If you’re thinking of selling your shared ownership home, here’s everything you need to know about the scheme.
What is shared ownership?
The shared ownership home scheme is when you buy a share of a property and pay rent on the rest. The share that you can buy is typically between 25% and 75%, however some homes will allow you to buy only 10%.
This scheme allows first time home buyers the opportunity to purchase a share in a new build or resale property. The home buyer will pay a mortgage on their share of the property and then pay rent to a housing association for the remaining share.
As the purchaser only needs a mortgage on the share that they own, the amount of money required on the share they’re purchasing is usually a lot lower compared to the amount of deposit that would be required if purchasing outright.
Can you increase your share?
Yes, you can. Purchasers have the option to increase their share during their time in the property through a process called ‘staircasing’. In most cases, they can staircase all the way up to 100% ownership. When this happens, the shared owner will no longer pay any rent, only their mortgage along with any service charges and ground rent.
Why buy a shared ownership home?
The shared ownership scheme is extremely helpful for people who would like to own their own home but can’t afford to buy on the open market.
The benefits include:
- Lower rent compared to the open market. Usually charged at 2.75% of the property value per annum
- In many cases, you can start with as little as 25% share
- The deposit is 5% to 10% of the price of the share, not the full market value for the property
- Until your share reaches 80%, the Stamp Duty Land Tax (SLDT) can usually be deferred
What happens if you want to sell your shared ownership property?
Contact your housing provider
If you would like to sell your property, then one of the first steps is to contact your housing provider and let them know. After that, you will be asked to choose a surveyor to value your home.
Get a valuation
For the valuation of your home, you will have to pay a fee, but you will be informed of the cost before proceeding. If you’re happy to proceed, then the surveyor will visit your property and carry out a survey. This valuation will set the sale price for your home. When this figure has been established, your housing provider will then work out the value of your share.
When the housing provider has the valuation report, they will arrange for you to sign a contract to agree the fee as well as details of how your home will be sold.
Even though you have reached this stage, the valuation does not commit you to selling your home.
Contract of sale
If you still want to sell your home and would like to proceed, then you’ll need to complete and return a contract of sale and include details of the solicitor who will be acting for you when a buyer has been found.
Get an EPC certificate
The next stage is instructing an Energy Performance Certificate (EPC) provider to produce an EPC.
An EPC is important as it provides crucial information on the existing efficiency of your home, as well as giving recommendations on how to improve energy efficiency.
You will only be able to begin the process of selling your shared ownership house when you have confirmed an EPC has been commissioned.
Take photos of the property
The next step is arranging photos to be taken of the property that are suitable for marketing it. It is important that your house looks clean, tidy and presentable in order to ensure that the house is marketed in the best possible way.
Find a buyer
Often there is a long waiting list for shared ownership homes. Your housing provider will have a set amount of time to try and sell your home to other buyers who are looking to purchase through the scheme.
After this set period of time, you will be able to advertise the property yourself, both selling privately or through an estate agent of your choice.
If you haven’t staircased to 100% of the property by the time you wish to sell, then you will be required to sell your home on a shared ownership basis. This means that the buyer will need to meet the required eligibility criteria and will be required to purchase a share equal to or higher than what you currently own.
The penultimate stage. Similar to how you bought the property, the new buyer will have to go through a similar process. It will involve having a financial interview with an independent advisor. If approved and a sale agreed, then the housing provider will confirm the details.
Solicitors on your side and on theirs will contact each other and normal house buying proceedings occur next.
It is always encouraged that you keep in regular contact with your solicitor to make sure that the house buying process runs smoothly.
Contact Robin Mortgage Design
We hope this short article gives you hope and if you would like to discuss your options with a human being, then our team of professional mortgage advisers at Robin Mortgage Design would be happy to help. Just give us a call on 0333 242 386, alternatively, you can fill out our online enquiry form, and we’ll be in touch with you shortly.