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Shared ownership is a housing scheme in the UK that allows buyers to purchase a share of a property (usually between 10% to 75%) and pay rent on the remaining portion owned by a housing association or the developer.

Over time, buyers can gradually increase their share through a process known as “staircasing,” which involves purchasing additional shares. This allows individuals who may not afford to buy a property outright to get onto the property ladder.

Here’s how shared ownership works:

  1. Initial Purchase: The buyer purchases a share of the property with the help of a mortgage and a deposit (usually around 5-10% of the share’s value). The buyer will then pay a subsidised rent on the portion owned by the housing association.
  2. Shared Ownership Costs: The buyer is responsible for the mortgage repayments on their share and also pays rent to the Housing Association on the percentage not owned. The housing association is typically responsible for maintaining the property’s communal areas if it is a flat, or if it is a house, none at all.
  3. Staircasing: As the buyer’s financial situation improves, they can choose to buy additional shares in the property. The price of the additional share will be based on the property’s current market value. The higher the buyer’s share, the lower their rental payment will be.
  4. Selling the Property: If you decide to sell the property, the housing association usually has the right of first refusal to find a new buyer for the property. They will also have a hand in valuing the property at the time of sale.

Regarding the legality around shared ownership, it is a regulated process, and all parties involved must adhere to specific legal requirements. The terms of the shared ownership arrangement are detailed in the “Shared Ownership Lease.” This document outlines the rights and responsibilities of both the buyer and the housing association.

Conveyancers, such as the Clarity team, play a crucial role in the shared ownership process by providing legal advice and assistance to the buyers. Our responsibilities include:

  1. Conducting Searches: Clarity will perform various searches on the property to uncover any potential issues, such as planning permissions, or environmental concerns.
  2. Reviewing the Lease: We will thoroughly review the Shared Ownership Lease to ensure that the terms are fair and reasonable for our clients.
  3. Managing the Legal Process: Clarity will handle the legal paperwork, including the transfer of ownership and checking your mortgage offer.
  4. Exchanging Contracts: As your conveyancers, we facilitate the exchange of contracts between the seller and yourself.
  5. Completion: On the completion date we will finalise the transaction, ensuring that all necessary payments are made, and the property’s ownership is legally transferred to the you It is usual for the Housing Association to request 1 months’ rent payment in advance from any new buyers and we will deal with these payments on your behalf.

Conclusion:

Shared ownership provides an opportunity for individuals to step onto the property ladder by purchasing a share of a property and paying rent on the remaining portion. It is a regulated process, and conveyancers play a vital role in ensuring that all legal aspects of the transaction are handled appropriately for both the buyer and the housing association/developer.

Looking for some legal advice?

Clarity is experienced in working closely with local housing associations. If you would like to get in touch with the team to discuss how we can help you get on the property ladder, we’d be delighted to help you. We have offices in Northampton and Milton Keynes and serve the surrounding areas.