All you need to know about shared ownership
Getting on the property ladder isn’t easy! Saving for a large deposit and even getting accepted for a mortgage could be a challenge. If this is you, read on for all the information you need on what could make Shared Ownership the ideal solution.
What is shared ownership?
Shared Ownership offers people the chance to purchase a percentage share of a new home and pay rent on the remaining share. This means that the deposit required is smaller than if you were buying 100%.
The share that you are buying can be funded by a mortgage or using your own savings, with rent payable on the remaining share.
See below to find answers to the most commonly asked questions about shared ownership.
Shared ownership is an affordable way of getting onto the property ladder.
You usually buy an initial share (from 40% to 75%) making it affordable. You then pay an affordable rent to Ocean on the remaining bit.
When you’re able to, you can buy more shares and in most cases can buy the home outright.
Who can apply?
You can buy a home through shared ownership if both of the following apply:
• your household income is £80,000 a year or less (£90,000 a year or less in London)
• you cannot afford all of the deposit and mortgage payments for a home that meets your
One of the following must also be true:
• you’re a first-time buyer
• you used to own a home, but cannot afford to buy one now
• you own a home and want to move but cannot afford a new home suitable for your needs
• you’re forming a new household - for example, after a relationship breakdown
• you’re an existing shared owner and want to move
If you own a home
When you buy a shared ownership home, you must have:
• formally accepted an offer for the sale of your current home (called ‘sold subject to contract’ or ‘STC’)
• a memorandum of sale
You must have completed the sale of your home on or before the date you complete your shared ownership purchase.
If you’re aged 55 or over at the time of buying the home, you can buy up to a 75% share through the older people’s shared ownership (OPSO) scheme. Once you own 75%, you will not pay rent on the rest.
You can apply for a scheme called home ownership for people with a long-term disability (HOLD) if there are no shared ownership homes for sale:
• where you need to live to be close to your support network
• that meet your needs
The HOLD scheme helps you to buy a home on the open market that is suitable for your needs. It works in the same way as the shared ownership scheme.
To apply, first register with Help to Buy and then complete a shared ownership application form.
Priority for military personnel
Only serving and some former military personnel will be given priority over other groups.
Connection to a local area
There are conditions in some areas to ensure that affordable housing remains in the ownership of local people. This means you may have to show that you live, work or have a connection to the area where you want to buy a home. Homes advertised for sale in these areas will show these conditions.
How it works
You pay for a percentage share between 10% and 75% of the home’s full market value. You enter into a lease agreement with Ocean, and agree to pay rent to us on the remaining share.
Most shared ownership homes require an initial share purchase between 25% and 75%. When homes are available for sale under the new model for shared ownership, shares will be available from 10%.
When you find a home you want to buy, you’ll be referred to a mortgage adviser. They will assess your income and outgoings. They will tell you the share purchase you can afford based on your personal circumstances.
You can buy more shares in your home. This is known as ‘staircasing’. If you buy more shares, the rent you pay goes down in proportion to the landlord’s remaining share.
Homes you can buy through shared ownership
You can buy:
• a new-build home
• an existing home for sale through a registered provider’s shared ownership resale scheme
• a home that meets your specific needs, if you have a long-term disability
All shared ownership homes (houses and flats) are sold as leasehold. This is because the landlord (Ocean) has an interest in the remaining share.
If you reach 100% ownership, where possible, for most houses the freehold will transfer to you, and the shared ownership lease falls away. For most flats, the lease will remain in place but the shared ownership obligations will fall away.
We will tell you how this works.
There are a few things to check before being able to buy a shared ownership home.
• You must be 18 or over
• Your household income is no more than £80,000
• You don’t own a home already*
• You’re able to show you can afford to maintain the cost of owning your own home
*You may be in the process of selling a home but to be able to buy a shared ownership home from us, your existing property must have a sale offer accepted before we can accept you.
Connection to a local area
There are conditions in some areas to ensure that affordable housing remains in the ownership of local people.
This means you may have to show that you live, work or have a connection to the area where you want to buy a home.
Homes advertised for sale in these areas will show these conditions.
You can buy a shared ownership home from new or an existing home through resale.
For a full list of the homes we have available for shared ownership please click here.
You can buy a shared ownership home with a deposit as little as 5%.
To give that some perspective, if you were to buy a 40% share in a £200,000 property (which would be £80,000) then your deposit would be just £4,000.
How to apply
1. When you've found the home you want to buy on our website, complete the application documents on the advert, or email firstname.lastname@example.org for details.
2. We will refer you to a mortgage adviser. They will assess your income and outgoings to make sure you can afford the payments for your home purchase.
3. The mortgage adviser will let you know the share you can afford. You’ll need to buy the share with either a repayment mortgage or a lump sum from savings.
4. Pay a reservation fee to Ocean to secure the home. When you pay the fee, no one else will be able to reserve the home for a fixed period of time. We will tell you how long the fee secures the home for and how much the fee is.
5. Apply for your mortgage (if applicable).
6. Instruct a conveyancer to act on your behalf. They will handle the legal aspects of buying the home. They will explain the terms of the shared ownership lease to you, and communicate with our solicitors on your behalf.
You can buy more shares in your Shared Ownership property at any time.
This is called Staircasing and you can staircase up to outright ownership (100% shares) in most cases, meaning the property is entirely yours.
Buying a Shared Ownership home is an investment just like any other purchase.
If the property value goes up, then so does the value of your share.
Just like any other homeowner you'll be responsible for keeping the home in good condition including decoration and repair. You'll also be responsible for meeting those costs.
For new-build homes, the building warranty will cover the cost of structural repairs in the first 10 or 12 years. If you buy a home through a shared ownership resale, any remaining period on the building warranty will transfer to you.
Any work required that is covered by a warranty or guarantee must be claimed through the policy by the policyholder. The building owner (Ocean) is responsible for carrying out structural repairs.
Your responsibilities as well as ours will be set out in the lease and it's important that you take the time to understand those.
In the new model for shared ownership, there is a 10 year repairs allowance period. In this period, you’ll be able to claim costs up to £500 a year from your landlord to help with essential repairs.
The Nomination period
Your lease requires you to notify Ocean of your intent to sell; once this is received we have the responsibility to advertise your property. This is known as the ‘nomination period’ and during which we typically have 8 weeks (dependent on your lease) to find you a buyer.
The nomination period is a mechanism to help other first time buyers and to honour our agreement with the local authority. It also helps to make sure you are given an efficient and cost effective service. If we successfully find a buyer for your home, you will be charged an administration fee of 1% of the market value of your property. This is competitive to many estate agents and covers the cost of providing a service to you.
Getting the price right
In order to sell your home, you must firstly obtain a full valuation report. This must be carried out by a surveyor who is accredited by the Royal Institute of Chartered Surveyors (RICS) and you are responsible for meeting the cost of this.
Once we have received your valuation report we will let you know the value of your property – any significant improvements you have made to your home will be included in the full market value. From this we will also calculate the value of your share.
Your valuation report will be valid for three months only – a desktop valuation will be needed after this time. It is your responsibility to make sure you have an up-to-date valuation that will allow you to exchange contracts.
Potential buyer checks
We will request that suitable applicants who are interested in your property to contact you directly to arrange a viewing.
After viewing your home, your potential buyer will need to contact us, we will then:
• check that their details are up-to-date
• check their eligibility
• carry out a financial health check to ensure their affordability.
At this stage both parties must also advise us of the name of the solicitor’s you have chose to represent you.
After successfully passing our checks we will write to your buyer confirming their approval along with the following breakdown of costs:
• full market value
• the price they must pay for your share
• the current rent and service charges payable.
We will also provide them with details of the solicitors representing each party during the conveyance. A copy of this letter will be sent to you and your respective solicitors.
With the Solicitors
At this stage both parties will need to formally instruct their solicitor, the sale is then in the solicitors’ hands and you will need to keep in regular contact with them to make sure things are moving forward. We will not have any direct involvement from this point on, but we are happy to help if required.
Once solicitors have been instructed, the buyer’s solicitor will obtain a copy of your lease and raise leasehold enquiries, some of which form the ‘management enquiry pack’.
Your solicitors will be expected to provide response to these enquiries by getting some information from Ocean. It is standard practice for Ocean to charge an administration fee for this service.
Service charges typically cover the cost of maintaining communal areas in the building, communal gardens and cleaning the external windows of a block of flats.
When you register interest in a home, Ocean will give you a ‘Summary of costs’ document. This sets out the service charge and what it covers.
There is more information on the GOV.UK website about service charges and other expenses.
It’s your home. You bought it.
The term Shared Ownership is just used to describe the relationship between you and Ocean.
“Shared Ownership gave me my first step on the housing ladder"”
C Salmon, Falmouth