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With larger deposits demanded by lenders and high prices, many people find it difficult to raise a mortgage to buy a property outright. To help alleviate this, various affordable housing schemes have been set up by successive governments. Intended to encourage people to own their own home through shared ownership, these initiatives allow people to buy a share of a property with the option to purchase the remaining share when their finances allow and own the property outright.
New Build HomeBuy is the latest government-backed affordable housing shared ownership scheme. Those eligible to buy under this scheme include all key workers, existing social housing tenants and those in priority housing need. Up to four people can enter into shared ownership but all applicants must jointly and individually meet the eligibility criteria.
In general terms, you are a key worker if your job is considered to be essential to your community, but you don't earn enough to afford to buy a property in the area in which you provide those vital services. For instance, you could be a police, fire or prison officer, nurse, midwife, occupational therapist or social worker or a member of the armed forces in the lower, non-commissioned ranks. Registering with your local HomeBuy Agents will confirm your eligibility and you will then receive details of the scheme together with an application form.
For more information, visit www.helptobuy.co.uk
Glanvilles Home Solicitors have successfully helped many people buy their home under this Government backed scheme. As with any house buying and selling process, there are a number of rules that must be met as well as legal stages that must be undertaken. If you're eligible you can initially buy 25%, 50% or 75% of the property value with the benefit of mortgage finance. The outstanding share is then rented from a registered social landlord (typically a housing association or local authority) for an affordable rent. Your outgoings therefore will consist of the affordable rent plus the mortgage repayments. However, these will be based on a much lower amount than if you'd bought outright. Glanvilles will talk you through all the stages and advise you on whether going for straight rental rather than a combined rental and mortgage arrangement would best suit your current circumstances.
As and when you have the funds, you can then buy additional shares (known as 'staircasing') until eventually you own the property outright. The proportionate cost of those additional shares will be determined by the market value of the property at the time you decide to buy and the number of additional shares you wish to purchase.
When you wish to sell your shared ownership in the property there may be a requirement to offer it to another household nominated by your landlord (the council or housing association) for an agreed market rent. If you've fully 'staircased' your property and now own 100%, you should be free to sell it like any private property owner. Your landlord may wish to buy the property back from you to offer it to other households who want to enjoy low-cost shared ownership. They'll tell you if they want to do this when you tell them you want to sell. The selling price is not fixed by them and the property is sold at market value, so you will benefit from any equity built up on the share you own.