What is shared ownership?
Shared ownership is a scheme designed to help those who wouldn’t otherwise be able to purchase a home of their own. This may be because you can’t meet the full mortgage repayments, save a sufficient deposit, or both. With shared ownership, you buy a percentage of your home and pay a reduced rent on the share you don’t own. When your finances allow, you may have the option to buy more shares until you own your home outright. This is called staircasing. Some of our rural developments have restricted staircasing to ensure the property remains affordable for future generations of local people.
How does shared ownership work?
You will buy a percentage share of a home, independently priced at market value. Depending on your ability to pay, your initial share may be as little as 25%, or as much as 75%. The minimum share you can buy depends on your household income and savings. Hastoe will charge you rent on the share you don’t own plus a service charge. This service charge covers things like buildings insurance and estate maintenance. If you eventually own your home outright, you’ll no longer pay rent, but may continue to pay a service charge.
Do I qualify?
If you have an annual household income of less than £80,000 and can afford the cost of a mortgage and rent based on the percentage available, then you may qualify for shared ownership. You’ll also need to be able to secure a mortgage with an approved lender and have a minimum cash deposit of between 5% and 15% of the share value, plus approximately £4,000 of savings to cover additional costs, such as solicitors’ fees.
Who gets priority?
Priority for our shared ownership homes is given to Ministry of Defence personnel. If no priority household succeeds in securing the property, it will be made available to all other applicants who meet the buying criteria. This criteria is often specific to each individual housing development.
Rural Priority
Some of our homes in rural areas come under the banner of ‘rural exception’. This means that a buyer can’t own 100% of the property and will only ever be able to purchase a share between 10% and a maximum of 80%, so it remains affordable in perpetuity for local people. If you’re interested in one of our shared ownership properties in a rural area, it is likely that you’ll need to prove a local connection to the parish in which the homes are built, or the surrounding areas. Generally, a local connection means you:
- Are currently a resident in the parish
- Were a resident in the parish but were forced to move away because of a lack of affordable housing in the area
- Have close family who live in the parish (mother, father, son, daughter, brother or sister)
- Have permanent employment in the parish.
A close connection to a neighbouring parish may also make you eligible. We may ask the parish council to verify the local connection information you provide.
Shared Equity
Shared Equity works in a similar way to shared ownership but is aimed at people who have a low or non-existent deposit. You take out a loan which forms part of the deposit for the property you wish to buy, and then take out a shared equity mortgage to cover the remaining property value. Your home is not shared with anyone else.
6 Steps to buying a home
1. Registering
If you would like to apply for a shared ownership home, you’ll need to register with the Help to Buy Agent for your area, by visiting www.helptobuy.org.uk. Once your application is approved, you can search the Help to Buy database for available properties.
2. Applying for a Hastoe home
You’ll need to complete an application form. Please visit www.hastoesales.com.
3. The Offer
We’ll carry out an affordability assessment based on the information you provide within your application form. The assessment helps us to decide what share you could realistically buy, without borrowing more than you can afford. If you’re successful, you’ll be offered a share of the property, which will be between 25% and 75% of the property’s market value.
Our sales team will send you an offer pack containing an ‘acceptance of offer’ form. To accept, you will need to complete and return this to us within one week, with the details of your chosen lender and solicitor, and a reservation fee of £500.
You’ll also be required to provide the following documents:
- Help to Buy registration number
- Copy of your current passport or driving licence
- Proof of your existing address – e.g. council tax, utility bill
- The last three month’s original
bank statements - Recent council tax bill or 3 months’ utility bills
- Proof of deposit. If the deposit is a gift, then we’ll need a letter stating this from the person gifting the money to you
- The last three months’ pay slips (or two years audited accounts if self-employed)
- Housing waiting list number (if applicable).
Once we are in receipt of all the paperwork, we’ll instruct our solicitors and set up a deadline to exchange contracts within 28 days by way of a Memorandum of Sale (MOS). The MOS contains details about the sale and is sent to you, your solicitor, your financial advisor and/or lender and our solicitor.
Offer of a property - resales
Once you have found a property you wish to buy, we’ll send you an offer pack which contains an ‘acceptance of offer form’, which you’ll need to complete and return within the stated time frame. We don’t require a reservation fee on re-sale properties. We’ll then issue a sales pack and MOS to the seller’s solicitors who in turn will contact your solicitor to manage the sale process through to exchange and completion.
4. Appointing a solicitor
You’ll need to appoint a solicitor to carry out your legal work. They will:
- Check the lease and talk to our solicitors about any issues
- Talk to your mortgage lender to make sure everything is in place
- Carry out ‘searches’ to check we own the home we are selling to you and that there are no known plans which could affect your home in the future (such as new developments or roads)
- Make sure that all the relevant paperwork is in place so the sale can go through.
Solicitors’ costs will vary so it’s worth checking their fees before you appoint one. We’ll prepare a contract which, when signed by you and us, is legally binding.
5. Exchange of contracts
When your solicitor has completed the legal work, you’ll be given a report with the findings of the searches etc. You’ll need to provide your deposit to your solicitor, which is paid to our solicitor on exchange. Once you’ve paid your deposit and signed the contract, the exchange of contracts can take place. For the exchange to happen, your solicitor and Hastoe will need a copy of your mortgage offer. The exchange of contract commits you to buying the home and commits us to sell it. Completion will happen on a date agreed by you, Hastoe, and both solicitors. This could take anything from a day to a week from the exchange of contracts. Upon completion, you’ll be expected to pay the first month’s rent and service charge in advance. For new build properties, you may be expected to ‘exchange on notice’. This means the sale is legally agreed and the completion date will be set once your home is completed and Hastoe has taken handover.
6. Completing and moving in
If your home is still being built when you buy it from us, we’ll let you know when it is ready, and when you can set your moving date. On the day of completion, your mortgage funds are transferred from your solicitor to ours, who in turn will notify us that completion has taken place, we will then make arrangements for you to collect the keys or for them to be sent to you. When moving into your new home, you’ll be given a handbook which contains all the instructions for such things as the kitchen appliances. It will also cover all the information you need about what responsibilities you have as the home owner, and ours as your landlord. You need to take meter readings on the day of completion so that you can give these to your electricity, water and gas suppliers.
What are the costs of purchasing?
Your household income should be sufficient to meet the costs of shared ownership, but not enough that you could afford to buy a property outright on the open market. You’ll need access to at least £4,000 in savings to cover the costs of the buying process. This will include:
- Reservation fee: When you are offered a new build property by Hastoe we’ll ask you to pay a £500 reservation fee. This fee is deducted from the final purchase price when you complete. This is not required for re-sale properties.
- Mortgage costs: Your lender will arrange to value the property to check it’s worth the funds they’re lending to you. This cost varies from lender to lender, but will be around £400.
- Mortgage arrangement fee: Your mortgage lender will also charge you a fee for arranging your mortgage. Costs will vary depending on your lender and the length and terms of your mortgage. This fee will range from £400 to £1,500 and is not refundable.
- Solicitor fees: Typically, it will cost between £600 and £1,000 including fees, searches, land registry fees and expenses. We have a panel of experienced solicitors we can provide details of.
- Stamp duty land tax: This is a government tax on buying your home. The rules on stamp duty change from time to time, your solicitor will advise you of current rates.
- Deposit: There will be a minimum deposit required by your lender depending on the value of your home. This is usually between 5% and 15% of the share price you’re buying.
What are the costs once I move in?
You need to consider your costs in three parts – mortgage, rent and service charge.
- Your mortgage payments may go up or down depending on interest rates and the type of mortgage you have
- Your rent is reviewed each year and will increase in line with inflation
- Your service charge is calculated each year and may go up or down depending on the costs of services. You will be responsible for a number of household costs including contents insurance, council tax, water, electricity, gas and other utilities such as broadband, telephone and satellite TV
Find out more about shared ownership charges
What happens if I miss mortgage payments?
Your mortgage is covered by a contract between you and your bank or building society. If you fall behind with your payments, the bank or building society may take possession of your home and then sell it to get its money back.
What happens if I miss rent or service charge payments?
Your rent is a contract between you and Hastoe. If you fall behind with your rent we’ll contact you to agree a payment plan. If this fails then we’ll contact your lender regarding payment of the arrears and this could be added to your mortgage. Remember, you may be entitled to housing benefit if your income is reduced and we can offer guidance on where you can go for independent debt advice.
If you remain in rent arrears and no positive action is taken, we may seek legal action, via the courts, to have your lease forfeited. This means you will have to sell the property.
What are your rights and responsibilities?
When you buy a shared ownership home you take on a Lease and become a Leaseholder. You’ll have the same rights and responsibilities as a full owner-occupier.
A guide to your shared ownership lease
Who pays for repairs?
If your home is a house, you’ll be responsible for redecoration and all internal and external repairs. We’ll insure the structure of your home and you’ll have to pay a service charge to cover this and the cost of rent collection. If your home is a flat, you’ll be responsible for all internal repairs and redecoration. We’ll undertake to keep the building in good structural repair. We’ll also insure the structure and keep any common parts – such as the staircase and corridors – decorated, cleaned and lit. You’ll pay a service charge to cover these costs. We’ll tell you how the service charge is spent and will consult you before doing any major repair or maintenance work.
You’ll be given a certificate from the National House Builders Council or equivalent. This means the builders are responsible for remedying any defects due to their workmanship or materials which arise in the first 12 months after the properties are handed over to Hastoe and any longer term latent defects for a period of up to 10-12 years.
Some shared owners have an initial 10-year repair period. Please check the terms of your lease to see if this applies to your home.
Do I need permission to make alterations or improvements to my home?
You don’t need our permission for redecorating and simple repairs. You’ll need to get our written consent before doing more complicated or structural works such as adding a conservatory or extension. If you wish to put up a satellite dish, you must seek our agreement first (due to conditions within some planning agreements).
Can I let or sub-let my home to someone else?
No. Sub-letting the whole property is not allowed, but we do allow our residents to rent out one room or have a lodger.
Increasing your share - staircasing
How do I buy further shares in my home?
Staircasing enables you to buy a greater proportion of your home. Most people who live in shared ownership properties staircase to reduce the rent they are paying. As the rent is paid on the share that Hastoe owns, by purchasing further shares, the rent is reduced. When you come to sell your home, the greater percentage you own, the more profit you’ll make if the value of your home has increased.
The percentage share you can buy will be outlined in your lease, but please contact the Sales team to check your individual staircasing options. If you’re unsure about staircasing, we can recommend an Independent Financial Adviser (IFA) who will carry out a quick affordability check and help you decide whether it’s financially the right time for you to staircase. Or, you can choose your own IFA if you want to.
What happens when I want to sell?
If you’ve bought a Shared Ownership or Shared Equity home, you can choose to sell it at any time. Your Shared Ownership lease is held with and managed by Hastoe. If you wish to sell your home, the dedicated Hastoe Re-sales department has a period to find another buyer to purchase the percentage you currently own. After this time, if they have found no suitable buyer, you can also market your your home with a local estate agent.
A guide to selling your shared ownership home
