Housing for Shared Ownership

What is Shared Ownership?

Shared Ownership aims to help people on low to moderate incomes to purchase a property where it is affordable for them to over the long term. Through a shared ownership scheme, you can buy a 25 per cent, 50 per cent or 75 per cent share in a house or flat owned by the housing association.

Priority access is given to the needs of first time buyers with limited housing alternatives, members of the armed forces and veterans who have left the armed forces within the past two years, and widows, widowers and other partners of service personnel for up to two years after their partner has been killed whilst serving in the armed forces.

How Shared Ownership operates

Shared Ownership allows you to buy a share of the property and pay an Occupancy Charge on the remainder to a housing association. An Occupancy Charge is an amount you pay because a housing association allows you to occupy the whole property although technically it still owns a share. An Occupancy Charge does not include a cost for repairs to your property and like other home owners you will be responsible for all internal and external repairs for your property, and any ongoing maintenance costs.

An information leaflet for applicants is available.

Shared Ownership is different from Shared Equity.  The decision to apply for Shared Equity or Shared Ownership will depend on your circumstances and preferences.  We recommend that you fully consider both and then you consult with your financial advisor before making a decision.  The Table below highlights some of the key differences between Shared Ownership and Shared Equity:-

 

SHARED EQUITY SHARED OWNERSHIP

You purchase a property and own the property outright, but you obtain a mortgage for a certain percentage of the equity (e.g. 70%).  Your primary lender will secure a charge over the property and the Scottish Ministers will secure a second charge over the remaining share (e.g. 30%) to secure the repayment of its share.

In certain circumstances the Scottish Ministers will keep a 20 per cent stake in the property. This is known as a 'golden share' and is likely to happen in areas where there are only small amounts of affordable housing and few opportunities to build more affordable homes. For example, if you purchased an initial equity stake of 75% and you wish to increase your share, you may only increase up to a maximum of 80% as your property has a 'golden share' provision attached. The registered social landlord administering the scheme will tell you whether a golden share operates in your area.

You do not pay an occupancy payment on the share that the Scottish Ministers holds.

You purchase a share in the property (25%, 50%, or 75%) and you pay an occupancy charge on the remainder to a housing association.  You do not own the property outright.

The stake that you take will normally be between 60 and 80 per cent of the price of a property for the New Supply Shared Equity Scheme and between 60 and 90 per cent of the price of a property for the Open Market Shared Equity Scheme.

You will be required to purchase an initial share of 25%, 50%, or 75%

As you are buying the whole property, you may have to pay stamp duty tax (if it is over the threshold).

You are unlikely to have to pay any stamp duty tax buying a shared ownership home but you should check this with your solicitor.

You will have the option to increase your equity share by a minimum of at least 5% at any time.  You are strongly advised to consult with your financial advisor before you proceed with increasing your equity share.  You should be aware that there are processes to be administered and new legal documentation needs to be drawn up. 

You will have the option to increase your equity stake in property and you are strongly advised to consult with your financial advisor before you proceed with purchasing an additional share of your home.  You should be aware that there are processes to be administered and new legal documentation needs to be drawn up. 

You will be responsible for all maintenance, insurance and repair costs.

You will be responsible for all maintenance, home contents insurance and repair costs.  It is possible that Buildings Insurance will be included in the Occupancy Payment that you will pay the housing association.  However, we suggest that you make sure that this is the position with the housing association.

The Shared Equity Agreement that you enter into with Scottish Ministers is initially for a 19 year period although you will have the opportunity to extend provided certain technical legal issues can be satisfactorily overcome.

The Exclusive Occupancy Agreement that you enter into with Scottish Ministers is initially for a 20 year period although you will have the opportunity to extend provided certain technical legal issues can be satisfactory overcome.

You can sell at any point but the Minute of Agreement that you entered into with Scottish Ministers may have what is called a ‘Golden Share’ arrangement which allows Scottish Ministers the right to buy back your property.

You can sell at any point but the housing association that you entered into an Exclusive Occupancy Agreement with usually has a pre-emption right to buy back your property.
 

If you own your property outright you may still be responsible for costs such as factoring costs and you should find out what costs you may still be responsible for.

If you own your property outright you may still be responsible for costs such as factoring costs and you should find out what costs you may still be responsible for.

You may be interested in Shared Ownership homes that may be available in your area and you can find further information here.