New Shared Ownership model
Shared Ownership has come a long way since its introduction in the 80’s, continually growing and adapting to the needs of the housing sector. So far, it’s helped hundreds of thousands of people make their first, or next step on the property ladder. It’s no wonder the government has continued to invest heavily into the delivery of Shared Ownership homes.
Recently, a new model of Shared Ownership was announced as part of the governments Affordable Homes Programme (AHP) for 2021-26. This new model will run alongside the traditional model and is expected to provide over 300,000 additional households with access to affordable homeownership.
Under the new Shared Ownership model:
- The minimum initial share you can purchase has been reduced from 25% to 10%
- A new gradual staircasing model has been introduced, allowing shared owners to buy an additional 1% of their home each year
- The introduction of a new 10 year internal repairs allowance, during which shared owners will receive up to £500 reimbursement per year from their housing association to help pay for essential repairs
- The housing association is responsible for the cost of essential repairs required to the external fabric and structural repairs for the first 10 years
- Shared owners can end their 8 week nomination period with their housing association for the resale of their property after 4 weeks
- The issued lease length has been increased to a minimum of 990 years
- Key Information Documents (KIDs) will be provided to shared owners
Which homes will be affected?
All new build Shared Ownership homes which are built using funding from the Affordable Homes Programme 2021-26 will be under the new Shared Ownership model.
‘Traditional’ Shared Ownership will continue on all homes built using funding from the 2016-21 programme, and homes made available for purchase through Shared Ownership which received no AHP funding, because often, housing associations will use their own money to build Shared Ownership properties.
Minimum initial share
Under the current Shared Ownership scheme the minimum initial share of your home you can purchase is 25%, this has been reduced to 10% for new Shared Ownership model properties.
An independent mortgage advisor will work with you to assess your finances and set the right share for you to buy. For both new model and traditional Shared Ownership the share you buy is still based on what you can afford.
Under the new model of Shared Ownership you’ll be able to buy an additional 1% share in your home each year. The option to staircase by 1% will be available each year, for the first 15 years after the initial purchase of your home and does not require you to pay any legal, valuation, or admin fees.
Plus, you’ll still be able to staircase in the traditional way should you wish to. The minimum additional share increment for traditional staircasing has been reduced from 10% to 5%.
To find out more about gradual staircasing click here.
Internal repairs allowance
Homes purchased under the new Shared Ownership model will be entitled to an internal repairs allowance for the first 10 years of their property’s life. This is to help you with unplanned costs which aren’t covered by any warranties associated with your new home.
You will be entitled to £500 per year and any unclaimed allowance can be rolled over into the following year, up to a maximum of £1,000. For example, the previous year’s un-claimed £500, plus the current year’s £500.
It’s worth noting that this internal repairs allowance can only be used towards costs incurred for qualifying repairs, and cannot be applied to any other purpose, such as staircasing. Items like boilers, sinks, baths, showers, toilets, pipes and drainage are covered, but other items such as, washing machines, hobs and ovens are not covered. Find out more about the internal repairs allowance here.
Shared owners who purchase a property under the traditional model of Shared Ownership will still be responsible for all maintenance of their property.
External and structural repairs
Shared Ownership landlords will be responsible for the cost of essential repairs required to the external fabric of the building and structural repairs to walls, floors, ceiling, and stairs inside of the home - but only where the repair is not covered by the new build guarantee.
Resale of your home
If you choose to sell your Shared Ownership home, housing associations may have a certain time during which they have exclusive rights to market the property. For traditional Shared Ownership this is 8 weeks, after which if the property isn’t sold it can be placed on the open market.
Under the new model shared owners will have the option to end the exclusivity period at 4 weeks if they would like to pursue an open market sale.
At Sovereign, we are well placed to arrange the sale of your home as we have large numbers of prospective buyers interested in Shared Ownership. Find out more about selling your Shared Ownership home here.
Key Information Documents
Your housing association is required to provide you with three Key Information Documents (KIDs) prior to reservation of your new Shared Ownership model home. These documents have been standardised by Homes England for use across all housing associations and will include all the information you need to make an informed decision about your Shared Ownership home. More details on each can be found below.
Key information about the home
A summary of the key information on a specific Shared Ownership property, to help you decide if it’s the right home for you. Includes information on the property’s address, full market value, purchase price and rent examples, reservation fee, lease type and length, and more. This document will be available online before you have completed a financial assessment or made any commitment to buy a home.
Key information about Shared Ownership
A summary of all the key information relating to Shared Ownership designed to help you decide if Shared Ownership is right for you. This document is supplied after you have gone through a financial assessment to determine the right share for you, but before you have paid a reservation fee. It is provided together with the ‘Summary of costs’ document.
Summary of costs
A personalised summary of all the costs involved in buying, owning, and selling a Shared Ownership home. This is your final chance to make sure you’re happy with all the figures before you commit to buying your new home and paying your reservation fee. This document is provided after you have gone through a financial assessment to determine the right share for you, but before you have paid a reservation fee.
Rest assured, all homes which fall under the new Shared Ownership model will be clearly marked on our website, and our friendly, experienced Sales team will be on hand to support you throughout your Shared Ownership journey.