04 Jun Shared Ownership Property Conveyancing Explained
As we have covered briefly under the Help to Buy Guide, there are various schemes available (mainly aimed at first time buyers looking to get on the property ladder) from both the Government and Local Authority. Unlike the Help to Buy Equity Schemes which are only available for New Build Properties, Shared Ownership Schemes are available for both New Build and existing properties.
When you are using a Help to Buy Equity Scheme, both your mortgage lender and the Homes & Communities Agency will hold an interest over your property – by way of a security charge. You however will be the owner (Proprietor) of the property.
With Shared Ownership Properties however, you will NOT own the whole of the property. What this in effect means is that (as the name suggests), you will be co-owning the property with another entity; usually the Council or a Housing Association.
How do Shared Ownership Properties work?
Starting share’s usually start at 25% of the property and extend up to 75%. You will own part of the property which you can purchase with the help of a Mortgage. Don’t forget however that unlike Help to Buy Equity Schemes where you only pay interest starting at year 5 (accurate at the time of writing), you will have to pay ‘rent’ on the remaining share, to whoever you have the Shared Ownership Agreement with.
Once again, since Property Law is a wide and somewhat convoluted topic, Shared Ownership Properties should not be confused with affordable housing (not all shared ownership properties are affordable housing schemes you find on New Build Property Developments).
Can I own more of a share in the future?
Simple answer – yes. The process of buying more shares of your shared ownership property is known as Staircasing. Generally, there are certain restrictions applicable (staircasing in blocks of 25% for instance) and therefore, great care must be taken when you are entering into Shared Ownership Leases.
Naturally, there is a process to follow, where similar to Staircasing Help to Buy Equity schemes, you as the Tenant will be required to first notify the Shared Ownership Administrator for prior consent, then carry out an independent valuation at a cost to you; following which terms can be agreed.
Though it is not unheard of you, as the tenant, can eventually staircase up to 100% percent of the share of the property in order to own the property outright, we have seen more and more instances where there is now a cap of 75% to fight the housing crisis. Also pay particular attention to clauses such as these, however your Conveyancing Solicitor will point out these important aspects of your Lease as part of conveyancing formalities.
What happens if I want to sell my share of the property?
Unlike a conventional transaction, you will not be contacting an Estate Agent in the first instance. There will be various procedures to follow, which will all be stipulated on your Lease (and also explained to you by your Conveyancing Solicitor at the time of purchasing your property), however in most cases will be a similar process to when you are looking to Staircase your property.
You will be required to pay for an independent valuation, following which the respective Local Authority or Housing Association will then source a new buyer as per their waiting lists. In certain cases, following a finite length of time (for instance – 3 months) and assuming your respective shared ownership administrator is unable to source a suitable new buyer you may then be allowed to sell the property on the market using a High Street Estate Agent (remember, you will once again be liable to pay the Estate Agent’s fees).
Do I still have to pay stamp duty on Shared Ownership Properties?
Yes – however you will need to check the position with your Solicitor. As of recently, assuming you are a first time buyer, you will not have to pay any Stamp Duty, so long as your share does not exceed £300,000. However, there might be certain long-term tax benefits from electing to voluntarily pay the Stamp Duty of the entire value of the property (especially if you are serious about eventually purchasing the property outright).
Can Express Conveyancing’s Solicitors help with my purchase of a Shared Ownership Property?
Absolutely – our Solicitors regularly act as ‘recommended’ Solicitors for many Housing Associations with a significant volume of Shared Ownership Referrals in London, Manchester and Birmingham. Our expert Property Lawyers therefore have extensive knowledge and experience in handling Shared Ownership Conveyancing matters.
Our team of friendly Lawyers are happy to speak to you to discuss and explain the process of purchasing (or selling) your Shared Ownership Property. Contact our New Business Team on 0800 799 9892 or using the Contact Form.