What are the requirements for Shared Ownership?
There are specific requirements you must meet throughout the process. Getting an understanding of these can help you navigate the scheme more effectively.
Financial Requirements
- Mortgage Approval: Before proceeding, obtain a mortgage in principle. This shows that a lender is willing to lend you money to buy your share.
- Savings: You’ll need savings for a deposit, usually 5% to 10% of the share you are buying.
- Additional Costs: Budget for additional costs such as solicitor fees, survey fees, and stamp duty where applicable.
Lease Agreement
Shared ownership is a leasehold arrangement. This means:
- You’ll have a lease agreement that outlines your rights and responsibilities.
- The lease period is usually 999 years but can vary depending on the Shared Ownership model.
Who qualifies for Shared Ownership?
Beyond basic eligibility, certain groups often receive priority status for shared ownership. This may depend on the housing provider and local authority.
Priority Groups
- Military Personnel: Serving members of the Armed Forces have priority.
- Local Residents: As mentioned, local councils or housing associations may have extra criteria favouring local connections.
- Housing Association Tenants: Existing tenants may be prioritised for shared ownership properties.
Employment Status
Your employment status doesn’t necessarily disqualify you. Both employed and self-employed people can apply, but you will need to show stable income.
What is the age and income limit for Shared Ownership?
There isn’t an upper age limit for shared ownership. However, if you are older, lenders may scrutinise your ability to afford the mortgage beyond retirement age. This could affect your borrowing capacity.
The income limit for shared ownership is intended to help those who can’t afford a home independently.
Income Cap
- General Rule: Your total household income should not exceed £80,000 annually. In London, the limit increases to £90,000.
- Combined Income: If buying with someone else, your combined income should still remain within these limits.
Assessing Affordability
- Assessment: Lenders and housing associations will assess whether you can afford the mortgage and rent together with any service charges.
- Evidence: You’ll need to provide evidence of your income through payslips, tax returns, or bank statements.
Can you increase your share in the future?
After purchasing, you can increase your ownership share over time through a process called staircasing.
How Staircasing Works
- Incremental Purchase: Buy additional shares, usually in 10% increments.
- Reassess Affordability: Get reassessed to ensure you can afford the increased share.
- Fees: Be aware of associated costs, such as valuation fees and legal costs.
By staircasing, you can eventually own your home outright, if you choose.
How much is the rent for Shared Ownership?
Rent is an ongoing cost, charged on the share that you don’t own. Other costs may include service charges, especially if the property is in a block of flats.
Rent Calculations
- Rent Amount: Typically based on the market value of the unowned share.
- Examples: If the remaining share is worth £100,000 and the rent is 3%, your annual rent would be £3,000.
Case Study Example
Beth and Tom wanted to buy a home in Manchester but couldn’t afford market prices. With a combined income of £65,000, they investigated shared ownership.
- Initial Steps: They secured a mortgage in principle and saved for a 5% deposit of their share.
- Finding a Property: They searched for properties fitting their needs and found one through a housing association.
- Application: They completed an application demonstrating their eligibility and financial capacity.
Beth and Tom successfully bought a 50% share of their home. Now, they only pay rent on the remaining 50%, which makes owning a property manageable.
Tips for Prospective Buyers
- Research: Look into different housing associations and what they offer. You can check the latest developments from Guinness Homes which are available through Shared Ownership.
- Prepare Finances: Make sure your finances are in order, ensuring that you can cover costs beyond the purchase price. Take a look at our guide for when you are ready to reserve.
- Seek Advice: Consider seeking advice from housing advisors to guide you on specific steps. You can contact one of our panel of solicitors for legal advice.
Final Thoughts
Shared ownership can be an accessible way for many people to own a home. However, it’s essential to clearly understand the rules and processes involved. Be proactive in learning about eligibility and prepare your finances carefully to make the most of this opportunity.
