Affordable Housing - Shared Ownership
Information about Shared Ownership schemes
What Is Shared Ownership?
Shared Ownership is a government-funded scheme where you buy a share of a newly built property sold through a Housing Association and pay that Association a discounted rent on their share. You will own between 25% and 75% of the house, with the rest being owned by the Housing Association. For the percentage that you own, you will need to take out a mortgage and/or use savings. For the percentage that is owned by the Housing Association, you will pay the Housing Association rent and possibly a service charge if it is an apartment. Shared Ownership is particularly useful to those with a regular income, but cannot afford a home in their local area. Gradually, you can buy further shares in the property until you own your own home.
Who Can Buy Through The Scheme?
Shared Ownership aims to help local first time buyers. Priority is given to Solihull Council or Housing Association tenants and serving military personnel, and then to those on the Council's Housing Register. To join the Council's Housing Register please contact Solihull Community Housing. For all Government funded affordable housing schemes £60k is the maximum household income threshold.
What Choice Of Properties Are Available?
Shared Ownership homes will be a newly built house or apartment on an approved development. Prices vary according to location but are expected to be within the reach of those on low incomes, when compared to house prices in the local area. Most applicants buy a 50% share, but you may buy as little as 25% or up to 75% of the property. Shared Ownership homes are made available in one of two ways: new developments and existing shared owners selling their property back to the Housing Association. Choice and availability is therefore limited to what is available at a given time. Various Housing Associations have schemes across the borough and and you can see the developments currently available in Solihull by looking at the Affordable Housing Developments in Solihull page. Resale properties are also advertised on the Orbit HomeBuy website and will be offered for sale under the same terms as originally purchased by the outgoing leaseholder.
What Costs Will I Incur In Purchasing A Shared Ownership Property?
The costs of moving, such as legal fees and stamp duty (stamp duty is only applicable on purchases over £120,000) you will need to meet yourself. If you take out a mortgage to pay for your percentage, you may need a deposit (normally 5% of the mortgage) and meet any arrangement and/or valuation fees. You will also be responsible for the up keep of a property including maintenance and, where applicable, service charges. Decorating and furnishing is also your responsibility.
What If I Want To Move?
If you want to move you will normally have to offer your property to the Housing Association first, where a valuation is normally sought. If not, it will be sold on the open market. Whichever method is used, any increase in property price over the years will be split between you and the housing association. If the price had gone up by £5,000 and you had a 50% share, you would receive £2,500 (less legal expenses). Remember property prices can go down as well as up.
How Do I Apply?
You apply for Shared Ownership through Orbit HomeBuy. The aim of Shared Ownership is to free up socially rented houses or prevent the need to apply for one. Shared Ownership is therefore important in meeting housing needs. If you feel you cannot meet your own housing needs and are not on the Housing Register, you should talk to the Housing Options Team at Solihull Community Housing immediately.
Where Can I Get Independent Help?
Your proposed housing association should always be your first port of call if you have any questions. However, the Citizens Advice Bureaux located around the borough can offer you independent advice if there are issues or points you don't understand. DON'T be afraid to ask!
What will owning my own home mean to me?
There are various responsibilities and costs of owning your own home. Some of the costs associated with home ownership you may currently pay for through your normal rent. The difference with owning your own home is that you may have to pay for them, yearly rather than weekly. This may mean you have to pay a one off bill unexpectedly. Therefore budgeting will be much more important and you are responsible for keeping your home in good condition, not a landlord. There is an endless list of costs but some are provided below.
Mortgage Repayments - A mortgage is a loan that will enable you to pay for your proportion of the property. You will have to pay back the original capital as well as ongoing interest. Interest rates can go up but you can get fixed rate deals, which mean you will know your outgoings over the next five years. For more information talk to an Independent Financial Adviser. Remember do not apply for any mortgage before first talking to Orbit HomeBuy agents as not all lenders provide mortgages for Homebuy schemes. The amount you can afford to borrow depends on your income and savings. Remember your home is at risk if you fail to keep up with repayments on a mortgage or other loan secured on it.
Mortgage costs - In addition to the repayments on the mortgage you will also have to pay an up front fee to the lender. If the home is not new, they will also normally insist on survey to establish the condition of the property.
Mortgage Payment Protection Insurance - If you take out a mortgage and you became ill or was made redundant you will still be required to keep up with your mortgage repayments. State benefit may be able to help but probably not for the first 9 months and then it will only cover interest payments. Under these circumstances Mortgage Payment Protection Insurance may be appropriate for you to meet your mortgage payments. For more information you should talk to an Independent Financial Adviser.
Legal Costs - You will also need to get a solicitor to complete the legal side of owning your own home for you. Stamp duty land tax would normally be payable if the purchase price of the home that you choose is over £125,000, however first time buyers are currently exempt from stamp duty land tax, up to a threshold of £250,000. As part of the legal role, the solicitor will be required to register your details with the Land Registry. For this they will have to pay fee on your behalf. When trying to find a solicitor you should compare prices as the prices they charge do vary, as does what's included. Do not instruct a solicitor to act on your behalf before speaking to Orbit first.
Insurance - If you own your own home you will also need buildings insurance. This is different to contents insurance, which you are probably familiar with, in that buildings insurance covers the structure of the building i.e. the insurance company would pay for your home to be rebuilt if it fell down following an accidental fire. As part of HomeBuy you MUST have buildings insurance. An Independent Financial Adviser can help you find suitable buildings and contents insurance.
Service Charges - If you buy a flat or maisonette then you will have to contribute towards the upkeep of the building. You may pay a service charge in with your rent if you rent a flat or maisonette, but if you buy a flat you may be required to pay the service charge once a year. Most flats and maisonettes pay the service charge to a freeholder/landlord who then maintains the property in a good condition for all residents. It is important to establish at the start what your service charge does or doesn't cover.
Repairs and Decorations - You will be required to maintain and decorate the inside of your home, and if you own a house, the exterior. You may have the skills and expertise to do this yourself or you may need to budget in order to employ somebody to do it for you.
Services - You will need to pay for gas, electricity, water and telephone charges supplied to you home.
Contact Details
Telephone: 0121 704 8486
Email: housingstrategy@solihull.gov.uk