What are the benefits of shared ownership?

One of the biggest barriers to buying a home is often the size of the deposit you need to secure a mortgage.

The benefit of shared ownership is that, unlike buying a house outright, you won’t need such a big deposit because you are only paying for the percentage of the property you are buying.

This means you can get onto the property ladder more quickly than you might if you were saving up to buy a home outright.

It can also sometimes be cheaper than renting, although not always.

You can buy additional shares as time goes by (this is called staircasing). If you sell your shared ownership home you will benefit from any increase in its value.

What you need to know before entering into a shared ownership agreement

Whilst shared ownership is great for some, there can be drawbacks for others.

It is important you understand the full terms and conditions of shared ownership before deciding if it is right for you. Please seek advice from your mortgage broker/advisor.

Are you eligible for shared ownership?

You are normally eligible for shared ownership if:

• Your household earns less than £80,000 per year.
• You’re a first-time buyer or used to own a home but cannot afford to buy one now.
• You are able to obtain or mortgage or have the funds for your share.
• Your income is enough to cover the mortgage, your additional rent, any service charges and household bills.
• You have access to £2,500 to cover the fees for buying your property, plus the deposit.
• You have access to a minimum 5% deposit on the share you are purchasing.

How do you buy more shares in a shared ownership home?

You can buy more of your home after you become the owner. This is known as ‘staircasing’.

The cost of your new share will depend on the value of your home when you want to buy the share, so expect prices to go up or down over time.

What do you do if you want to move from a shared ownership house?

You can sell your shared ownership home at any time.  If you want to sell, please get in touch.

Are there any upfront costs?

There is no fee to pay to us directly. However, you will need funds for other costs associated with buying or moving home, such as:

• Mortgage deposit
• Mortgage arrangement fees
• Solicitor and legal fees
• Removal costs

What are the monthly costs?

In addition to your household bills, you will normally pay monthly rental fees for the share of your home we retain and your mortgage payments on the share you own. Monthly rent is usually calculated at 2.75% per year of our share, for example:

• Your home is valued at £200,000
• You buy a 50% share, so £100,000
• We retain a 50% share, equal to £100, 000
• The annual rent would be 2.75% of £100,000 which is £2,750
• The monthly rent you would pay would be £229.17

On some properties you may need to pay an additional service charge.  Your solicitors will make sure you are aware of any additional fees in addition to these.

What does a service charge cover?

Service charges usually cover the costs of things like estate and ground fees, the upkeep of internal and external communal areas and may also include insurance.

Is Stamp Duty Land Tax (SDLT) payable?

You would usually only need to pay SDLT on the share you are buying and not for the full property value.  However, as rules and limits on SDLT thresholds are subject to change you should check what the current rules are before going ahead.

Do I need insurance?

We provide buildings insurance. It is your responsibility to arrange contents insurance, and we strongly recommend that you do.

Why is the home sold as leasehold?

All shared ownership homes are sold on a leasehold basis, whether it is a house, bungalow or apartment. This is because we are your landlord for the share we retain. If you staircase to 100% and become the sole owner, usually the freehold will be transferred to you.  Shared ownership properties that are in a DPA area will always be leasehold even when you own 100%.

Can I sublet my property to someone else?

Subletting of the whole home is not allowed in shared ownership properties, however, you may be allowed to let a room within your home.  You will need to ask permission first though.

What happens to my share if I die?

You should make arrangements in your will to make sure any of your assets are passed to whoever you want your beneficiary to be.

Can I transfer my lease to someone else?

Yes. This usually happens as part of the selling process, but there may be other times when you want to transfer your lease (or your share of the lease if you’re a shared owner).

You’ll need to appoint a solicitor and we’ll need to agree to the transfer in writing.

Do I need to tell you if you are re-mortgaging?

Yes, you need to let us know if you take out a new mortgage.  If you own a share of your home, you’ll need a consent to re-mortgage notice from us.

How do I make a claim on buildings insurance?

You will need to contact us and we will be able to provide you with the latest insurance documents.  In most cases, you would contact the insurers and deal with them directly. This makes the process quicker and more transparent.

What are my rights and responsibilities?

Your rights and responsibilities are set out in your lease agreement.  Leases differ for most properties so make sure you refer to the actual lease for your home.  All of the terms and conditions will be listed in your lease but if you are not sure about anything in particular please get in touch.

Will I ever stop paying rent?

You will pay rent for as long as we have a share in your home.  If you eventually purchase 100% of the property then you will not have to pay rent but may still have to continue paying any service charges where applicable.

What happens if I miss any rental payments?

If you are struggling to pay your rent you should contact us straight away. We have people who will be able to help you.  Your rent forms part of your contract with Orwell Housing and failure to pay this could end in you losing your home but we will do everything we can to make sure this doesn’t happen.

Can I buy further shares?

In most cases you can purchase further shares up to 100%, and then you will own your home outright. There are a few properties where this is not possible because of the types of lease but if this is the case then you will be made aware of this before buying.  There are costs associated with buying further shares in your home that you should be aware of such as valuations, legal and mortgage fees.

Can I move in the future?

Yes, you can sell your share of the home in a very similar way to how you’d normally sell a house.  You would instruct an estate agent to market your share at the valued price.  Viewings and offers would be managed in the usual way with any buyers being asked to complete an application form and subject to the same eligibility criteria you had to meet when you first bought shares in your home.

Once everything is agreed, the sale goes ahead as normal.  Each sale is different but you should allow at least 12 weeks from sale to completion.  You must let us know before starting the sales process to avoid any delays in the sale.

Shared Ownership Sales First Come First Served Policy

Review Date – July 2025

Policy Statement

This policy applies to every allocation of new shared ownership homes developed with grant funding from Homes England.  It does not apply to new shared ownership homes developed without funding from Homes England.  Please contact our Home Ownership team to establish if this policy applies to your purchase.

Purpose

Orwell will consider all shared ownership applications they receive in an impartial, equitable and consistent manner, in accordance with Homes England’s guidance.

When demand for our shared ownership homes outstrips the supply, it is important that we are clear in how we allocate and offer our shared ownership homes to prospective eligible customers.

Orwell will ensure that all prospective customers are aware of the process prior to expending any cost.

Policy

In line with regulatory guidance, we must be open in offering our shared ownership homes on a first come first served basis. Our first come first serve policy at Orwell is based upon whoever first made contact after the full launch of a development. We will operate a plot to applicant ratio, which is 1:1.  This is where we allocate one plot to one applicant at the preliminary offer stage following assessment of their eligibility for shared ownership. 

If the applicant does not then pass the full financial assessment with suitably qualified and experienced advisors that are regulated to give mortgage advice, then the plot will be offered to the next applicant in date order, who made contact after the launch of the development.

This is done to ensure potential customers are not inconvenienced unnecessarily or incur any potential abortive costs.

There are some specific exceptions when the First Come, First Served Policy will not apply.  These are as follows;

• Applications from serving military personnel and former members of the British Armed Forces discharged in the last two years
• Where properties are situated in National Parks, Areas of Outstanding Natural Beauty and rural exception sites as we will need to allocate these homes in line with set criteria

Ministry of Defence personnel will be prioritised for Shared Ownership schemes where:

• They have completed their basic (phase 1) training and they are one of the following:
  • Regular service personnel (including Navy, Army and Air Force)
  • Clinical staff (with the exception of doctors and dentists)
  • Ministry of Defence Police Officers
  • Uniformed staff in the Defence Fire Service
  • They are ex-regular service personnel who have served in the Armed Forces for a minimum of six years, and can produce a Discharge Certificate (or similar documentation) as proof, where they apply within two years (24 months) of the date of discharge from service or
  • They are the surviving partners of regular service personnel who have died in service, where they apply within two years (24 months) of the date of being bereaved. Read about surviving partners in the MOD surviving partners guidance

It is the association’s responsibility to inform their suitably qualified and experienced mortgage advisors who are dealing with enquiries from customers for our grant funded shared ownership homes, that they will need to be aware of the approach taken by the association in meeting the Government’s requirement that Shared Ownership applicants are considered on a first come, first served basis (excepting the priority for qualifying Military of Defence personnel, National Parks, Areas of Outstanding Natural Beauty and rural exception sites) and undertake assessments accordingly.  However, the responsibility of meeting this Government requirement lies solely with the association, not the advisor.

Related Policy and Procedures

• Low Cost Home Ownership Policy

If you would like this information supplied in another format,translated or for further information, please contact us via info@orwell-housing.co.uk or call 0345 60 100 30

Shared Ownership Sales Monthly Surplus Income Policy

Review Date (Yearly) –July 25

Policy Statement

Purpose

This policy applies to customer applications when purchasing Orwell’s shared ownership .

 The purpose of this policy is to ensure our customers can afford and sustain home ownership and the affordability of applicants will be assessed against a monthly surplus income requirement.

Policy

The monthly minimum surplus income is an amount of money that an applicant should have at the end of each month once housing costs, other commitments and expenditure have been accounted for.

These costs will be established as part of the affordability assessment using a budget planner which is carried out by a suitably qualified and experienced mortgage advisor.  This service will be free of charge to applicants and  applicants will not be obliged to take out a mortgage with the advisor who is undertaking their financial assessment.

Our monthly minimum surplus income requirement is 10% of the applicant’s net income.  This amount has been determined using methodology from mortgage lenders and mortgage advisors and based on our knowledge of household incomes and the costs of living in the areas of operation.

Net income is calculated on the following basis:

• (A) Gross income
• (B) Less gross deductions (tax, National Insurance, student loan, etc)
• (C) Less known commitments (loans, credit cards, childcare, etc)
• (D) Less shared Ownership rent and service charges – these are stress tested so will take into account estimated increased rent, and service charges, over the following 5 years from completion.
• (A – B – C – D) = E

E is the income remaining that will be used to pay mortgage costs, other essential expenditure (identified through a budget planner) and to meet our 10% monthly minimum surplus income requirement.

Homes England guidance state that we must ensure that the mortgage a customer is able to secure represents no more than 30% of their net (subject to recommendations from a suitably qualified and experienced mortgage advisor).  This is after what are considered firm expenditure commitments and the rent and service charge costs of the shared ownership purchase.  The customer must also meet our minimum surplus income requirement of 10%.  This result will be determined from completing the budget planner with the suitably qualified and experienced mortgage advisor.

Applicants will be encouraged to purchase as large a share as is suitable based on their individual circumstances and affordability, taking into consideration any known foreseeable, imminent and evidenced changes within the next six months, examples of changes include, but not limited to, maternity/paternity leave, change of job, inheritance, and fixed credit ending.  If Orwell believes that the applicant does not have an evidenced and/or justifiable rationale, their preferred share purchase amount will be declined.

If the customer does not meet the requirements in this policy, we would consider the property to be unaffordable to the customer.      

Related Policy and Procedures

• Low Cost Home Ownership Policy

If you would like this information supplied in another format, translated or if you have any questions, please contact us via info@orwell-housing.co.uk or call 0345 60 100 30