How to Buy a Shared Ownership Flat

Shared ownership is a housing arrangement primarily used in the United Kingdom. In large metropolitan areas, such as London or Edinburgh, house prices are too high for many workers to own property. Shared ownership works with government agencies, housing associations and money lenders to help people buy a portion of a property and pay rent on the portion they do not own. Shared ownership is not designed for everyone, so it is very important to research your options before starting this process. Learn the best way to buy a shared ownership flat.

Steps

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    Research housing in your area. Before inquiring about costs or processes with any agency, you should get a feel for the cost of housing and the number of shared ownership flats that are available. As well as researching online, you may want to talk to someone who has begun shared ownership to get advice.
    • Go to websites, such as sharetobuy.com, to see what shared housing options they have listed. Try to be as specific as possible about the location you want. Some websites will allow you to set up an alert when shared ownership is available. Most of these schemes are with new buildings, so you may need to wait until flats are built in that area.
    • You can contact both housing associations and real estate developers in your ideal area, to see if they are running shared ownership schemes. Development companies like Crest Nicholson and Johnnie Johnson Housing have shared ownership on a number of their properties.
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    Evaluate your financial health. In order to become a shared owner, you will need to have a steady job, assets and/or good credit. These are necessary in order to get a mortgage for the portion of the flat you will purchase. You will need to make both mortgage payments and rent payments every month, which can mean you will pay more than you currently pay each month.
    • In addition to these costs, you will need to pay some housing association fees and maintenance fees. Once you are part owner, it is likely that you will be responsible for all interior maintenance.
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    Choose the place where you would like to live and apply for shared ownership. You will want to narrow down your choices based on location, costs and agreements. Contact the housing association for information on prices and agreements.
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    Find a HomeBuy agent. If you are in the UK, go to housingcorp.gov.uk/server/show/nav.2128 housingcorp.gov.uk to find HomeBuy agents in your area. Shared ownership is a scheme developed by The Housing Corporation, a government agency, so HomeBuy agents ensure that the rules of this scheme are followed by the housing association and the buyer.
    • If you have been waiting on shared ownership opportunities to become available in your area, you can contact a HomeBuy agent ahead of time. They can search for new opportunities and contact you when they become available.
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    Complete an application for shared ownership with your HomeBuy agent. The application will assess your eligibility with the property of your choice.
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    Meet with the housing association. The housing association at the property must evaluate your application, and they often request a meeting with potential buyers. If they determine that you are eligible based on your financial statements, credit and other information, you can move forward with the process.
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    Decide what percentage of the property you want to buy. With most shared ownership flats, you can purchase between 25 and 75 percent of the flat. The amount you purchase may be based on the loan you qualify for or your plans to stay or sell in the future.
    • The more you own of the flat, the more you are susceptible to market housing fluctuations. If the housing price goes up in future years, you will benefit when you sell the property because it will be worth more. If the housing price goes down, you may stand to lose money because you will sell lower than the buying price.
    • If you want to eventually own 100 percent of the flat, look for a housing association that offers "staircasing." This means that you can opt to buy another share of the flat, usually at least 10 percent. This may be available 1 year after you complete your shared ownership agreement. You will need to serve your landlord notice and pay according to the housing associations valuation, and your rent percentage will be reduced.
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    Obtain a copy of the lease in order to look for a mortgage. Your housing association may be able to recommend financial advisers or mortgage companies that regularly give shared ownership mortgages. Not every money lender will handle this type of mortgage.
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    Compare mortgage rates. You may want to submit an application for a mortgage with a few different lenders. Obtain your mortgage offers and choose the 1 with the best terms.
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    Hire a solicitor to oversee the rest of the home buying process. The solicitor will communicate with the conveyancer and complete legal documents.
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    Go over the contract with your solicitor and conveyancer. The housing association will send you the terms of the contract, including both the price of the purchase and the rent that will be due on the percentage you do not own. Comb the contract and discuss possible changes or problems with your solicitor for possible negotiation.
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    Sign and exchange contracts for your new ownership flat. Once the documents are official, you will begin paying mortgage, rent and taking care of repairs on the flat's interior.
    • If you want to staircase on this property, you must submit a request to your housing association. You will need to have the property valuated each time you buy another share.

Things You'll Need

  • Housing research
  • HomeBuy agent
  • Housing association
  • Financial statements
  • Solicitor
  • Mortgage company
  • Conveyancer
  • Mortgage loan
  • Housing contract

Article Info

Categories: Buying Property