6. Shared Ownership Housing
What is 'Shared Ownership' and how does it work?
'Shared ownership' is a cross between renting and owning a house, where the occupier purchases a share (typically 25% or 50%) in the ownership of the property but pays a reduced rent on the remainder. A number of local housing associations provide the option to share ownership. The rent goes to the housing association and the mortgage contribution to the building society, bank or other lender.
Shared ownership housing is aimed mainly at people who cannot afford to buy a house outright on the housing market, but are still keen and financially able to make a start on the home ownership ladder and invest some of their money in their property. The occupier's housing costs can vary according to the type of mortgage and the size of the ownership share (e.g. 25%, 50% or more).
Shared ownership occupiers have the right to buy further 25% tranches of the equity up to and including 100%, which means that they then become the sole owners of the houses. For further information contact local associations to identify the location of any local shared ownership scheme.
How to apply for shared ownership housing and the eligibility criteria
• Applicants apply for shared ownership property by completing and returning a shared ownership application form (this is a separate form from the one used to apply for the association's rented accommodation). There is often a minimum income level required before an application will be accepted.
• Associations normally give priority to applicants who are living in public rented sector housing (i.e. associations, Council or Scottish Homes tenants) because the effect of a successful allocation to one of these applicants is to free up an affordable rented unit for another household in housing need.
• Associations are also expected to give priority to applicants who have never owned or part-owned a home before and who are seeking to step onto the home ownership ladder for the first time. Consideration will, however, be given to applicants who have previously been owner-occupiers, where the personal circumstances warrant it (e.g. significant deterioration in the applicant's financial circumstances or a relationship breakdown).
• Applicants who can afford to buy a house outright on the open market are not eligible for shared ownership housing, nor are those who could not properly afford to purchase a 25% or 50% share of the equity.
• The procedure associations use for considering shared ownership applications, therefore, includes a careful assessment of the applicant's financial circumstances, which requires verification from the applicant's bank or building society that he/she can truly afford and sustain all the costs involved.
Specific local information about the practices of associations, notification to applicants, prioritising applications and procedures for viewing will be available from local housing associations. See the SFHA web site www.sfha.co.uk. for a list of housing associations.
