Are you considering purchasing a shared ownership property? Or perhaps you are already a shared owner and are facing legal issues related to your property? In either case, it is important to have a shared ownership solicitor who is well-versed in property law and can help you navigate any potential disputes.
How Can Bretherton Law Help?
Our experienced team of specialist shared ownership solicitors offer their services for a fixed fee and offer an exemplary level of client care throughout the conveyancing process.
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For a friendly initial chat and a fixed fee quote please use the contact form or call 01727 869 293.
What is Shared Ownership?
Understanding the Basics
Shared ownership housing schemes work by allowing individuals to purchase a share of a property, usually between 25-75%. The remaining share is owned by a housing association or the developer, and the buyer pays rent on this share.
Shared ownership properties are usually leasehold, meaning that the buyer owns the property for a set period of time (usually 99 years) but not the land it is built on. This is where a shared ownership solicitor comes in – they can help you understand the terms of your lease and ensure that your rights as a shared owner are protected.
To participate in a shared ownership scheme, you typically need to meet certain criteria set by the housing association or developer. These criteria may include income requirements and eligibility for affordable housing.
Once you have purchased your share, you will have the same rights and responsibilities as any other homeowner. You can live in the property and make it your home. However, there may be certain restrictions in place, such as seeking permission from the housing association if you wish to make alterations to the property.
Over time, you have the opportunity to increase your share in the property through a process called “staircasing.” This means buying additional shares until you eventually own the property outright. The price of the additional shares will depend on the current market value of the property at the time.
It’s important to note that shared ownership schemes are regulated by the government and are subject to certain rules and regulations. Working with a shared ownership solicitor can help ensure that you understand the terms of your lease and that your rights as a shared owner are protected.
Staircasing is the process of increasing your share in a shared ownership property over time until you eventually own the property outright.
Here is an explanation of the process:
Assessing Your Eligibility: Before considering staircasing, you should check if your shared ownership agreement allows for it. Some agreements may have restrictions or conditions on when and how you can increase your share.
Valuation: Before purchasing additional shares, you will need to get a valuation of the property. An independent valuer will determine the current market value of the property, which will help determine the price of the additional shares you wish to buy.
Contacting the Housing Association: Once you have the valuation, you will need to contact the housing association or developer that owns the remaining share of the property. They will provide you with the necessary information and guide you through the process.
Purchasing Additional Shares: If you decide to proceed with staircasing, you will need to buy additional shares from the housing association or developer. The price of the shares will depend on the current market value of the property. You may need to secure a mortgage or use your savings to fund the purchase.
Updated Lease Agreement: After purchasing additional shares, your lease agreement will need to be updated to reflect the change in ownership percentage. This ensures that your rights and responsibilities as a shared owner are properly documented.
Costs and Fees: Keep in mind that staircasing involves additional costs and fees. These may include valuation fees, legal fees, mortgage arrangement fees, and stamp duty if applicable. Make sure to budget for these expenses.
Repeating the Process: Staircasing can be done multiple times, allowing you to gradually increase your share in the property until you eventually own it outright. Each time you staircase, you will need to go through the valuation, contacting the housing association, and purchasing additional shares steps.
It’s important to note that the availability and terms of staircasing may vary depending on your shared ownership agreement and the policies of the housing association or developer. Working with a shared ownership solicitor can help you navigate the process and ensure that your rights as a shared owner are protected.
Shared Ownership Eligibility
Shared ownership housing is designed to help people who cannot afford to buy a home outright. Eligibility criteria for shared ownership housing may vary depending on the specific policies of the housing association or developer.
Generally, the following factors can determine eligibility:
Income: There is usually a maximum income threshold to be eligible for shared ownership. This is to ensure that the scheme benefits those who genuinely need assistance. The specific income requirements may vary depending on the location and the number of people in the household.
First-time buyers: Shared ownership properties are often targeted towards first-time buyers. Some housing associations prioritise applicants who have never owned a property before.
Local connection: In some cases, housing associations may give priority to individuals who have a local connection to the area where the property is located. This could be through employment, family ties, or other factors.
Housing need: Priority may also be given to those who are in immediate housing need, such as individuals or families living in overcrowded or substandard accommodation.
It’s important to note that these eligibility criteria may vary, and it’s best to consult with the specific housing association or developer for the shared ownership property you are interested in. They will be able to provide you with the most accurate and up-to-date information regarding eligibility requirements.
Selling a Shared Ownership Property
Selling a shared ownership property can be a bit more complex than selling a traditional property which is why using a specialist shared ownership solicitor is advisable.
There are certain steps and regulations that need to be followed:
Notify the Housing Association: Before putting your shared ownership property on the market, you will need to inform the housing association that owns the remaining share. They may have certain requirements or conditions that need to be met before you can proceed with the sale.
Valuation: The property will need to be valued by an independent valuer. The valuation will determine the market value of the property and the price at which you can sell your share.
Find a Buyer: Just like selling any property, you will need to find a buyer who is interested in purchasing a shared ownership property. It’s important to note that the buyer will also need to meet the eligibility criteria set by the housing association or developer.
Offer to the Housing Association: Once you have found a buyer and have a valuation, you will need to offer your share of the property to the housing association. They will have a certain period of time to decide if they want to purchase your share. If they decline, you can proceed with selling it to your buyer.
Legal Process: Like any property transaction, there will be a conveyancing process involved in selling a shared ownership property. You will need to work with a shared ownership solicitor to handle the conveyancing and legal documentation.
Key Elements of Shared Ownership to be Aware of
Shared ownership housing schemes can offer many advantages, such as the opportunity to get onto the property ladder with a smaller deposit and lower mortgage repayments. However, there are also some potential pitfalls that buyers should be aware of. Here are a few:
Limited control: With shared ownership, you typically own a percentage of the property and rent the remaining share from the housing association. This means that you may have limited control over certain aspects of the property, such as making significant modifications or subletting.
Staircasing costs: If you decide to increase your share of the property over time (staircasing), you will need to pay for a valuation each time, as well as any associated legal fees and mortgage costs. These expenses can add up and make staircasing more expensive than initially anticipated.
Resale restrictions: When you decide to sell your shared ownership property, there may be certain restrictions imposed by the housing association. For example, they may have the right to find a buyer for your share before you can sell it on the open market. This can limit your options and potentially delay the sale process.
Affordability concerns: While shared ownership can make homeownership more accessible, it’s important to consider the ongoing costs. In addition to your mortgage repayments, you will also need to pay rent and service charges to the housing association. These costs can increase over time and may affect your overall affordability.
Limited availability: Shared ownership properties are not as widely available as traditional properties for sale. This means that it may take longer to find a suitable property, especially in certain areas or during periods of high demand.
It’s essential to consult with a shared ownership solicitor or a property professional who specialises in shared ownership schemes to fully understand the potential pitfalls and make an informed decision.
Stamp Duty and Shared Ownership
Stamp Duty Land Tax (SDLT) implications for shared ownership properties can be complex and depend on various factors but a specialist shared ownership property solicitor will fully understand the various rules and exemptions for example:
First-Time Buyers Relief: If you are a first-time buyer purchasing a shared ownership property, you may be eligible for First-Time Buyers Relief. This means that you may be exempt from paying SDLT on the portion of the property that you are purchasing. However, if the property’s market value exceeds the threshold for this relief, SDLT will still be payable on the remaining share.
SDLT on the Rent Element: In shared ownership, you will typically pay rent on the share of the property that you do not own. SDLT is not payable on the rent element, as it is considered rental income rather than a property purchase.
Staircasing and SDLT: When you decide to increase your share of the property through staircasing, SDLT may be payable on the additional share that you acquire. The amount of SDLT will depend on the value of the share you are purchasing and the current SDLT rates applicable at the time of the transaction.
Shared Ownership Property and Remortgaging
When it comes to shared ownership properties and remortgaging, it is important to consider a few key points:
Firstly, if you are looking to remortgage your shared ownership property, you will typically need to obtain permission from the housing association or the shared ownership provider. They may have specific criteria and requirements that need to be met before you can proceed with the remortgage. Additionally, when remortgaging a shared ownership property, you will need to consider the valuation of the property. The valuation will determine the amount of equity you have in the property and will play a role in determining the terms of the remortgage.
It is also worth noting that the process of remortgaging a shared ownership property may be different from remortgaging a traditional property. This is because you only own a share of the property, so the mortgage lender may have specific requirements and restrictions in place. You may also want to consult with a specialist remortgage solicitor to ensure you fully understand the terms of your remortgage.
Get in Touch
We are based in the centre of St Albans City. Our shared ownership solicitors provide residential conveyancing services across the UK and our team can help you with your property transaction with a level of client care not offered by many conveyancing firms. Over the last 50 years we have built an enviable reputation – but don’t just take our word for it, take a look at what our clients say about us in our testimonials.
Please get in touch for a fixed fee conveyancing quote via the contact form or call us on 01727 869 293. (If you telephone us your call will be answered by a real person no recorded voice saying press this and that number).