Our specialist new build property team have vast experience in acting on behalf of new build purchasers and shared ownership schemes. Unlike many law firms, we have a specialist department that deals exclusively with new build and shared ownership transactions.
What Is Shared Ownership?
Shared ownership provides the opportunity to purchase a share in a property, usually between 25% and 75%. You will pay a mortgage on the share that you own and pay a subsidised rent to a housing association on the remaining share. As you will only need a mortgage on the share that you are purchasing, the amount of money required for a deposit is usually a lot lower than if you were to buy outright.
As and when you can afford to, you can usually buy further shares in the property until you own 100%. This is known as ‘staircasing’.
Purchasing a Shared Ownership Property
Buying a shared ownership property follows a slightly different process compared to a standard purchase. However, with the right guidance, it can be a clear and manageable route onto the property ladder.
Eligibility Check
Shared ownership schemes are designed for people who cannot afford to buy a home outright. Generally, you must be a first‑time buyer or someone who has previously owned a home but cannot now afford to buy on the open market. Your eligibility is assessed by the Housing Association and usually involves income and affordability checks.
Choosing a Property
Once you are confirmed as eligible, you can look for a suitable shared ownership property. These are often new build homes but can also include resales. The property will be offered in shares, typically ranging from 25% to 75%, allowing you to buy what you can afford while paying rent on the remainder.
Arranging Your Finances
You will need to secure a mortgage for the share you are purchasing. As this is a specialist area, many buyers use mortgage advisers who are experienced in shared ownership lending. In addition to your mortgage payments, you will pay a subsidised rent to the Housing Association for the remaining share of the property.
Instructing a Specialist Conveyancer
Once you have selected a property and arranged your financing, it is important to instruct a conveyancer experienced in shared ownership transactions. These purchases involve detailed leases and additional documentation, and specialist advice is essential to ensure that your interests are fully protected.
Making an Offer and Reservation
After making an offer, and once this is accepted by the Housing Association or developer, the property will usually be reserved for you. This allows the legal work to begin.
The Conveyancing Process
Following reservation, we will carry out the necessary legal checks, review the shared ownership lease, raise enquiries, undertake searches and liaise with the Housing Association and your mortgage lender to progress the transaction.
Exchange, Completion and Moving In
Once all legal matters are agreed and your mortgage offer is in place, contracts are exchanged and a completion date is agreed. On completion, you will become the legal owner of your share in the property and can move into your new home. Over time, you may choose to purchase additional shares through a process known as staircasing, increasing your ownership and reducing the rent you pay.
Selling a Shared Ownership Property
If you own a share in a property, you are not free to sell it as you would a normal property. The Housing Association involved has the right to nominate the buyer.
There are usually two ways to sell a shared ownership property:
- By selling the share that you own
- By buying the remaining share of the property and then selling the property as a whole.
Stamp Duty Land Tax on Shared Ownership Properties
You will not need to pay SDLT on a shared ownership property unless the value of the share that you are buying exceeds that at which SDLT becomes payable. This is currently £125,000 or £300,000 for first time buyers.
You can elect to pay SDLT on the full market value of the property. You may choose this option as if you staircase up to in excess of 80%, you may need to pay SDLT. When you staircase to 80%, the full value of the property may have increased, meaning you would be paying more SDLT than if you had paid at the start.
Subletting a Shared Ownership property
Shared ownership leases do not allow you to sublet the property. You are required to live in your home as your main residence as it is a government funded scheme intended to help people to own their own home.
At Spire Solicitors LLP, we are members of the Law Society’s Conveyancing Quality Scheme and have extensive experience both in acting for individuals buying new build homes and for Housing Associations in connection with shared ownership schemes.
