Gardner Leader

Shared Ownership Properties

Typically Shared Ownership schemes are normally organised by a Housing Association and allow you to own a percentage of your home while “renting” the rest from the Housing Association.  A shared ownership property can be either a house, maisonette or flat.

These schemes allow people to take the first step onto the property ladder when otherwise they would not be given the option due to property prices, mortgage finance etc.

When coming to sell or buy a shared ownership property, as well as dealing with the procedures set out on our “Buying your home” and “Selling your home” there are a number of matters that are unique to shared ownership properties.

The Rent

As you will only own outright a certain percentage of your home, you will be renting the rest from the Housing Association under the Lease. Generally the amount of your rent will be determined by market rent.  So, for example, if you are renting 50% of the property you will be charged half of the current market rent for renting the whole of the property. This rent will be reviewed each year by the Housing Association and so is likely to change each year.

Staircasing

This is the term used to describe when you buy further shares in the property. On an initial purchase it is important just to check that the rights are included.

If you currently own your shared ownership property and you wish to increase your share, you need to give notice to the Housing Association of what percentage you wish to purchase. They will then value this percentage to obtain the purchase price. You would need to then instruct us to deal with the legal paperwork for the purchase of your further share. The thing to remember is that on the date you increase your share, the rent you will be paying will decrease as you will now be renting less of the property.

Stamp Duty Land Tax

Stamp Duty is calculated slightly differently on shared ownership properties. When buying a new shared ownership property you are given a choice as to whether to pay Stamp Duty on the market value or just the share you are purchasing.

If you pay Stamp Duty on the full market value now, you will not have to pay any Stamp Duty when you staircase, whereas you might if you only pay on your share.

If you elect to pay Stamp Duty on your share, you normally do not pay Stamp Duty if you are buying an 80% share and the premium you are paying is less than £175,000 (the current Stamp Duty threshold).

Alienation

This refers to restrictions in the shared ownership lease on underletting or selling the property. In general you will not be able to underlet a shared ownership property at all and should you wish to sell the property, you would normally have to offer it back to the Housing Association for a period of time first. The Housing Association would then have this period of time (often 6 - 8 weeks) to find a buyer for the property. The property would be sold for a market value. This re-sale clause will often still apply even if you have bought 100% of the property and now own it outright. 

Mortgage

In order for a mortgage company to grant a mortgage for a shared ownership property, there are certain protection clauses required to be in the lease. For these to take effect, the mortgage offer once issued must be approved in writing by the Housing Association and it is important to make the mortgage company aware that a shared ownership property is being purchased so that the correct clauses are included in the offer.

Our solicitors at Gardner Leader have many years experience advising clients on shared ownership properties and will be able to make sure that this more complex transaction proceeds smoothly by taking care of all the unique shared ownership features.

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