What is shared ownership?
Shared ownership offers a low cost way for first-time buyers to get on the property ladder by making house purchase more affordable. It is a part-buy/part-rent scheme which allows you to buy a share of a new build property and pay a subsidised rent on the rest. You can normally buy between 35% and 75% of the property. The combined monthly cost of your rent and your mortgage will usually be substantially less than buying the property outright.
When can I buy more shares?
After the first 12 months you will have the option of buying more shares (known as staircasing) in multiples of 10%. A new valuation will be required from a qualified RICS valuer at the time of sale. As the tenant, you will have to pay for the valuation fee and any updates as necessary. This figure will then determine the price of the share you wish to purchase. You are free to increase your share percent to 100% after the first 12 months.
What about the price?
As a condition of government funding, we ensure that all our property valuations are set at current market values and are reviewed every three months. We are therefore unable to charge a higher price than the current market value.
What are the costs involved in purchasing?
There are various costs involved in buying a home. As well as paying money to purchase your home, you will have to pay solicitor’s fees and other charges. The costs are outlined below.
- Valuation fee
The cost may vary from lender to lender and according to the purchase price of your property. When you make a mortgage application you will be required to provide a cheque for the valuation fee.
Legal fees and stamp duty
You will need to instruct a solicitor to act on your behalf. Your solicitor will advise you on other fees that you are required to pay, including Land Registration fees, search fees and stamp duty.
The reservation fee is payable to Catalyst Housing and will ensure that the property of your choice is reserved for you. This payment will contribute to the purchase price of your home.
On exchange of contracts you will be required to pay a deposit – this is likely to be at least 5% of the share you are purchasing. Your solicitor will discuss this with you in more detail.
Rent and service charge
After exchanging contracts on your new home, you will need to pay your rent and service charge for the month that you are exchanging and the month that follows. This is because your monthly rent and service charge are payable in advance.
Are there any ongoing costs?
Yes. Regular costs will include:
You will need to make monthly mortgage repayments. The cost will depend on the amount you have borrowed and the interest rate you are being charged.
Your monthly rent will be calculated as a percentage of the share that you do not own. Your rent will be reviewed on an annual basis and any increase in your rent will be linked to the Retail Price Index (RPI).
You are responsible for the upkeep of your property, both inside and outside. You will be required to pay a monthly service charge for the upkeep of communal areas. The services the charge covers will vary according to the new home you buy, but may include cleaning, lighting, and the maintenance of shared gardens or parking areas. Before you move into your new home details of the service charge payable will be explained to you.
Buildings insurance will normally be covered in your service charge – you can check this with your Catalyst Account Manager. You are responsible for ensuring that the contents of your property are insured. You may also want to insure yourself against loss of income because state benefits do not usually cover mortgage repayments if you become unemployed.
You will have full responsibility for repairing and maintaining your property in the same way as any other home owner purchasing on the open market.
You are responsible for paying your utility bills from the date the property becomes yours. As near after completion as possible, you will need to take gas, water and electricity meter readings and provide these to your suppliers. You are also required to send a copy of your meter readings to Catalyst Housing for our records.
If you do not keep up your rent and mortgage repayments, your home could be at risk.
What if I decide to sell?
We will help sell your share via our database of first time buyers. We have an exclusive option on the sale of the property, and will seek to find a buyer within eight weeks of the property coming onto the market. After the eight week period, if the property remains unsold, you will be free to sell the property on the open market.