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Guide to Shared Ownership 


What is shared ownership?


Shared ownership is an affordable way to buy your own home. You buy a percentage of the property and pay rent on the rest. Nottingham Community Housing Association (NCHA) owns part of it, but you’re living there, you decorate it, and you decide when to sell.

How does it work?

You buy a share of a property on a long term shared ownership lease – usually between 25% and 75%. You then pay rent to NCHA on the remaining share. Your lease will outline how much rent you’ll have to pay each month, as well as what your responsibilities are.

To buy your share of a property, you’ll usually need a deposit and a mortgage. Later on, if you’d like to, you can buy additional shares of the property. If you increase your share to 100%, in most cases you’ll become the freeholder, owning the property outright, and you won’t need to pay rent.

Can I buy a shared ownership home?

Anyone who doesn’t own a property in the UK or abroad and has a household income of less than £80,000 per year can apply.
We will give you details on how to apply online. We will carry out an assessment of your application to find out which share is right for you. If you have enough savings to buy a home on the open market, you may not be able to buy a shared ownership home.

What are the initial costs?

When you buy a shared ownership home, you’ll need to budget for:

Reservation fee - You’ll pay a reservation fee to us to reserve your home. This fee will be deducted from the amount due from you when your sale completes. If you withdraw from the sale, we will refund 50% of the fee. The rest will be retained to cover our costs.

Deposit - This is the sum of money you need to put down in order to secure your property, and essentially the first instalment towards buying it. We’ll normally require a deposit equal to 5% of the sale price of the share you’re buying. If you’re buying with a mortgage, your mortgage lender may require you to have a larger deposit to put down.

Mortgage - A mortgage is a loan taken out to buy a property. It’s a fixed amount, and has to be paid back over a certain amount of years. You may have to pay a valuation fee, the legal
fees relating to the mortgage and any fees for the mortgage product. Your lender will confirm these costs for you.

Mortgage valuation - It’s a report by the mortgagee (the bank or building society that’s lending you the money) which values your property and decides how much you can borrow to buy it.

Legal fees – You’re responsible for instructing and paying for your solicitor. Before instructing a solicitor, ask for a detailed estimate of the legal costs.

Stamp duty - This is a tax payable when you buy a property. You may have to pay stamp duty on your new home, depending on the value and whether or not you’re a first time buyer. Legislation on stamp duty is subject to change - you can check at: www.gov.uk/stamp-duty-land-tax

A step by step guide to buying your home

1. Visit the NCHA Sales website to see where we’re building new shared ownership homes
2. Complete an online application form
3. Get a mortgage offer in principle
4. Arrange a visit to one of our developments and choose your new home
5. Reserve your home with a reservation fee
6. Instruct your solicitor and arrange a mortgage
7. A mortgage valuation and legal searches will be carried out
8. Exchange contracts
9. A completion date will be set for you to collect the keys to your new home

What are the ongoing costs?

Once you’ve moved into your new home, your outgoings will be your monthly mortgage, rent and service charge payments.

Rent

The rent is worked out on the share of the property that you don’t own. It’s payable in advance, on the first day of the month by direct debit.

Service charge

The service charge is the extra money you’ll need to pay for things like communal maintenance, repairs within an apartment block and administration.

What about repairs and alterations?

If you live in a house you’ll be responsible for all maintenance and repairs. If you live in a flat, you’ll usually be responsible for repairs inside your home, and we’ll be responsible for the structure of the building along with any communal areas. The costs of the repairs will be recharged via the service charge.

The only exception to this is for repairs which may be covered under a defects liability period with the builder. This relates to new homes and usually covers the first 12 months following completion of the building work.
If you wish to make any alterations to your home you may need to get our permission, so let us know in writing before you go ahead.

How do I increase my share in the property?

The process for increasing your share is known as ‘staircasing’. You may start with a 25% share, but gradually buy more shares to own 50% or even 100% of the property. As you increase your share, your rent will reduce.

If you staircase to 100% ownership you will not pay any rent, but there may still be a service charge to pay. In most cases when you staircase to 100% ownership the freehold will be transferred to you. In some areas, mainly in rural locations, you can staircase up to 100%, but cannot buy the freehold.

This is to make sure future generations can benefit from shared ownership. In these cases if you own over 80% and want to sell, we’ll buy your home back from you at the market value.

What do I do if I want to sell?

You’ll need to contact us in writing to let us know. When you sell, whatever your buyer pays for the property is yours, minus any outstanding mortgage payments you owe.

For a more detailed breakdown of the steps to owning a new home, take a look at our new guide to shared ownership.
  
You can also find information on all the government's Help to Buy schemes at https://www.ownyourhome.gov.uk