Shared Ownership Conveyancing Solicitors

Shared ownership can be a great option if you’re struggling to afford a home outright. It allows you to buy a share of a property and pay rent on the rest, making it more affordable than buying a home on the open market. You also have the option to increase your ownership over time through “staircasing.” 

However, it’s important to consider the ongoing rent and service charges, which can increase over time. Shared ownership properties are usually leasehold, meaning you don’t own the land, which can come with additional fees and restrictions.

If you’re unsure, it’s a good idea to seek legal and financial advice to ensure it’s the right choice for you. At GD Property Solicitors, we can guide you through the process and help you make an informed decision.

For a Shared Ownership mortgage, the deposit required is typically based on the share of the property you’re purchasing, rather than the full market value. Generally, you’ll need a deposit of around 5% of the share you are buying. For example, if you’re purchasing a 50% share of a property valued at £200,000, your deposit would likely be 5% of £100,000, which is £5,000.

However, the exact amount can vary depending on the lender and your financial situation. It’s always a good idea to speak with a mortgage advisor to understand the specific requirements for your circumstances.

Pros:

• Lower Initial Cost: You only need to buy a share of the property, making it more affordable than buying outright.
• Option to Increase Ownership: You can “staircase” to buy more shares over time, eventually owning the property outright.
• Lower Rent: Rent on the unowned portion is typically cheaper than market rent, making it more affordable than private renting.

Cons:

• Ongoing Rent and Service Charges: You’ll still pay rent on the share you don’t own, and service charges can increase over time.
• Leasehold Ownership: Shared ownership properties are usually leasehold, which comes with additional fees and restrictions.
• Limited Availability: Shared ownership properties may be limited in some areas, and you’ll need to meet certain eligibility criteria.

Ultimately, shared ownership can be a good option for those looking to get onto the property ladder, but it’s important to consider the ongoing costs and lease conditions.

Shared ownership homes are typically leasehold because the housing association or landlord retains ownership of the land the property sits on. As a leaseholder, you own the property for the duration of the lease, but the land remains owned by the freeholder (usually the housing association).

This setup allows housing associations to manage the shared ownership scheme and ensure properties are available for affordable housing initiatives. It also means they can maintain control over the property’s long term management, including the structure and communal areas.

While leasehold ownership can come with additional fees and restrictions, it is a common arrangement in shared ownership to keep the properties affordable and under regulated management.

If you purchase a shared ownership home, you’ll have several ongoing costs to consider:

• Mortgage Payments: You’ll pay a mortgage on the share of the property you own, which is usually similar to a standard home loan.
• Rent: You’ll pay rent on the portion of the property you don’t own. The rent is typically lower than market rent, but it can increase over time.
• Service Charges: As a leaseholder, you’ll likely be responsible for service charges, which cover the maintenance of communal areas and the building’s upkeep. These can also increase over time.
• Ground Rent: Depending on your lease agreement, you may need to pay ground rent, which is a fee for the land the property sits on.

It’s important to factor in these costs when budgeting for shared ownership, as they can impact your monthly payments.

In most cases, you cannot sublet or rent out your shared ownership home without permission from your housing association or landlord. The terms of your lease will outline whether subletting is allowed and under what conditions.

Housing associations typically require that you live in the property as your main residence, and any request to rent out the property (either in full or in part) must be approved. If you do want to rent it out, you’ll need to seek consent, and it’s possible that restrictions, such as rent caps or specific rules, could apply.

Always check your lease agreement and speak to your housing association to understand the rules and potential consequences of subletting.

If you pass away or your circumstances change, such as through separation or financial hardship, the fate of your shared ownership depends on your lease agreement and the policies of the housing association.

If you die, your share in the property becomes part of your estate and can be inherited by your beneficiaries, in line with inheritance laws. However, the housing association may have the right of first refusal to buy back your share, typically offering a price based on the current market value of the property.

If your circumstances change, such as during separation or divorce, your share may be transferred to your partner or sold, depending on the legal arrangements. In this case, you will need to follow the terms laid out in your lease and may want to consult legal advice. If you face financial hardship and can no longer afford the mortgage payments or rent, the housing association may assist, but they might also have the right to reclaim the property or offer it for resale.

It’s essential to carefully review your lease agreement and seek professional advice in these situations to ensure that your rights are fully understood and protected.

Yes, Stamp Duty Land Tax (SDLT) may apply when you buy a shared ownership property, but how much you pay depends on a couple of factors. When you first purchase a share, you can either choose to pay SDLT on the full market value of the property or just on the price of the share you’re buying. If you go with the second option, you may need to pay further SDLT on any additional shares you buy later (this is called “staircasing”), if the total amount you’ve paid exceeds the SDLT thresholds.

As of now, the standard SDLT threshold for most residential properties is £125,000, so you won’t pay SDLT on the first £125,000 of the purchase price. First time buyers who meet certain criteria may qualify for SDLT relief, paying 0% on the first £300,000 for properties costing up to £500,000. If the price of your initial share, or any future shares, is within these limits, you may not pay any SDLT at all. However, once you cross the threshold, the usual SDLT rates will apply.

Because the rules around SDLT, shared ownership, and staircasing can get a bit complex, we recommend getting tailored advice to make sure you’re paying the correct amount and claiming any reliefs available to you. Our shared ownership solicitors will advise you on the most tax efficient option and handle the SDLT return filing to ensure you’re fully compliant. Always seek professional advice to navigate the specifics of SDLT in your shared ownership transaction.

Yes, it is highly recommended that you hire a solicitor when purchasing a shared ownership property. The process can be more complex than a traditional home purchase due to the involvement of lease agreements, housing associations, and additional legal considerations, such as rent payments on the unowned portion and the right to “staircase” to full ownership.

A solicitor will talk you through the entire process, ensuring you understand the terms of your lease, your rights and responsibilities, and the financial implications of the shared ownership scheme. They will also liaise with the housing association, your mortgage lender, and other parties involved to ensure everything is in order and that the transaction proceeds smoothly.

Having a solicitor will provide peace of mind and help you avoid potential legal pitfalls, making the process of buying a shared ownership property as straightforward as possible.

The shared ownership conveyancing process typically takes between 6 to 8 weeks, though this can vary depending on factors such as the complexity of the transaction, the responsiveness of the housing association, and the speed of your mortgage lender. If you’re staircasing to buy additional shares, the process may take longer due to the need for property valuations and further negotiations.

Your solicitor will work to ensure that all legal requirements are met, including reviewing the lease agreement, arranging surveys, and liaising with the housing association and lender. While the process may take a little longer than a standard home purchase due to the added steps, GD Property Solicitors aim to keep things moving smoothly and efficiently, keeping you informed at every stage.