Shared ownership housing schemes explained

 

Shared ownership housing schemes explained

Shared ownership schemes are a mix of buying and renting and are aimed mostly at first time buyers, this allows you to own a share of the property and rent the other not owned share at a low cost from the housing association or local council.

Share ownerships are offered with differing amounts of shares e.g  one third to two thirds of the property value , the rental part will reflect the amount not owned but is lower than what you would pay on an open market rental .

One most occasions properties are new build but some second hand properties are sometimes offered or can be bought from a private vendor who owns a share and wants to move. All shared ownerships in England are offered on a leasehold basis .

Who can apply for Shared Ownership?

The criteria for who’s eligible for the shared ownership scheme varies from country to country.

From April 2021, changes to the scheme were introduced under the government’s new ‘Affordable Homes Programme which include:

• The minimum initial share has to be reduced from 25 to 10% percent.
• You must now be a first-time buyer with an annual household income less than £80,000, down from £90,000 in London.
• Homeowners can now purchase additional shares in 1% percent instalments, down from 5 or 10% percent.
• Fees for buying additional shares now been reduced.
• Landlords will pay the costs of repairs and maintenance for the first 10 years of ownership.
• The rules on selling the property have changed.

You don’t have to be a key worker, such as a nurse or teacher, to apply for shared ownership.

But military personnel will be given priority over other applicants.

If you’re aged 55 or over, you can get help from another home ownership scheme called ‘Older People’s Shared Ownership’.

This scheme is similar to a normal shared ownership scheme but it only lets you buy up to 75% of your home.

Once you own 75%, you won’t have to pay rent on the remaining share.

If you have a long-term disability and cannot find a suitable home for your needs, you can get help with the ‘Home Ownership for People with long-term Disabilities (HOLD)’ scheme.

 

Getting a mortgage for share ownership

When getting finance for a shared ownership, you will be limited by choice of lenders as only some will consider shared ownership schemes and the affordability calculators are a lot different to standard mortgages, the rental amount needs to be taken into account as well as the income needed to apply for the mortgage . It is more difficult to borrow money for a shared ownership if you have poor credit as it is the bigger high street lenders that tend to lend on these types of schemes but with a good mortgage broker, getting a mortgage with some adverse credit is sometimes possible.

You will probably be looking at around 3 times income after rental cost is taken into account and will need to supply proof of income and deposit if any additional money is being put down. A lot of share ownerships can be bought with minimal deposit as they are aimed at first time buyers. Also it is possible to buy the other share of the shared ownership if it is being offered by the scheme owners and can be financed by some mortgage lenders.

 

Conveyancing what happens at completion

 

 

Conveyancing what happens at completion

 

 

What happens on completion day of any house or flat sale is the same, however there are a number of things that can go wrong or that cause delays leading to you not moving in until late in the day, or sometimes not at all. On the day of completion the buyer's solicitor sends to the seller's solicitor the balance of the purchase price (as 10% deposit is normally paid on exchange of contracts). Once received the seller's solicitor releases the keys to the buyer.

You can choose to complete on any day that both the seller and the buyer agree to (read more on how long between exchange and completion).Most people choose Friday as their completion day so they can tie in moving in with the weekend; maximising the time to unpack and get their life in order. However, with Friday being in such high demand, you can find the cost of removals are alot more than any other day of the week. If you have the capacity to do so, choosing a Monday or a Tuesday to complete can save on removal costs and your solicitor is less likely to be busy.

 

Another issue of completing on a Friday is that if you do fail to complete, you have to wait until Monday before you can complete which means the breaching party is covering the other party's costs over the weekend.

 

The most common reasons for delays on the day of completion are:

 

1.       No Mortgage Money

 

All too often conveyancing solicitors draw down the mortgage funds for the day of completion which could mean you end up waiting for your mortgage lender to release the mortgage money. You should always ask your solicitor to draw down the mortgage advance the day before completion.

 

2.       No Completion Money

Delays in receiving the completion money from the buyer is often a challenge as buyers want to hold onto their money (accruing the interest) for as long as possible. The best advice is to make sure you send your completion monies the day before you are supposed to complete. The completion monies include:

 

• Balance of the purchase price of the property (less deposit and mortgage);
• Stamp duty (must be held by the solicitor before they can complete);
• Land registration fee;
• Solicitor's legal fees; and
• Any other property associated costs (including, for leaseholds, ground rent, service charge apportionments and landlord notice fees).

3.       No Signed Documents

You solicitor can't complete without being in receipt of the signed transfer documents  from you; some won't even exchange without this. If you are selling and haven't received your transfer document to sign (it normally is sent with your contract) then chase your solicitor for it - and never return this in normal post, always send it recorded delivery.

 

4.       No Money From Buyers

 

Waiting for your buyer to send their completion money can feel very frustrating as you have no way to speed the process up. What all too often happens is the bottom of the chain fails to draw down mortgage monies the day before completion or the buyer hasn't sent in their completion monies. The best way to combat this is to make sure your estate agent and solicitors confirm that the buyer's solicitors are in receipt of the mortgage and completion monies the day before completion

 

 

Contract Exchange and completion by a solicitor what happens part 1 Exchange

 

 

 

 

 

 

 

 

 

 

 

Buyers and sellers have the time up to exchange of contracts to pull out of the deal  without penalty , this does happen with frequency in England as either party has no commitment other than any side payment they might of made to the buyer or estate agent to secure the deal  ( deposits before exchange payable on acceptance off offer to the Vendor or estate agent  to try and stop people wasting time on the deal ) Exchange of contracts timescales depend on the size of the chain and the readiness at the start of the buying selling process of the parties involved .

The solicitor has a list of things to tick off before recommending an exchange date these things are listed below but don’t encompass everything as there a million things that can delay or stop exchange.

1.       Finance in the form of a mortgage, cash or bridging loan etc, this needs to be firmly in place before a solicitor will allow a recommendation for exchange. For cash purchase the solicitor will need to see 3 to 6 months of bank statements that they will go through and ask any questions on anything that is in the bank account that needs explaining .

Mortgages and bridging loans a copy of the offer will be emailed or posted to the solicitor the solicitors copy will have a list of conditions to satisfy sometimes referred to as special conditions, ranging from additional deposit checks, items on the survey that need further checking timber and damp reports etc, the solicitor will need to satisfy all of these things and get notice from lender that mortgage finance funds are ready to be released.

2.       Searches, these are a massive part of the process especially if buying with a 3^rd parties money that will be secured on the property, they will insist on a searches usually Local authority, environmental and Chancel , when the searches are bag anything that flags up issues like potential for flooding or near to a mine the solicitor will need back enquiries or reports or indemnity cover in place so that any issues on the searches are covered or explained to the point it satisfies the buyer and lender .

3.       Land registry search, this is usually done before the searches as this will identify the actual area the search needs to cover, the land registry can uncover work that has been done that needed planning permission, leases should be registered and anything wrong with the title should be uncovered like additional charges including ones secured by the police etc .any anomalies will need to be dealt with before exchange.

4.       Management packs if leasehold the solicitor will need to write to the freeholder and get a pack filled in asking questions about service charge and ground rent being up to date etc and anomalies will need to be sorted before exchange.

5.       Booking removal companies, this can be an issue on an exchange that’s near completion if removal companies are fully booked already.

6.       The above are some of main things that need to be satisfied to allow exchange , if there is a chain all the people in the chains solicitors have to have all the things that could cause a problem or stop funds being released before exchange can happen this can take months .

7.       If no chain exists and the buyer is paying in cash after the money has been through money laundering the buyer can force exchange against the solicitor’s advice by providing a signed letter from the buyer accepting all the things that might be an issue in the Future.

 

Exchanging contracts

During the exchange of contracts, the solicitor or conveyancer will read out the contracts over the phone in a recorded conversation.

They will make sure the contracts are the same and then post them to each other.

Once contracts have been exchanged and you’re legally bound to buy the property to:

• tell the freeholder (if it’s a leasehold property) you’re the new owner
• check the solicitor/conveyancer has registered transfer of ownership with the land registry
• If it’s a share of freehold purchase, the solicitor will arrange for a new share certificate to be issued.

Exchanged contracts are legally binding and will usually be done with a 10% of the purchase price payment, once exchanged if you try to pull out you will legally forfeit the deposit and possibly be sued by the vendor if they really wanted to be awkward.