A simple guide to shared ownership
Shared ownership is a buying option that has many benefits and opportunities for both first time buyers and current homeowners, such as a considerably lower deposit requirements and lower rent rates. In this article, we will explain exactly what shared ownership is and how it could be beneficial to you.
What is shared ownership?
Shared ownership or part-buy-part-rent properties are the perfect way for first time buyers or current homeowners to own a new home now while paying what they can afford. The way shared ownership works is you purchase a percentage share of your new home, while paying a monthly rental fee on the remaining share until you are ready to buy in full or sell and move on.
Strata work with a company called heylo to offer the government-backed Home Reach scheme. The scheme allows buyers to purchase a 50-75% share in a new Strata home at selected developments, while renting the remaining share directly from heylo.
Who is eligible for a shared ownership?
You are eligible for a Strata home using Home Reach shared ownership scheme if you meet the following criteria:
* The total income of your household is less than £80,000 per year
* You have at least 5% of the share value saved as a cash deposit
* You are a first time buyer, or a homeowner who cannot currently afford to own 100% of a new home
* Your new home will be your only owned property
* You pass an Affordability Check with Strata and register with a Help to Buy agent
Why should I consider a shared ownership?
Buying a shared ownership property using the Home Reach scheme has a number of benefits. The scheme is flexible to your needs. You can choose a share from 50% up to 75% and you will only need to pay 5% deposit on the share price to buy your new home now.
You don’t need to keep moving and upsizing gradually – you can buy your forever family home now and pay as much as you can afford. You can also gradually increase how much you own, so if your financial situation changes – for example, if you have a pay rise at work or pay off a long-term debt and free up more spare cash – you can buy a larger share or even buy the full 100% at any time.
You’ll also benefit from the same journey as all Strata customers – from choosing your options and personalising your new home to receiving the same two year warranty period and aftercare service. And with our Assisted Selling Plan, we’ll help you to sell your current property, so you can relax and enjoy planning for your new home.
With Home Reach, you pay a monthly mortgage fee on the owned share of the home, while paying a 2.75% rental fee on the remaining share. The below example shows how this adds up.
Will I still be responsible for repairs and maintenance of my home?
Yes. When you buy a shared ownership property, it works in a similar way to buying a new home outright. You live in the new home and are responsible for all running costs, including the repairs and maintenance required on the property, regardless of how much your owned share equals.
Can I sell my shares of the house at a later date?
When it comes to selling a property that you own through shared ownership, you would go about this in the same way as selling any home. However, the benefit of shared ownership is that you can advertise your property for sale at the share price, which opens up a whole new market of homebuyers who can afford to buy your home. The buyer would have the opportunity to buy the same share that you are selling, or purchase a larger share of the home from heylo.
How do I buy a shared ownership property?
Strata offer Home Reach at a number of developments across Yorkshire and the Midlands. If you’d like to find out more about Home Reach and view the homes available to buy using the scheme, get in touch and one of our team will be happy to help.