River Finance Ltd

River Finance are Mortgage and Protection Advisers. We offer a first class service in helping you find the most appropriate products for your mortgage and protection needs from a comprehensive range of mortgages from across the Market. Our qualified advisers help reduce stress by explaining the advice clearly and honestly through every stage of a transaction, making sure you understand, and are happy with the terms of any products we recommend.

Shared ownership home

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Shared Ownership

What is shared ownership housing?

Shared-ownership is a great way into home ownership and is the main affordable housing scheme. If you can't afford to buy outright, you can part buy/part rent your home.

You might buy a 25%, 50% or 75% share in your home. You pay a rent on the share that you don't buy normally set at an 'affordable' rate of, say, 2.75%. The bigger the share that you purchase, the less rent you have to pay. When you can afford to do so, you can buy more shares until you own your home outright in a process known as 'staircasing'.

The other share in a shared ownership property is usually owned by a 'housing association'. Alternatively, some shared ownership homes are provided by house builders directly on schemes called 'shared equity'. The Homes and Communities Agency refers to such schemes as 'Equity Loan' schemes because the Government provides a loan to buy part of the home. Help to Buy is the latest Government equity loan scheme, following on from HomeBuy Direct.

Who can buy shared ownership housing?

Shared ownership housing schemes are usually intended for people who cannot afford to buy a suitable home in any other way. However, the way in which this is defined will vary considerably with some shared ownership schemes merely being restricted to first time buyers and others to applicants living within a certain borough. Generally, priority goes to the following groups in the first instance, in order of priority: existing social tenants; serving military personnel; and then on equal priority ranking, local priorities as set by Local Authorities.

When a new housing scheme is developed that includes shared-ownership homes for sale, housing associations will usually advertise shared ownership properties for sale. If you are interested in shared ownership housing apply to the local authority or a housing association that offers shared ownership housing in your area as soon as possible.

You don't have to find a new housing development to be able to buy a shared ownership property. When shared owners want to move home, their property will either be offered to the housing association to find a buyer, or will be advertised in the local estate agents (i.e. as a second hand 'resale' property as described above).

Who does the repairs on shared ownership properties?

The shared ownership lease between you and the housing association will set out your rights and responsibilities as a shared owner. Although you have not bought the property outright, you will generally have the normal rights and responsibilities of a full owner-occupier. In particular, you will generally be responsible for the cost of repair and maintenance to your home, paid through a monthly fee known as a 'service charge'.

What is 'Help to Buy'?

Help to Buy is a type of shared equity or equity loan product. This type of scheme is where the purchaser buys a home in the usual legal way, taking 100% ownership of the property from the outset. However, part of their deposit is in the form of an 'equity loan'. With First Buy, the equity loan makes up no more than 20% of the deposit and the customer would have put down their own 5% deposit. The remainder of the purchase is a mortgage for 75% of the price giving the customer access to potentially competitive 75% LTV mortgages yet putting down just a 5% deposit of their own. The 20% equity loan is shared equally between the developer and the Government. Hence, Help to Buy is a Government affordable housing scheme because it includes a Government equity loan for home purchase. Help to Buy equity loan follows on from a previous shared equity scheme with a Government equity loan called Homebuy Direct. This had a slightly different arrangement but was broadly similar to Help to Buy.

What is 'FIRST STEPS'?

FIRST STEPS is the Mayor of London's brand to promote low cost home ownership throughout Greater London. FIRST STEPS London will have its own branding for London equity loan/shared equity and shared ownership/part buy part rent in the capital.

What is 'shared equity'?

Shared equity is not the same thing as shared ownership. With shared equity, you generally use an 'equity loan' to form part of a deposit but the person buying the home owns the whole property (though the provider of the equity loan usually has an agreement to share in any appreciation). From a customer's perspective, the main difference between the two schemes is that you are likely to need a larger deposit on shared equity as the shares typically start from 75%, compared to as little as 25% on shared ownership. Also, the main providers of shared equity and other equity loan schemes tend to be major housebuilders. The main shared equity scheme is Help to Buy.

 

Your property may be repossessed if you do not keep up repayments on your mortgage.


The FCA does not regulate some forms of buy to let mortgages.

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