Rebecca Edwards - EDP Property column. Shared ownership

I am thinking of purchasing a ‘shared ownership’ property, what exactly is this?

Shared ownership schemes are provided through housing associations; they enable you to purchase a share in a property and pay a subsidised rent on the remaining share. The initial share purchased is usually between 25 - 75%, with an option to purchase further shares (in most cases). You have to meet criteria determined by the housing association to see if you qualify for such a purchase. On completion of the purchase, you will become the legal owner of the property, subject to the provisions of the shared ownership lease. Although you will only own a share in the property, you will be responsible for the total cost of any repairs and maintenance to the property.

What are the advantages of purchasing a shared ownership property?

Shared ownership purchases are generally a more affordable way to purchase a property in the short term, as the initial deposit required is much smaller and you will only require a mortgage to cover the share you are purchasing. However, please bear in mind you are required to pay rent on the remaining share. It is also a good way to get onto the property ladder as, in most cases, you can purchase further shares in the property and, eventually, own the property outright.

Will I be able to sell the property?

Yes - you are able to sell the percentage share you own in the property at any time. You will need to give notice of your intention to sell to the housing association. They will then carry out a valuation to determine the value of the property and your share. The housing association may also be able to nominate a purchaser for the property. If not, you can sell the property on the open market (but cannot sell for more than the determined valuation). Some leases will also state the property can only be sold to ‘qualified’ persons who met a certain criteria, for example, people live or work in the area in which the property is situated.

Are there any restrictions on the use of the property?

Each shared ownership lease will contain certain covenants, restrictions and obligations, and it is therefore important you obtain legal advice from a lawyer who specialises in this area of conveyancing. Shared ownership leases will contain a restriction that you cannot rent out the property. 



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