Shared ownership Manchester
If you’re looking to buy your first home, or you simply want to get back onto the property ladder, then shared ownership could be for you. If you’re not sure what exactly it is, then we’re here to clarify just that.
First of all, let’s be clear. Shared ownership homes are not the same thing as shared accommodation.
If you invest in shared ownership that doesn’t mean that you’ll have to share your home with other people.
These days there’s an ever-widening gulf between average earnings and house prices. That’s why many first-time buyers are now opting to buy a shared ownership property. It’s a great way to get your foot in the door.
What is shared ownership?
Shared ownership exists as a part-buy, part-rent scheme for those who need a little extra help to buy a home.
As many mortgage lenders now require borrowers to have a minimum deposit of 10-15%, getting on the property ladder isn’t a viable option for many potential first-time buyers.
That’s why the government is backing shared ownership schemes. It enables people to invest in properties with a much smaller deposit - in some cases, as little as 5% of the share value.
The way it works is that you initially purchase between 25-75% of the property, usually with a mortgage and deposit, and then continue by paying a subsidised rent on the unpurchased remaining share.
When you buy a share of the property, you won’t need to prepare for such a large mortgage, and the deposit will be much lower than on full-property buys.
For example, if you’re looking at buying a £300,000 home, you don’t need to prepare a deposit based on the value of the property. Rather, you need to decide how much of the property you want to own in terms of shares and then pay a portion of the share.
So for a property of £300,000 you decide that you want to buy a 25% share on the property. All you’ll need is 5% of the share ready as a deposit. So 25% of £300,000 is £75,000. And 5% of that is £3,750. And that’s what you’d be paying as a minimum deposit.
So for less than £4,000 you’ve got your foot on the first rung of the property ladder. Much more accessible than what you’d be paying on a full mortgage deposit.
You can increase how much of the home you own when you’re ready to buy more, which gives you more control over your finances and over the home ownership process.
If this sounds like an attractive option to you, read on.
You’d be surprised at where you can buy shared ownership properties. You can find family homes in the countryside, or even slick, modern city centre apartments. Check out High Definition’s selection of shared ownership properties in Greater Manchester.
You can even buy ‘off-plan’ without viewing the actual property. You get a detailed description of the home’s layout through floorplans or by viewing a showhome.
What is staircasing?
Staircasing is the term that refers to the process of buying your property in stages by taking out more shares in it until you eventually own 100% of the property.
The more shares you have in your home, the less rent you’ll have to pay each month.
There are not usually any restrictions on when you can buy more shares of your home. Although, usually, each additional share purchased must be at least 10%. Each time you staircase you need to pay some associated costs, such as a property valuation, solicitor fees and mortgage fees. It’s advisable to staircase in as few steps as possible to avoid repeating these costs, but each step brings you closer to owning all of your home.
What responsibilities do shared homeowners have?
Just because you’re participating in a shared ownership scheme doesn’t mean that you’ve renounced your responsibilities as a homeowner.
You don’t need to ask for permission to decorate the property - this isn’t a rental situation. You will, however, have to ask permission for major changes to the structure of the property.
You’ll be fully responsible for all day-to-day repairs and maintenance such as getting the boiler or washing machine fixed.
You may be entitled to some help with costs of minor repairs. If in doubt, consult Latimer’s rights and responsibilities content for clarification.
The Government announced changes to the scheme on all new build shared ownership homes delivered through the Affordable Homes Programme from April 2021, running for five years up to 2026.
What about selling the property?
You can sell your share of the property if you decide to move house. If you do sell a shared ownership home, there will be a fee, which will be either a percentage of the full market value or a flat fee.
When you come to sell your shared ownership property, you'll need to give your housing association a minimum period to sell your shares to another prospective shared ownership buyer. This is to provide the same opportunity to help someone else onto the property ladder. The minimum period is usually eight weeks, details will be in your lease.
A buyer can't buy less than you own, but they can also choose to buy more. If you own 50% of the property, for example, they can buy from 50-75%.
If, after the minimum period, no-one buys your shares, you’re then able to take your property to a private agent to sell on the open market. This means someone can buy your home as a non-shared ownership property.
How much does shared ownership cost?
If you’re a first-time buyer you won’t have to pay any stamp duty on your home if its value is less than £300,000. If it’s worth more, then you’ll owe 5% stamp duty tax.
If it’s not your first time buying a property, the threshold for stamp duty is £125,000.
As a shared homeowner you have the right to choose whether to pay the stamp duty from the very beginning on the total value of your home, as stamp duty is deferred until your share reaches 80% of the property’s worth.
Alternatively, you can pay it later on when you have shares of your home above £125,000. That choice gives you a little bit of breathing space and flexibility over how you pay and when.
Monthly costs of shared ownership include mortgage repayment, rent on the unpurchased share, the usual living costs like utility bills, council tax and home insurance, and, if applicable, service charges.
The rent you pay will be in line with inflation and will change according to the general cost of living.
The service charge corresponds to what type of home you buy. For example, if you choose to live in an apartment block with lifts, concierge, and on-site gym, then your service charges will be higher than if you don’t have these extra benefits.
You also need to be able to pay for the costs of the initial mortgage valuation or survey, as well as the legal fees. You’ll need a minimum amount of savings to get started, the amount varying depending on which scheme you subscribe to.
Are there shared ownership properties in Manchester?
If you’re living and working in Manchester and want to get your foot on the first rung of the property ladder, then shared ownership may be for you.
High Definition offers some of the most stylish, modern properties on the market, all close to Manchester City Centre.