First pay 25-75% of the house price
Shared ownership is a form of half buying and half renting recommended by the British government. Usually, buyers only need to pay 25-75% of the house price, and the rest is repaid by paying the monthly rent. (Please note Northern Ireland and Scotland have different regulations.) In this way, a large number of buyers who could not afford the full loan can buy the ideal house only by paying part of the loan, along with the down payment (at least 5% of the total price) and the monthly paying as a rent of the rest of house price.
For example, a buyer who can only afford a £ 100,000 loan is interested in a £ 200,000 house. By shared ownership, he can buy half of the property rights of the house, that is, pay 90,000 pounds (45%) for the mortgage, plus a minimum down payment of 5%. The remaining 50% of the property right belongs to the seller. The buyer only needs to repay the rest of mortgage through monthly rent.
Finally buyer can own the whole property right
Shared ownership property buyers can gain the whole property rights step by step until they buy the whole price. This process is called "staircasing". The independent appraiser will estimate the house price, and you only need to pay the part you need to buy.
Applicants need to meet some basic conditions:
Welfare of special groups
Residents over the age of 55 can purchase up to 75% of family housing property rights through the Older People's Shared Ownership (OPSO). Once they own 75% of the property, they do not need to pay rent for the rest of the property.
People with long-term disabilities also enjoy the corresponding Home Ownership for People with Long-Term Disabilities (HOLD). For example, if they want to buy a one storey house, they need this plan.
In addition to the 5% down payment, buyers also need to consider other expenses, such as reservation fee, mortgage valuation, legal fees, stamp duty, annual service charges, etc. Hiring a moving company is also a considerable expense.
UK shared ownership property website
- Share-to-Buy website in England: http://www.sharetobuy.com
- First Steps website in London: http://www.sharetobuy.com/firststeps
- Scottish Government's website http://www.gov.scot/Topics/Built-Environment/Housing/investment/grants/hso
- In Wales buyers need to find the relevant real estate association directly
- Northern Ireland Co-Ownership https://www.co-ownership.org/
Aimee Charnock, 32, from Rossendale, UK, is a mental health care nurse in a local hospital. Recently, Aimee bought a two-bedroom house in Dale Moor View through the shared ownership scheme. She said: "the whole purchase process is not complicated. I first go to the local house selection, and then contact a loan intermediary to handle the loan. After that, I contact the law firm to handle some legal registration files, and then exchange the agreement with the house sales agency and sign the agreement. After all these were done I can move in."
"The original price of the house is £ 140,000. Through the shared ownership scheme, I bought 35% of the property and paid a 5% down payment, that is £ 2450. In this way, in addition to the mortgage I bought, I paid a monthly rent of £ 209 per month for another 65% of the property. This method is very effective and simple. I highly recommend it for first-time house buyers. "
Benefits of purchasing shared ownership houses
- The shared property scheme allows you to climb the property stair faster than buying the whole property directly.
- Over time, you can purchase the rest of the property rights.
- Generally speaking, it may be cheaper than renting a house first and then saving money to buy one.
- You can sell the property at any time. If the house price increases after you buy the property, you will also benefit from it.
Risks of purchasing shared property
- Compared with ordinary real estate, the number of shared property is relatively small, and its geographical location and other aspects may not be your special preference.
- If the value of the property increases, the purchase of residual property rights will become more COSTLY.
- Even if you only purchased part of the property rights, you still need to pay the full service charges if the building is repaired. Some houses are aging and need maintenance, and the service fee is a large sum of money.
- If you make any changes to the house with share property rights, unless this right is granted in the contract, you should negotiate with the landlord in everything.
- Property with shared ownership cannot be rented.
- When selling shared property, it is necessary to prepare for sale at least eight weeks in advance, and many government departments should be informed that the handling fee for sale is calculated at least 1.25% of the value of the whole house.
- When selling real estate, the housing association has the right of first refusal or the right to designate a buyer to ensure that the real estate can only be purchased by people who are qualified to buy shared property houses.