Shared Ownership Conveyancing Solicitors

What is Shared Ownership?

The Shared Ownership Scheme has been introduced by the UK Government to support first-time buyers to get started on the property ladder, or simply find affordable housing.

Shared Ownership means that you will own a share in the property and pay rent under a lease on the remaining share to the housing association, until you have paid 100% of the property value. It essentially means you can part-buy-part-rent a property for a lower initial investment.

With a lower deposit and rent, Shared Ownership property can be appealing to those on a lower budget. If you decide to buy a Shared Ownership home, you will be able to purchase additional shares of the home over time - a process known as staircasing.

Instructing expert Shared Ownership Solicitors can make the difference, and ensure your interests are protected throughout the process. Use our Online Conveyancing Calculator or contact PSR Solicitors today for experienced advice regarding Shared Ownership in Cheshire and North Wales.

What are the benefits of Shared Ownership?

Entering a Shared Ownership agreement is a very viable option for many, especially first-time, young, or lower-budget buyers. Some of the main benefits over a traditional property purchase include:

• Lower initial cost: Prices for properties in most locations in the UK have become out of reach for many. Shared Ownership provides an opportunity for prospective buyers to begin their journey on the property ladder at a lower cost, allowing many to invest in properties they may not otherwise be able to afford.
• Cheaper deposit: Traditional property purchases usually require buyers to pay a deposit that is valued between 10% and 20% of the total property price. With Shared Ownership, buyers could pay as little as 5% of the share they are purchasing, which represents a much smaller upfront investment.
• Smaller mortgage payments: Buyers of a Shared Ownership property only need a mortgage to cover the price of the share they’re purchasing. As such, they will usually secure much lower monthly mortgage payments.
• Opportunity for gradual homeownership: Shared ownership allows buyers to increase their share in the property over time through a process known as "staircasing." As their financial situation improves, they can purchase additional shares in the property, eventually reaching full ownership if they choose to do so. This gradual homeownership approach provides a stepping stone towards complete ownership without the need for an initial large investment.
• Access to desirable locations: Shared ownership enables individuals to live in areas that would otherwise be financially inaccessible. Buyers can choose properties in sought-after locations, such as city centres or desirable neighbourhoods, that they might not be able to afford if purchasing outright. It opens up possibilities for living in areas with excellent amenities, transportation links, and proximity to work.
• Option to sell and move on: Shared ownership offers flexibility for individuals who may need to relocate or change their housing circumstances. If a co-owner decides to sell their share, they can do so at any time, subject to certain conditions. This gives owners the opportunity to move on or upgrade to a larger property when their circumstances change, without being tied down to a particular home.
• Government support: The UK government has been actively promoting shared ownership as a part of its affordable housing initiatives. Various schemes, such as Help to Buy, provide financial assistance, equity loans, and other incentives to help individuals enter the property market through shared ownership.

Specific agreements for Shared Ownership properties may vary, as can the circumstances of the buyers. Each property and agreement will offer their own benefits, and our Shared Ownership Solicitors can ensure you get the best deal possible when approaching this type of property.

What legal limitations does Shared Ownership have?

Because of the basic concept of Shared Ownership, which is to provide an affordable option for homeownership to lower-income individuals, entering this type of agreement will come with certain limitations and obligations, which will be outlined in your leasehold agreement. These should include a share of fees and costs, such as maintenance, mortgage, and taxes, for each of the share owners.

You will not be able to freely sell your share of the property, as the housing association will have the right of first refusal to purchase it back, and transferring the ownership after the death of one of the owners may also be more complex than a traditional property.

If you want more information about your specific circumstance, contact us. Our Shared Ownership Solicitors will assess your agreement to ensure you fully understand the legal considerations involved in your Shared Ownership property.

What is Shared Equity?

Shared Equity means that you will own the whole of the property by paying a small deposit (at least 5% of the agreed sale price) and covering the purchase price with the combination of an equity loan and a mortgage.

The equity loan will have to be repaid, which can be done at the end of the mortgage term, when the buyer moves, or when they can afford to do so with their own savings. How much you owe is represented as a percentage of the value of the property, so you could pay more or less than its original value when the loan must be repaid.

Compared to Shared Ownership, buying under a Shared Equity scheme makes it easier to sell the property. Owners will have much more lenient restrictions, but complications may still arise.

If you are looking to purchase or sell a Shared Ownership or shared equity home in Cheshire or North Wales and you want free advice from a fully qualified conveyancer then please contact us now. Using one of our specialist conveyancers ensures that your property transaction will proceed quickly and with the minimum amount of stress.

What is Staircasing in Shared Ownership?

Staircasing is a process that allows individuals who've entered into a shared ownership agreement to buy more shares of their property over time.

When you first buy a shared ownership property in the UK, you purchase a certain share, usually between 25% and 75% of your home’s value, and pay rent on the remaining share, which is typically owned by a housing association.

As your financial circumstances improve, you may wish to increase your ownership stake in the property. This process of buying additional shares is known as staircasing. Every time you buy another share, the amount of rent you pay to the housing association decreases correspondingly.

The ultimate goal for many people in shared ownership schemes is to staircase all the way to 100% ownership, at which point they become the outright owner of the property and no longer have to pay any rent.

However, it's worth noting that there might be restrictions on how soon and how often you can staircase, depending on your agreement. There are also costs associated with staircasing, including valuation fees and possibly stamp duty. Therefore, it's important to take these factors into consideration and seek specialist legal advice before deciding to staircase. Contact our Shared Ownership Solicitors to ensure you are taking the best and fastest path to home ownership.

How do I Purchase a Shared Ownership Property?

Once you have made the decision to buy a Shared Equity or Shared Ownership home or property, and have made sure that you are eligible for Shared Ownership, you will typically contact the relevant housing association and mortgage advisor and negotiate the purchase price. This will happen through the estate agent, unless you are buying directly from the seller.

If you instruct us at the same time or at an early stage we can arrange with you to have the initial forms and necessary checks completed in readiness. Once your offer has been agreed with the seller and/or housing association we will have the necessary information to hand to immediately start the legal process of purchasing your property without delay. The more quickly and smoothly the transaction runs the less likely a risk of it falling through (aborting).

Once we have received the contract pack from the seller’s or housing association’s solicitor we can commence with searches, investigate the legal title to the property, and raise any relevant enquiries.

Once we are satisfied with all the replies to our enquiries, the results of searches, and are in receipt of any required mortgage offer, a completion date can be proposed. This process may take a little longer depending on how many people are in the conveyancing chain.

Once contracts have been exchanged you can book your removals with the confidence that your seller or housing association is contractually bound to complete on the sale to you.

Should you require a mortgage on the property we will liaise with your mortgage lender, deal with their requirements, and request the mortgage funds in readiness for completion. Similarly, we will also pay for the searches and any stamp duty land tax on your behalf.

Can I sell a Shared Ownership property?

A Shared Ownership agreement will generally put limitations on the terms of the sale of the property, whether it involves a share or the whole property. Each agreement will outline these restrictions, so having a clear understanding of the legal considerations involved is crucial.

If you are attempting to sell a share of the ownership, the housing association will usually have the right of first refusal to either purchase the share back, or offer it to a buyer of their choice who will also enter a Shared Ownership. The price they will offer will be calculated according to the market value of the property at the time of the sale.

If you have achieved 100% ownership of the property, you will usually be subject to much less restrictive rules. In many cases, you may be able to sell the property in the traditional manner.