Shared Ownership

Shared Ownership Shared ownership schemes allow buyers who meet the eligibility requirements to secure a mortgage to purchase a stake (typically between 25 percent and 75 percent) in a property while paying rent on the remaining share to the housing association or private developer who owns the building in which they are purchasing the property. The rent you pay on the remaining portion of the property is charged at a reduced rate.

Property is usually leased, and as a result, you are required to pay a monthly service charge in addition to making a contribution toward major maintenance projects.

It is possible to purchase more of a home through "staircasing," which is the process of increasing your share of the property. It is possible to purchase shares in increments of ten percent, which will lower your monthly rent.

Typically, housing associations or private developers offer shared ownership plans for their properties. The specifics, costs, and restrictions involved vary from provider to provider, so research each one on its own merits and carefully read the fine print of your lease agreement. If you have any query regarding sell or buy house please contact cash home buyers anytime.

What are some of the disadvantages of shared ownership?

1. The cost of maintenance Hopefully, the monthly mortgage payments, as well as the rent, will still make shared ownership significantly less expensive than buy a house fast in Suffolk County outright. But don't forget to factor in maintenance costs, as well as the possibility of future price increases. Besides asking whether there will be a general monthly service charge for caretaking and maintenance of communal areas, find out how you will be responsible for paying for more significant work, such as roof maintenance.

It is important to understand that even though you own a portion of the property, say 30 percent, you are still responsible for the full cost of maintenance and repairs.

2. No renting is permitted.

Renting out the property is also likely to be subject to restrictions, if not prohibited entirely. Subletting is not permitted in the vast majority of situations.

3. Acquiring additional shares in your property can be a costly endeavour.

When it comes to increasing your stake in your property – also known as "staircasing," it's not just about purchasing additional shares that you need to be concerned about. There are additional expenses to consider: In order to confirm the current market value of the property, your housing provider will instruct a surveyor to conduct an inspection.

Legal fees – staircasing will necessitate changes to your existing lease, which will necessitate the hiring of a lawyer.

In the event that you are not eligible for first-time buyer relief, you have two options for paying your stamp duty. The first method involves making a onetime payment in advance based on the market value of the property, while the second method involves making payments in stages. You'll have to do some math to figure out which option is the best for you.

Mortgage application fees – If you are applying to switch lenders in order to purchase your additional share or to take advantage of better interest rates,

you will be required to pay a lender's valuation fee, along with a mortgage arrangement fee, in addition to any penalty your existing lender may impose for terminating your mortgage with them.

4. There are limitations to what you can do.

Check your lease for any restrictions that may apply. Before you make any structural alterations to your home, you will almost certainly be required to obtain written permission from your landlord or housing provider. In some cases, the lease will also require you to obtain permission for redecorating before proceeding with the project.

5. There is a risk of having a negative equity position.

The purchase of a new build property – whether through shared ownership or on the open market – is more likely to make financial sense if you expect to remain in the same location for an extended period of time. In part, this is due to the fact that new-build properties include an additional premium on the sale price that, like a new car, begins to depreciate as soon as you take possession.

If house prices fall, you may find yourself in a situation where you have negative equity and will lose money if you try to sell your home.

6. Issues pertaining to the sale of your stock when relocating.

When you are ready to sell your shared ownership home, the process is not straightforward and can cause you to fall behind on your plans to move up the property ladder. Firstly, the housing provider is likely to have the right to purchase the property before it is marketed to anyone else (this is known as the "right of first refusal"), even if you have purchased 100 percent of the property through staircasing in some instances. This is done in order for your property to be offered to other people on the waiting list who are unable to purchase on the open market at the time.

If your housing provider is unable to find a buyer for your share of the property after a reasonable period of time, you are free to market your share of the property yourself or through an estate agent. However, you will be required to find a buyer who meets the eligibility requirements of the housing provider for shared ownership. Because not all banks offer mortgages that are compatible with shared ownership, your pool of potential buyers may be reduced.

7. Shared ownership does not provide you with any additional protection.

Just because this is a government-sponsored scheme does not imply that you will receive any additional protection.

Costs can quickly spiral out of control. Check to see if you can afford higher maintenance expenses.

While rents will initially be low, expect them to rise over time.

It is your responsibility to ensure that your mortgage loan payments are made on time.