Blacks Legal blog posts

Blacks Legal • Apr 06, 2022

Shared ownership enables buyers to secure a home that meets their needs through a part buy, part rent arrangement. While this is great news for those who may not be able to afford the deposit and mortgage payments for a full ownership property, alternative homeownership schemes can often get stressful and confusing - there’s a whole host of paperwork and agreements involved, after all.

Enlisting the help of a reputable firm of residential property solicitors can make the process simpler and set your mind at ease. This blog from Blacks Legal is here to help you get to grips with how the shared ownership scheme works in England and how a residential property lawyer can help you at every stage in the process. Keep reading to find out more!

How does shared ownership work?

A shared ownership scheme allows certain buyers to secure a mortgage to buy a portion of a property (between 25% and 75%) and pay rent on the rest. Shared ownership properties are usually leasehold, so there might also be monthly service charges and contributions to major maintenance works. It is possible to gradually increase your share - this is called ‘staircasing’. The more of the property you own, the less rent you have to pay. You can increase your share whenever it becomes affordable - there’s no pressure!

You can usually buy shares of 10% or more at any time, but some older leases only allow you to buy shares of 25% or more while some newer leases will allow you to buy shares of 5% or more. If you bought your home in 2021, you may also be able to buy shares of 1%. If eligible, you can buy a 1% share each year for the first 15 years of your shared ownership agreement.

What are the eligibility criteria?

You qualify for shared ownership if your household income is £80,000 a year or less (£90,000 a year or less in London) and you can’t afford the full deposit and mortgage payments for a home that meets your needs.

One of the following must also be true:

●     You’re a first-time buyer

●     You used to own a home but can’t afford one now

●     You own a home and want to move but cannot afford it

●     You’re forming a new household (e.g. after a divorce)

●     You’re an existing shared owner and want to move

You can only buy some shared ownership homes if you have a connection to the area. This can include having close family living nearby, having already lived there yourself for a period of time, or being employed in the area.

If you own a home, its sale must be agreed by the time you apply for shared ownership and completed by the shared ownership completion date.

What is the process for securing a shared ownership home?

The usual process is as follows:

1) Register with the Help to Buy agent in the area you want to live in and complete a shared ownership application form. The agent will confirm if you’re eligible for the scheme.

2) Find your property, then contact the landlord of the shared ownership home you want to buy to register your interest. They will pass you on to a mortgage adviser.

3) Undergo financial checks and organise the terms of your mortgage. If all of this is adequate, you’ll be offered the chosen property.

4) If you’re eligible to buy the home, you can pay a fee (of up to £500) to the landlord to reserve it.

Once you’ve done this, no one else will be able to reserve the home for a fixed period of time.

5) Appoint a residential property solicitor. Every buyer needs legal representation - shared ownership is no different!

6) A memorandum of sale is issued. This contains all the key details of the purchase.

7) Once you’ve had your mortgage offer, paid your deposit, and contracts have been exchanged, you’ll be given the all-important move-in date. On that date, after the money has been exchanged, it’s time to celebrate - the property is now yours!

How can a specialist shared ownership legal service help?

Shared ownership allows people to buy part of their house from a social landlord or housing association and then pay rent on the rest. This can therefore be a great option for people who may not have been able to get onto the property ladder otherwise. However, it’s essential that anyone entering into a shared ownership agreement is very clear on the terms and conditions of their agreement, as there are potential pitfalls and issues to consider. This is where residential property solicitors can come in handy.

An important point to bear in mind is that shared ownership properties are always leasehold rather than freehold. Your residential property solicitor will be able to advise you on the implications of this and perform the necessary checks to ensure the terms of the leasehold won’t cause you problems in future. Your solicitor will also be able to make sure that the clauses in your contracts, mortgage offers and Stamp Duty Land Tax returns all comply with your shared ownership scheme requirements. It can be useful to have contracts solicitors or residential property solicitors on hand to ensure that everything is in order.

Familiarity with the regulations and the documentation involved in shared ownership cases is essential to properly advise on such cases. Here at Blacks Legal, our residential property solicitors have extensive experience of acting on behalf of a range of people entering into shared ownership agreements in the London and Essex areas. Combining knowledge and a proactive, personal approach, we help clients from every walk of life, from banks and corporations to private individuals and investment funds.

Thanks to our wealth of knowledge in this area of residential property law and years of experience behind us, we are also experts when it comes to the legalities of buying additional shares of your shared ownership property. So, if you already own some of your home and are looking to increase your share, our team of residential property solicitors will be more than happy to help.

When might I require residential property services?

Expert residential property solicitors such as those here at Blacks Legal will be well-equipped to help with all matters related to shared ownership. These legal services might include:

Buying a shared ownership property

Residential property solicitors are experts in conveyancing for a range of properties, including shared ownership schemes. Our team will be able to assist you at every stage, from understanding eligibility criteria to reviewing shared ownership lease agreements or mortgage documents. We also carry out any necessary conveyancing checks and all of the other legal details involved in buying a shared ownership property.

Increasing your ownership share (‘staircasing’)

If you decide you’d like to increase your share of your shared ownership property, a residential property solicitor can help you to understand your right to do so and explain any conditions that must be met in the process. Additionally, we will assist with all the legal documentation involved in the staircasing process and help you navigate refinancing where required.

Remortgaging a shared ownership property

It’s sometimes necessary to remortgage your property, in which case it can be really reassuring and helpful to have a legal professional to turn to. If you’re considering remortgaging your shared ownership property, we can help you to get a new mortgage that better suits your needs. Whether you need to raise additional funds or simply wish to reduce your monthly mortgage payments, we can make this process as straightforward and as stress-free as possible.

Selling a shared ownership property

When the time comes for you to sell your shared ownership property, a firm of residential property solicitors can help you understand the process inside and out and ensure that you achieve the best outcome for all parties involved. Some areas we can advise on include the housing provider’s right to find a buyer and your entitlement to advertise the property on the open market.

Disputes over shared ownership property

These kinds of cases do not happen often, but there are some instances where disputes involving a shared ownership property are unavoidable. When a dispute arises, your solicitor or their firm’s specialist litigation team will work with you to find an amicable and appropriate solution for all parties. Most commonly, shared ownership disputes can be resolved without court proceedings, which saves time, money, and a whole lot of stress.

It’s important you have someone you trust on your side when venturing into the property world. With Blacks Legal, you can rest assured that your legal matters will be handled by one of our highly experienced residential property solicitors. Our highly experienced team will ensure that your shared ownership issue is dealt with efficiently and effectively. We aim to help you every step of the way and are committed to making the entire process as smooth as we can.

Whether you’re in need of shared ownership assistance, mortgage advice, help with a tenancy agreement, or anything else property-related, Blacks Legal are here to help. Contact us to find out more about how we can help you secure your ideal home.

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