Shared Ownership
Shared Ownership means that you buy part of a property and rent the other part, usually from a Registered Provider (RP). The RP helps you by letting you buy a share you can afford. This is between 25%, the minimum that can be purchased, and 75%, the maximum.
You then pay rent for the part you do not own. If you buy a smaller share, the mortgage cost goes down but the rent increases. The attraction of Shared Ownership is that you can get nearly all the benefits of owning your own home including security without having to pay the whole cost; it is more affordable.
So, for example, if an individual could afford £100,000 on their income but not afford to buy a flat or house outright for £200,000 they could simply buy a half-share of £100,000, or even a quarter share at £50,000.
You will be the owner and have the same rights and responsibilities as any other home owner. You don't have to share the home with anyone else - unless you want to of course, and it isn't like owning some rooms and not others. You simply share the ownership with an RP.
It is sometimes possible to buy a larger share or even the whole property later on (if you want) and you can sell at any time if you want to move on.
The part that is retained by the RP is rented to the individual. In the case of disabled people the part that is rented will, provided the individual qualifies, be eligible for Housing Benefit.
There are two types of shared ownership currently available
- Home Ownership for Long Term Disabilities (HOLD) coupled with Support for Mortgage Interest (SMI), which is a specialist scheme for disabled people, and;
- Social Homebuy, a more general scheme
HOLD and SMI
If you want to buy a home you will need money to put towards the purchase. You may have money you have saved up or perhaps your family have money you can use. You could also borrow money from a bank or building society as a mortgage.
If you get a mortgage you have to pay a bit of it back each month, but you may be able to get money to help with this if you claim: Income Support, Incapacity Benefit or Employment Support Allowance (Support Group), as well as Disability Living Allowance or Personal Independence Payments, High or Middle Rate Care or Daily Living Component.
If you claim these benefits you may be able to claim an additional benefit called Support for Mortgage Interest (SMI). This pays most, but not all, of the interest on a mortgage of up to £100,000 for you. You will need to pay a 10% deposit on your share, and you also need to pay for the usual solicitor and conveyancing and mortgage broker costs.
The mortgage is eventually paid off using the money you get when the house is sold because you don’t want to live there anymore or you have died. If you have to sell the house for less than you bought it for the Housing Association covers the loss, so you will always have enough money to pay off the mortgage
The Housing Association may be able to get a grant from the Homes and Communities Agency called the HOLD Grant. They will also put some of their own money in as well. Because the Housing Association owns a share of the property, you must pay them rent for their share. You will be able to claim Housing Benefit on this, unless you have more than £16,000 in savings or have paid work for more than 16 hours a week. You can also ask the Housing Association to do the repairs and maintenance that is needed. They will charge you for this, but you can claim Housing Benefit to pay for it.
Together, these benefits may make shared ownership a much more affordable option than you might think. You could also buy your home outright if you have enough money.
More information can be found at: http://www.mysafehome.info/
Social HomeBuy
Social HomeBuy is a scheme available from some Housing Associations or Local Authorities. It is an option that provides tenants with the opportunity to purchase a share in their rented properties.
More information can be found at: https://www.gov.uk/shared-ownership-tenants
Help to Buy
In addition to shared ownership, the Government also currently offers a number of variations on a help to buy principle. They are: Help to Buy Equity Loans, Help to Buy Mortgage Guarantees and Help to Buy Newbuy Right to Buy and Right to Acquire.
Full details of these schemes can be found at: https://www.gov.uk/affordable-home-ownership-schemes/overview