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Shared Ownership – Help to Buy

Shared Ownership – Help to Buy

Shared ownership has been one of the flagship affordable housing schemes offered by successive Governments. In the Autumn Statement from the then Chancellor, George Osbourne, he announced a revamp launching Help to Buy Shared Ownership. The revised scheme launched in April 2016 and is targeted to deliver 135,000 shared ownership homes by 2021. The old scheme was aimed at lower income applicants but income eligibility restrictions have now been removed. The maximum household income allowed to qualify for the new scheme is £80,000 outside London or £90,000 in London. The priority status for existing social tenants and priority groups defined by local authorities has also been removed. Existing shared ownership home owners are now allowed to buy a new shared ownership home and bedroom restrictions have been removed.

Why Shared Ownership?

The Government has stated that it wants to help one million people into home ownership through Government backed initiatives by 2020. It wants shared ownership to become the fourth mainstream tenure and also wants more private investment in this sector. They are trying to encourage more lenders to offer mortgages as there are only small numbers at present. The Government confirmed a £4.1 billion budget to achieve it’s target of 135,000 new help to buy shared ownership homes. It has been estimated that the revised scheme will open up home ownership to 175,000 households in the rented sector.

What is Shared Ownership?

It allows you to buy a share of your home and pay rent on the proportion of your home that you don’t own. This is done in conjunction with a Housing Association and is always offered on a leasehold basis. You are initially able to buy a share of between 25% & 75% of the property. However, the schemes allow ‘staircasing’ which means that you are allowed to buy more of a share. You are able to sell at any time but if you don’t own 100% of the property then you must give ‘first refusal’ to the Housing Association. The Housing Association also has the right to find a buyer for your home unless you own 100% when you can sell it yourself.

Mortgage Availability

Unfortunately there are only a limited number of lenders that are willing to lend on this. They are generally available via mainstream high street lenders such as Barclays, Halifax, HSBC, Nationwide, Santander & TSB Bank. There are also a number of small regional Building Societies that offer these mortgages as well. Shared ownership mortgages are still available with no deposit as 100% mortgages are offered if required. Unfortunately if you have any adverse credit registered then there is only one specialist lender that may offer a mortgage. Interest rates on adverse shared ownership mortgages are high but CCJ’s & defaults registered over 12 months ago are ignored.

Mosaic Mortgages are specialist shared ownership mortgage advisors and we can assess your particular circumstances and advise you of the most appropriate mortgage for your needs. Contact us for a no obligation quote and to see whether you are eligible for any of the specialist shared ownership mortgage schemes currently available.

The author, Shaun Bielby has over 25 years experience in financial services and is a specialist mortgage and protection advisor with Mosaic Mortgages who are mortgage brokers that give independent mortgage advice to first time buyers, borrowers with an adverse or bad credit mortgage history or those looking to invest in buy to let.