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Fri 10th September, 2010
News
Shared Ownership – the revolutionary step for first time buyers |
11th October 2006 |
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With the current high cost of living many people are refrained from purchasing their first homes, however the Government has introduced the shared ownership homebuy scheme as a revolutionary step for first time buyers to enable them to take the “first step” on the property ladder.
Eligibility would depend on whether the first time buyer was on a low income and an existing social housing tenant or on the local authority or housing association waiting list.
Through shared ownership, the first time buyer could purchase a share of a property from a housing association and pay rent on the remaining share.
The shared owner will generally buy a 25%, 50% or 75% share of the property and this is invariably done by taking out a mortgage. The shared owner should not find this a difficult task as many reputable lenders are now keen to lend on a shared ownership property.
Shared ownership homes may be new or renovated flats or houses. Some housing associations even offer many varieties of shared ownership schemes such as the new build home buy where a housing association will work closely with a developer and the open market home buy where you may choose any property available on the open market.
Once completion has taken place the shared owner will be a leaseholder of the housing association, which will retain the freehold of the property. The leaseholder will usually have a 99 year lease on the property.
The lease will outline the rights and responsibilities of the shared owner and in essence will allow the shared owner to live in the property as owner-occupier for the length of the lease. It will entitle the shared owner to buy further shares until, in most cases, the property is owned outright. Although the property is not owned outright initially, the shared owner would have the normal rights and responsibilities of a full owner- occupier.
Other points in the lease outline the shared owner’s responsibility for repair and maintenance of the property and for payment of rent and service charge.
It must also be noted that the lease itself once drafted must be approved by the Housing Corporation who are the national Government agency that funds and regulates housing associations in England, therefore the housing association will not be able to add any onerous clauses to the lease itself.
There are around 2000 housing associations in England and with the Governments' keen approach to the funding of the scheme it would certainly seem that shared ownership is the way forward for those on low income trying to obtain the first step on the property ladder.
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