Category: Shared Ownership

Overview

I have extensively written on the topic of shared ownership. In this section, I provide you with some techniques to help you find your ideal shared ownership property and some advice to help you along the way. While, I cannot guarantee you that you will find the perfect shared ownership property. The below will, hopefully help you with your journey.

Visit MoSCOW

MoSCOW is Business Analyst tool for prioritising.

M – Must Have

S – Should Have

C – Could Have

O – Ought to Have

W – Would like to have or some will call it wish to have.

This tool is quite useful before viewing homes to determine priorities for features before you begin looking. It helps save time by helping you to idenfity properties that you are most interested in viewing versus wasting time being a ‘lookie loo.’ A ‘lookie loo’ someone who really does not have an interest in purchasing the property but is just looking. Likewise, it forces you to think about the purchase, what is important to you, what you need, and what is more of a luxury for you.

Basically, prioritisation is from the top to bottom with ‘Must Have,’ being the features you must have to consider the property and these would be your most important features. Whereby, if the property did not have most of them, the property would be one you would not pruchase. ‘Ought to Have,’ would be your next most important features that the property needs for you to consider but if a few were not included, it would not be a deal breaker for you. ‘Should’ and ‘Could’ have are features that are not as important but at least some should be included. Whereas, ‘Would like to have’ being more of features being on your wish list. How many you assign to each category, the criteria for each, and how you assign is your choice.

Expand your search

If you are looking towards shared ownership then you need to have a bigger search area. This is because shared ownership properties are in demand due to their limited numbers, and shared ownership operates on a first come first served basis. From my experience, if you are looking in a limited area because of nearby family or schools, for example, it is likely your search will be quite long. To get around the barrier of limited search area, is to expand your search to include nearby areas.

Expand you searching tools

Some people will advise you to use the Shared Ownership website. This is a great starting point but I would strongly recommend expanding your searching tools. One good tool is On the Market. This site allows you to search your area for shared ownership and to search on a variety of criteria. Another option is entering your search criteria into a search engine. The downside, to using a search engine you may return outdated results.

Keep up to date with new housing developments in your area

Share ownership properties are included with affordable housing requirements, social housing, for planned developments. This means a small number of homes will be allocated shared ownership, I believe the figure is around 10% for social housing. However it is worth noting social housing includes housing for councils and housing associations to rent. In order to be one of the first to apply, you will need to contact the developer to find out the housing association that is managing shared ownership. Once you find out, then you will need to contact them and to keep in contact to get your application in as one of the first. A good way to identify potential shared ownership properties is to follow housing developers on Facebook, for example Taylor Wimpey, Keepmoat, and Barrat Homes. Along with following housing associations in your area.

Look at your finances

Affordability and Credit Checks

The last thing you want to happen once you have found your dream home, is to find out you do not pass the affordability checks or you have an adverse credit history. The realiality shared ownership is not cheap. You will have to pay rent, service charge, a percentage of the building insurance, in many cases a mortgage, and repairs on the property. Furthermore, you will have to go through an affordability check to ensure you can afford the property. Plus, you will need to get a mortgage. Since shared ownership means you will not own the property outright, it means the number of mortgages available are limited and it can mean you will need to put up a larger deposit than if you bought the property.

Cost of Moving

The other side of getting your finances into shape is ensuring you have enough money. Moving is not cheap. You will face changes in your expenses, such as utility bills, council tax, and you may face re-connection fees for services like broadband. Also, you will face having to go through your possessions to see what you will need and what you can throw away. This can mean, the need to replace high value items like television and furniture. Along with hiring a skip to throw away items you no longer need. Next, you need to consider the legal expenses. In the UK, outside of London, a good ‘ball park’ starting figure is £2,000. £2,000 is your legal fees and this does not include your first month’s rent, mortgage + any additional days being charged because you are moving during the month. You will need to factor in at least an additional £4,000 – £7,500 if your property does not come with flooring (carpet and tiling). Finally, you need to account for the cost of your mortgage plus any fees being charged by your mortgage and mortgage broker.

Advice: Maximising your chances

Don’t get attached

The above sections gives you techniques on how to find your perfect shared ownership but it does not tell you how to endure the rejection that comes with shared ownership. To begin with, it is important to see your search as a journey that has an undefined destination. Yes, you may have an idea of the type of property you want, its location, and what it should contain, but it is important not to get attached. When viewing properties, it is easy to get attached to a property and begin to get tunnel vision that leads to an obsession of needing that specific property. Best advice, don’t get attached. Shared Ownership, can be very competitive and brutal. Instead, it is best to search every day and regularly view properties. If you find one you like then start the process to compete for it but continue your search. Because of the competitive nature of shared ownership and because shared ownership is done on a fist come basis, it is easy to give up. Perserveriance, is needed to be able to continue your search.

Be flexible and adaptable

While searching for your perfect shared ownership property, it is important to review what is working and what is not working. This is a journey and to find your perfect shared ownership property you will need to be flexible and open to updating your approach. The more you get ‘locked in’ to a location, type of property, or specific features, for example, the harder it will be to find your ideal property. To be clear, I am not saying you will not find it but it will, most likely, take longer with a lot of rejection. So, the more you can be flexible and adapt to what is available in your market the more likely you are able to succeed.

Final Thoughts

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Government Housing Plans

Over the last few months, in the United Kingdom, we have heard about plans to build 1.5 million homes in 5 years and heard how home ownership is the hallmark of being British. What remains unaddressed in the conversation is the need to reform shared ownership. This topic holds significant importance as it impacts families, workers, and individuals aspiring to enter the property market. Reforming shared ownership can lead to greater protection for those who reside in a shared ownership property, build confidence in the program, and increase sustainability in housing and asset sharing. By exploring innovative approaches and strategies, we can create a more inclusive framework that benefits all parties involved. It’s essential to engage in discussions that focus on this reform, as it has the potential to reshape the landscape of shared ownership for the better.

Legal Black Hole

Owning a shared ownership property is like being a placement for an employment agency. If you work as a placement, you are neither an employee nor an independent contractor. Instead, as a placement, you sit in a legal vacuum where your rights are limited by your agreement with the agency and the limited protection you are given by employment law.

When you purchase a shared ownership property, you become a renter and an owner. This means you rent the part you don’t own and often need a mortgage to buy it. Plus, with many shared ownership properties, you will also pay a service charge and pay a portion of the building insurance. The total cost of ownership can mean you pay more than if you took out a mortgage to buy the property.

Based on my personal experience, shared ownership property locations typically fall into one of two categories. First are areas with crime that the council would like to revitalise. Second, these areas tend to be more rural or suburban in nature. These areas lack connectivity and offer limited amenities. For those who live in these areas and work in an office, it can mean a commute to work, driving distances for groceries, and school. So, if you do not drive, then a part of shared ownership is not open to you.

Reforming Purchaser Rights

In discussions about shared ownership, the rights of the property purchaser are often overlooked. It is essential to recognise that these rights play a crucial role in the overall dynamics of shared ownership arrangements. Buyers must be aware of their entitlements, including the right to access information about the property, influence over decisions related to its management, and the ability to sell or transfer their share under specified conditions. A comprehensive approach to shared ownership should prioritise these rights, fostering transparency and fairness for all parties involved. Did you know when you purchase a shared ownership property, you:

• can be evicted even though you may own a part of the property and, in some cases, own the majority of it.
• Regardless of the percentage you own, you are responsible for paying for all repairs.
• even though you own a part of the property, and in some cases you may be the majority owner. However, you might face restrictions on pet ownership in certain situations.
• The price for staircasing, or increasing your ownership percentage, is based on current market value rather than the purchase price. I feel this is quite punative since you increased the value of the property by maintaining it and improving it. You should, I believe, benefit by being able to increase your share based on the purchase price.
• You can make some improvements as long as they don’t affect the property’s structure.
• Selling can be a complicated process where the housing association may get first right to sell before you use an agent.
• Benefits, from my understanding, can pay for the rent portion on a shared ownership.

The previous government, right before its defeat, introduced limited leasehold reforms. These reforms focused on more transparency about service charges, the right to challenge, and length of time to extend a lease. However, these reforms did not address the disparity leaseholds create nor recognise the duality of being an ower and a leaseholder. Although the reform addressed some fundamental issues, it failed to address the core issue of recognising the ownership interests of leaseholders. I believe there are four fundamental reforms that were missed. Firstly, there should be greater protection against eviction. Secondly, residents should have more freedom to use the property as they see fit. Thirdly, the ability to climb the ladder is determined by the purchase price of the property. Fourth, rights in the property based on percentage owned. Specifically, it allows for increased flexibility in enhancing the property and accommodating pet ownership.

Reforming Planning

Also, I feel something else is being missed. I feel the process of how a property becomes designated as shared ownership gets missed. There is a great disparity between desirable locations, numbers available, and making shared ownership properties accessible. I found there were, at the time of my search, a large number available in less desirable areas but very few, if any, in more affluent or more desirable locations. While I cannot prove it, I do feel NIMBYism (Not In My Back Yard) that is directed towards those who use benefits to pay for their rent on a share ownership. This ultimately forces those who do not want a postcode associated with crime and or anti-social behaviour to either not purchase shared ownership or look for shared ownership far away.

Finally

In my opinion, if shared ownership is to survive, then shared ownership must be reformed. The reform has to include having shared ownership properties in all of the areas of the city, not just those with high crime or rural. Since shared owners undertake the full financial responsibility for the property, then they must be provided more protection from eviction, be given greater latitude to make changes without obtaining consent, and rights should increase as the percentage of ownership increases. Finally, staircasing and selling the property should be simplified to allow the transfer to be easier. Fundamentally, this means the government needs to view the shared property resident as the owner and not a tenant. Without reforming shared ownership, potential purchasers will avoid shared ownership because they will not want all of the responsibility of home ownership without the benefits of own it.

Introduction

Navigating the maze of information on shared ownership can be daunting. This FAQ, drawn from personal experience, aims to simplify and clarify the details for you. Remember, this is a guide; for specific enquiries, consult your solicitor.

1. What distinguishes shared ownership from outright home ownership?

The differences can be viewed through various lenses: costs, objectives, political, socio-economic, or legal frameworks. I prefer to consider the differences in terms of costs and objectives.Shared ownership is a hybrid of renting and home ownership. Generally, you co-own the property with a housing association, which can be a stepping stone towards full ownership. In a shared ownership scheme, you buy a share of the property and rent the remainder, also covering a service charge and building insurance.

Pros and Cons

The upside is the potential to acquire a larger or newer property through shared ownership than if you bought outright. Additionally, properties under shared ownership are often newer, which could mean lower maintenance and energy costs initially.

However, when tallying rent, mortgage, service charge, and building insurance, the total cost might exceed that of an outright purchase. Also, new shared ownership properties may not include furnishings or flooring, adding significant expenses. Legal fees can also be higher due to the dual nature of the agreements: one to purchase and one to rent.

2. Can I negotiate the purchase price?

In most circumstances, it is not possible to negotiate the price.

3. How come not all lenders offer mortgages for shared ownership?

The key factor is the level of risk for the lender. In a traditional mortgage, the bank holds the property title until you’ve paid off the loan. But with shared ownership, the title is split, tying the lender to your lease’s selling conditions and potentially increasing the selling costs. Additionally, market fluctuations, the size of your deposit, and the demand for shared ownership properties can all affect the lender’s ability to recoup costs in the event of a default.

4. Can I make an offer for a shared ownership property?

No, shared ownership is based on a ‘first come, first served’ principle. This means that even if you present a more attractive offer to the seller, the person who finishes their affordability assessments and pays the reservation fee first will secure the property.

5. Do I have to use their mortgage broker?

Initially, you will qualify for the checks. If you decide to move forward, you have the option to secure a mortgage for shared ownership or choose a mortgage broker that meets your preferences.

6. How long does it take from first viewing the property to being able to move into it?

The timeline for acquiring a property can fluctuate widely due to factors such as property type, search volume, mortgage requirements, existing mortgage offers, personal needs, survey processes, duration of checks, property chains, and more. The following table provides a ‘very rough’ estimate and should be regarded solely as a reference point for estimation.

Property Type	Estimation
New build—to be built	3 – 10 months
New build, with mortgage	4 – 6 months
New build without a mortgage	3 – 5 months
Flat	4 – 7 months
Previously owned – with mortgage	4 – 7 months
Previously owned, without mortgage	3 – 5 months

7. How much will legal fees run?

The cost of legal fees for shared ownership can fluctuate significantly. Factors such as having a mortgage, the property type, its location, the necessary number of searches, whether a survey is required, and the chosen firm all play a role. You can expect to pay anywhere from a minimum of £1,500 to a maximum of £2,250 outside of London, with the average cost hovering around £2,000, excluding the initial month’s rent and charges.

Introduction

It is an exciting time; you are now one major step closer to your dream home. After experiencing elation, reality sets in, leading to feelings of panic and anxiety. What do you do?

After completing all of your initial checksand paying your reservation fee, the real work happens.

Finally, Part 1 discussed how to find your property through paying the reservation fee. This section will discuss a generic process that involves instructing your solicitor and ensuring its completion. It is not legal advice, and it should not substitute for it. Furthermore, it is worth noting that each purchase journey is unique and may not necessarily follow this exact path. On this journey, your solicitor will advise you on what is required.

Timeframes

For those who are buying a new build, it can take you 2 months or more before you move into your new home. It can take nearly a year to move into an off-plan home, and it can take another 3–6 months to move into a resale home. Why does the process take so long? This section will delve into the subsequent steps and provide guidance on how to prepare effectively.

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Words of Warning

Once you reach this stage, you need to be aware of two major issues that have the potential to derail your aspirations. First, until contracts are exchanged, either party can withdraw without penalty. This could imply that you have forfeited all your payments, yet you remain free to purchase the property. Secondly, and perhaps most importantly, you should have an agreement in principle (‘AIP’) for your mortgage offer. An AIP notifies the seller of your mortgage approval. Most importantly, you reduce the risk of your seller leaving due to delays.

This prompts a frequently asked important question. Your reservation agreement will include terms such as contract exchange within 28 days or property removal from the market for 28 days. I can’t speak for all shared ownership sellers, but in my experience, delays often lead to seller withdrawal. Generally, if the process advances and the seller receives regular updates, there shouldn’t be any problems.

Upon signing your reservation agreement, make sure you are prepared to proceed by supplying the necessary information and ensuring your availability. Any delays can dearly cost you.

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Finding a conveyancing solicitor

Individuals typically seek out a local solicitor or opt for the solicitor that the housing association recommends. In reality, you can easily complete the conveyancing process online, eliminating the need to visit the office. Therefore, restricting yourself to a local solicitor significantly reduces your options.

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Initial fee and checks

You will be required to pay an initial set-up fee once you find your solicitor. Typically, this will cost between £250 and £500. Once you have paid the fee, you will need to conduct additional checks. These checks are designed to verify the origin of the funds, and the duration of this process may vary depending on the source of the funds.

Your solicitor will identify the sellers’ representatives while conducting the checks, and you will receive the contract pack and contract report about 1-2 weeks after instructing your solicitor.

Solicitor fees will vary based on several factors, such as location, type of property, if a mortgage is involved, value of the property, requirements of the mortgage company, and other factors. A very general estimate is between £1,500 and £2,000. This does not include your deposit, and it does not include the cost of the survey.

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Searches

Generally, searches uncover information about different facets of your property and its surroundings. The cost of each search varies depending on its specific nature, typically falling between £30 and £100. From a purchasing perspective, searches can be either mandatory or optional.

Mandatory searches are those that your mortgage company, insurance coverage, or the law requires. Your solicitor can advise if any searches are mandatory. If you are a cash buyer, you can often choose to forego searches or request additional ones to gain a deeper understanding of your property. Therefore, you can request optional searches to enhance your understanding of your purchases, even though they are not mandatory.

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Title Searches

At some point, your solicitor will run a title search. This will confirm who owns the property and if there are any covenants, rights of access, or attachments to the title. Covenants are restrictions or actions you need to take. An example of a covenant could be fencing no higher than six (6) feet or refraining from hanging laundry outside. Consider utilities and rails as the best examples of right of access. It means someone has the right to access your land and provide an essential service. Examples can include running a gas line below ground on your property, rail tracks crossing a segment of your land, or electrical lines crossing above. Finally, attachments refer to debts that the landowner must settle at the time of purchase. Typically, this will include a mortgage or any unpaid debt that has resulted in a CCJ.

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Property Surveys

In addition to identifying repairs, a property survey may also consider the property’s value and/or the cost of the repairs. The RICS website provides a very informative guide about the types of surveys available.

As for the question, is a survey mandatory or optional? The answer depends on the type of property (new build or resale) and if you have a mortgage. Many mortgage companies will mandate the completion of a survey. The cost will differ depending on the property’s location, size, type, and type of survey. A very rough estimate is somewhere between £400 and £1,200.

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Opportunity to ask questions

Throughout the process, you will have the opportunity to ask questions of your solicitor, who will, when appropriate, also ask questions of the other side on your behalf. You should never contact the other side’s solicitor without first getting permission from your solicitor. Ask your solicitor any questions you have, and if you’re still not satisfied, consider following their complaint process.

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Exchanging contracts and completion dates

Once you’ve finished your searches, surveys, and checks and received answers to your questions, it’s time to exchange contracts. Your solicitor will provide guidance on the necessary procedures for that day, the timing and method of transferring funds, and, if you are renting, the appropriate notice period to give your current landlord.

Once you exchange contracts, you become legally responsible for the property, and on completion, you will need to pay all remaining balances.

How long can you have between exchange and completion dates? If feasible, it is possible to conduct both the exchange and the completion on the same day. This usually happens when there is an onwards chain or you want to immediately move into the property. If you require additional time to secure time off work, hire a mover, and/or start packing, it’s advisable to arrange the exchange and completion dates separately. Please note that certain housing associations may have stipulated in your reservation agreement that completion must take place within a certain number of days after contract exchange.

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Giving notice to your landlord

Once you pay your reservation fee, there is a natural inclination to give notice to your landlord. The best person who can advise you when to give notice is your solicitor. Generally speaking, you should give notice only after you have completed the sale. There are a few reasons for this. The reasons include, but are not limited to, the fact that completion is not instantaneous and can take months or over a year if the property is off-plan, deals fall through, and sales are dependent on a chain. This will mean for a period of time you will be paying rent for two places, but should the agreement fall through, waiting will prevent you from becoming homeless. Upon completion, you will receive the keys to your house.

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Council Tax

Once you have agreed your completion date, you will need to notify your council of your change of address and, if you are moving councils, to let your new council know when you have moved in. If you are facing a change in councils and/or tax bands, then this link will show you how much your council tax will be and how to contact the council about your change.

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What could cause the deal to ‘fall through’?

What factors could lead to the collapse of the deal? There are several reasons why a deal could fall through, including issues with the title, an unsatisfactory survey, financing issues (e.g., unable to secure a mortgage, changes in circumstances that cause the mortgage company to withdraw their offer, the mortgage being insufficient), either party deciding to withdraw from the purchase before contracts are exchanged, and other factors.

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Introduction

This article is written from a buying a share ownership, unoccupied new build perspective. While the following information will provide you some insight into shared ownership, the process and timeline for purchasing resale properties and unbuilt properties are subject to specific dependencies.

So why buy shared ownership? Are you currently renting and aspiring to own your own property, but are you concerned about the current economic situation, particularly the rising taxes on hard-working individuals? Do your concerns lead you to believe that you will always be renting due to your inability to afford homes?

For some, there exists a solution: shared ownership. Not everyone can afford shared ownership, but those who qualify may benefit.

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Shared Ownership Explained

Basically, you share the property’s ownership with the housing association. Typically, you will own between 25% and 100% of the property. In some situations, you can buy as low as 10%, but from my experience, 25% seems to be the lowest you can purchase. You pay the housing association rent, service charges, and insurance for the portion you do not own.

Buying a house outright with a mortgage involves making an offer. Purchasing through shared ownership is competitive and operates on a first-come, first-served basis. The individual who completes their checks first will have the first chance to secure the property. This process takes place regardless of any incentives or premiums offered by other buyers.

Purchasing your share

How do you know how much to buy? Purchasing a shared ownership property is more complex than purchasing a home with a mortgage. It involves a step-by-step process involving a finance company, a housing association, and, in most cases, a mortgage advisor. 

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1st Step: Initial Qualification

What do you want in a property

Consider what you need from your property. Think about your requirements, like location, number of bedrooms, size of the house or flat, if it has a garden, cost, energy efficiency, and other qualities that are important to you. This is the first question you must ask yourself, and it will shape answers to your other questions, such as is shared ownership right for you, can you afford shared ownership,Â

Finding the property

There are several ways to find your property and to help you determine if shared ownership is right for you. Please note that these tools are not associated in any way with this site. They provide a broad estimate of what you can afford and list properties in your area.

There are three ways to find a property under shared ownership. First, via the government.uk website. This search will identify developers offering shared ownership homes for sale, along with links to their respective websites. Another resource is Share to Buy, which offers listings of shared ownership homes. The final option is to utilise online platforms such as Rightmove and OntheMarket.com, where you can search for shared ownership homes using the site’s provided filters.

Regarding your affordability, several online tools, such as a shared ownership calculator, can estimate your shared ownership based on the information you provide. Others, like the shared ownership affordability calculator, can give you an estimate of what you can afford for your monthly payment.

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Making contact and initial screening

Once you find a property you like, you will reach out to the housing association, who will provide you with information about their finance company and contact details. The finance company will do an initial screening to determine if you qualify.

The finance company will notify the housing association and arrange a viewing of the property if you qualify.

What does this mean? It is a hybrid situation, where you will be leased but enjoy the benefits of home ownership. Because shared ownership is a hybrid ownership model, it means that you will pay a mortgage, pay service charges, and pay part of the building insurance.

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Step 2: Viewing and further qualification

At this stage, you will have the opportunity to view the property. It is likely that a representative from the housing association will be there. While the representative may not have all the answers, they should be able to address common questions such as tenancy agreements, the extent of improvements permitted by the housing association, the area, and other general inquiries. Once you’ve viewed the property, you should reach out to the finance company, not the housing association, to discuss your decision to proceed.

Should you wish to proceed, further checks are done, like income, debt, or anything adverse on your credit report, and you may be asked to pull your credit file. This stage is to determine if you qualify for a mortgage, to do a 5-year stress test, and to determine if you meet the housing association’s financial requirements. From my experience, housing associations will have a residual income requirement that can range from 0% up to 20%. Residual income is the percentage of income remaining after paying rent, mortgage fees, service charges, insurance, and other expenses.

If you haven’t already, we will now inquire about the source of your deposit and the amount you plan to contribute. Depending on your response, you may need to provide documentation and bank statements.

Once these checks are completed, the finance company will proceed to search for a mortgage. Really, you don’t need the finance company to find a mortgage. You have the option to find your own mortgage broker or arrange a mortgage on your own. However, if you have adverse credit, low income, or plan on using Universal Credit, then consider using a mortgage broker.

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Step 3: Reservation Fee

If you are the first to complete their checks, then you will get the opportunity to reserve the property. In order to reserve it, you will need to pay a fee, which will vary depending on the property, location, and housing association, but generally expect the fee to be in the £200–£500 range. It is only once you pay your fee that the property will be removed from the market, and if someone pays the fee before you, then you will lose the property. Therefore, it is imperative that you pay your fee as quickly as possible once you complete your checks. Once you have paid your fees, you will need to contact a solicitor to complete the process.

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Timeframe

So, how long does it take from initial contact to paying your reservation fee? A lot depends on how quickly you can provide the information required, the housing association, the finance company, the time of year, and the type of property. The general estimate would be 2–6 weeks to complete the checks and pay the reservation fee. Once you instruct your solicitor, expect 8–12 weeks, on average, before completing. Overall, this means the whole process from beginning to end will be 3–5 months.

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