What is Shared Ownership?
Shared Ownership is a home ownership scheme that helps to keep the cost of buying a new home low by enabling you to buy a share in the property and pay a subsidised rent on the share you don’t own, plus any service charges. It is designed as a step to full home ownership, allowing you to buy further shares in your property when you can afford to.
The scheme is a cross between buying and renting and allows you to buy a share in a property of the purchase price, and then pay rent on the remaining share.
You will be expected to pay a mortgage on the share you own and depending on the Shared ownership scheme, this can range from 10% to 75% of the value of the home. You will then pay an affordable rent to First Garden Cities Homes on the remaining share you don't own. In most instances, you then have an option to buy additional shares in your home until you eventually own 100%, this is what's known as 'staircasing.'
What is the New Shared Ownership Model?
In 2021, a New Model Shared Ownership (NMSO) scheme was introduced and on most new schemes, the new rules and regulations around this new model of Shared Ownership will apply to newly developed or acquired First Garden Cities Homes Shared Ownership homes.
Changes to the scheme include the following:
- The minimum initial share for purchase has been reduced from 25% to 10%
- A 10-year repair warranty has been introduced, during which the shared owner receives support from the housing provider or landlord to pay for essential repairs
- Shared owners can take control of the resales process from the landlord at an earlier point, which gives them more control over the sale of the property
- Any new leases on a new-build Shared Ownership property will have a minimum length of 990 years
- Staircasing has been made more accessible, with a new 1% gradual model that enables buyers to buy more shares in smaller instalments, with heavily reduced fees
- Buyers can now staircase in tranches of 5% rather than 10%.
These changes to the Shared Ownership scheme have not only made Shared Ownership more accessible but also improved the flexibility buyers have when it comes to staircasing.
I am interested in Shared Ownership
If you are interested in purchasing any of our new homes or wish to express an interest in one of our future schemes, please contact our agents First Step at 01462 658317 who can take you through the purchasing process.
Buying more shares in your home
STAIRCASING INFORMATION
With most shared ownership homes you can buy more shares in your property until you own 100%. This is known as staircasing. It increases your ownership/equity in the property and reduces your rent payments to us for the share you do not own.
The aspiration is for our shared owners to eventually own their home outright, where affordable and where the lease allows.
Please be aware some of our leases may restrict staircasing to 80%. This is normally in rural areas where the local authority wish to keep affordable homes in that area. Your solicitor should have made you aware of this at the time you purchased your home.
How to staircase:
We offer two options for buying more shares in your home.
Traditional staircasing allows you to buy from as little as 5% more shares in your home. The minimum amount you can staircase by will be set out in your lease.
Gradual staircasing applies to the new model shared ownership lease and lets shared owners buy an additional 1% share in their property each year, for the first 15 years of the lease. Please note, this is not available to all shared owners - your lease will set out whether you are eligible.
Once you let us know you want to buy more shares, we will send you an information leaflet with guidance on the steps you will need to take.
Traditional Staircasing
Buying shares from 5% is what we refer to as traditional staircasing. All shared owners can buy more shares in their home, the minimum amount can differ depending on your lease.
You should make enquiries with your Mortgage Lender regarding additional borrowing and how much you can borrow. This will determine the size of the further share which you may be able to buy. If you change mortgage companies, you should be aware of any redemption penalties you may have to pay.
You will be asked to provide a Royal Institute Chartered Surveyors (RICS) market valuation report. This valuation will set the price for buying more shares and will remain valid for 3 months.
You will need to provide us with the surveyor details for us to approve.
If you have carried out improvement works at your property, that have been approved by us, we will consider the added value that the improvements bring to your home. If the works haven’t received consent from us, it may mean that we will disregard the added value.
Once we have agreed the sale of the shares, we will instruct our solicitors who will communicate directly with your chosen solicitor to finalise the purchase.
Potential costs
You will need to pay fees to buy more shares. These may include but are not limited to:
- Royal Institute of Chartered Surveyors (RICS) valuation cost
- Solicitors/legal fees
- Mortgage fees (including valuation fees, if applicable)
- Stamp Duty
- Cost of your additional shares which will be based on the RICS valuation
- FGCH administration fee
Gradual staircasing
If you are eligible to buy additional shares of 1% each year for the first15 years from the commencement of the lease, you will receive a valuation from us each year. This is based on the house price index (HPI) and the valuation will remain valid for 3 months. You do not need a Royal Institute Chartered Surveyors (RICS) market valuation report.
You will be asked to evidence how you are funding the purchase. Following this, you will be sent the paperwork for signing.
When we agree a completion date with you, you will be asked to make payment for the 1% share to us.
Selling your share in the property
If you want to move and sell your share in the property you are entitled to do this at any time. You can notify us by emailing enquiries@fgch.co.uk or speaking to us on our phone number 01462 683307