Why is Shared Ownership So Appealing?

Currently, the needs of clients have led to investors coming up with creative ways to meet the needs of the customer namely getting a luxurious home, but with less money. The criteria caused real estate owners to consider a new way of selling called shared ownership, which allowed a luxurious property to be owned in parts by interested parties.

Shared ownership schemes are provided through housing associations. You buy a share of your home (25% to 75% of the home’s value) and pay rent on the remaining share.

You will need to take out a mortgage to pay for your share of the home’s purchase price.
Shared ownership properties are always leasehold.

Sourced from: https://www.gov.uk/affordable-home-ownership-schemes/shared-ownership-schemes

The shared ownership offers to sell each party a share of between 25-75% of the home’s value. The next question becomes where and who exactly provides these opportunities. Currently, one of the providers of these services is a HomeBuy agent.

The scheme is provided through HomeBuy agents, who will assess whether you are eligible. HomeBuy agents are housing associations that have been authorized by the government to run schemes for people who have difficulty buying a home on the open market. A few private developers in London also run shared-ownership schemes, but these are rare.

Sourced from: http://metro.co.uk/2011/11/16/shared-ownership-a-beginners-guide-221930/

Luckily, the number of developers offering the scheme is increasing by the day, but now the numbers are low. The changing times has led to the introduction of investors in all ages even seniors. Currently, there is a seniors scheme called Older People’s Shared Ownership.

You can get help from another home ownership scheme called ‘Older People’s Shared Ownership’ if you are aged 55 or over.

It works in the same way as the general shared ownership scheme, but you can only buy up to 75% of your home. Once you own 75%, you will not have to pay rent on the remaining share

Sourced from: https://www.gov.uk/affordable-home-ownership-schemes/shared-ownership-schemes

The seniors can buy a share of up to 75% in shared ownership. Like any other investment, shared ownership has quotas and restriction on the individuals that can apply for the opportunity.

You can buy a home through shared ownership if:

your household earns £60,000 a year or less (or £71,000 a year or less in London for a 1 or 2 bedroom property, or £85,000 a year or less in London for a 3 or more bedroom property)
you’re a first-time buyer (or you used to own a home, but can’t afford to buy one now)
you rent a council or housing association property

Sourced from: https://www.gov.uk/affordable-home-ownership-schemes

You can sell your shared ownership property at any time, but the housing association has the right to try to find a buyer before you put it on the open market. The amount of cash you and the housing association will get from the sale will depend on the market value of the property at the time.

Sourced from: http://www.which.co.uk/money/mortgages-and-property/guides/shared-ownership/what-is-shared-ownership/

Interestingly the offer is only available to people that do not own a home at that moment or used to own a home. The shared ownership gives the client the opportunity to buy a greater proportion of the house at any time after the initial buy in through a process called staircasing.

It is possible to obtain a greater share of your property at any time from the housing association – this is called ‘staircasing.’ The cost of increasing your share will depend on the market value of the property at the time.

To do this, you will need to pay the housing association to carry out a valuation of the property and make sure you have the cash or mortgage finance in place to pay for the extra share.

Sourced from: http://www.which.co.uk/money/mortgages-and-property/guides/shared-ownership/what-is-shared-ownership/

It is beneficial to the client that they can continue to buy more shares of the home until they complete payment for the entire property. Shared ownership promises to help normal people become part owners of a home that they could not initially afford. However, there are still some cons to this arrangement, but the demerits can be ironed out in time.

In practice, this means that shared ownership is just a tenancy, with an expensive downpayment for an option to buy the whole property later. The landlord or housing association remains the owner of the property up to the point of the 100% buyout, and the tenant can be evicted for rent arrears regardless of how much of the property they supposedly own – and without being recompensed for that payment. A case this year suggested there might be a human rights claim for the return of that money, but this is untested.

Sourced from: http://www.theguardian.com/housing-network/2013/sep/03/hidden-dangers-shared-ownership

There are other problems that, though not unique to shared ownership properties, occur more often with them. For example, frequently the housing association will itself only lease a number of flats in a block built by a developer, which it then sub-leases to people on a shared ownership basis. In this situation, the shared ownership leaseholder will often find that they have no way to enforce repairs to the building, as the housing association will have no responsibility for its condition. The shared ownership leaseholder may well face leaks, heating problems, or defective windows but be unable to make the landlord or freeholder carry out repairs, or be compensated, where a social tenant would, at least, be able to get compensation from their landlord.

Sourced from: http://www.theguardian.com/housing-network/2013/sep/03/hidden-dangers-shared-ownership