Welcome to our shared ownership glossary
Buying a home can be a challenging time, especially when it comes to the detail. Here, we have broken down some of the most common and complex terms you may come across.
A - Application
When starting your shared ownership journey, you will need to contact us via phone call or email to register your interest in your chosen development. You will also need to complete a shared ownership application on Help to Buy South and complete an affordability assessment with one of our approved mortgage advisors.
A - Anti-Money Laundering (AML)
Once you have been offered one of our homes, we will need two forms of certified ID along with full proof of funds. This will include proof of deposit and an Agreement in Principle from your chosen mortgage lender. If your deposit is gifted, the giftee will need to follow the same Anti-Money laundering procedure.
B - Buildings Insurance
Buildings insurance covers the cost of your home if it is structurally damaged or destroyed. Sovereign will provide you with a building insurance policy upon completion. Please note, this is separate to contents insurance which we’d strongly advise you to take out separately.
B - Building Warranty for New Builds
A building warranty is a comprehensive insurance policy that is provided by a developer to the owner/buyer. It offers reassurance that the building has been constructed to a standard set by the warranty provider.
B - Building Regulations
Building regulations are a set of design rules and standards that should be obeyed during the construction and alteration of homes. This ensures the safety and health for all people using or living in the building and they are regularly reviewed. There are a set of categories to ensure that the buildings are high-performing and fit within building regulations, including:
- Fire safety
- Electrical safety
- Materials and workmanship
C - Contents Insurance
Contents insurance covers you against loss, theft or damage to your personal and home possessions. Unlike buildings insurance, your mortgage provider won't insist on you having contents insurance however, we would strongly recommend you set this up. You'll have an excess on your contents insurance which means you'll need to pay a minimum amount every time you claim.
C - Conveyancing
Conveyancing is the branch of law that deals with the transfer of property from one owner to the next. Each party involved will need to appoint their own solicitor to carry out this process on your behalf.
C - Completion
One of the most exciting moments in your shared ownership journey! This is the day you can collect your keys and get settled in to your new home.
C – Completion On Notice
A fixed move in date cannot be agreed until Sovereign have taken responsibility of the property from the developer. When purchasing a new build property, the standard procedure is to exchange contracts before the property is built. This makes the purchase legally binding and ensures that the price cannot change. Once your new home is fully built and Sovereign have been given the keys, you will be given 10 consecutive days to complete.
D - Decision in Principle - DIP (also known as AIP)
‘Decision in Principle’ is provided by your chosen mortgage provider to indicate how much you could borrow from that lender. Just remember, this is not a full mortgage offer.
D - Deposit
The minimum deposit required for shared ownership is 5% of the share price. Your deposit is payed to your solicitor upon exchange of contracts. It’s always best to contact a mortgage advisor to establish your personal affordability.
D - Deeds
Title Deeds are documents showing the chain of ownership Transfers and Conveyances.
Deeds are now stored electronically with the Land Registry and are noted on a property’s Register of Title.
D - Defects
Our new build homes have a 12-month defect liability period. This starts from the date that the property has been handed over from the builders to Sovereign. You can report defects during this period and all genuine defects will be rectified by the Developer.
D - Developer
Sovereign work with many of the UK’s leading new homes, house builders to deliver shared ownership homes. Sovereign purchase the homes from the Developer, and then we sell them on through our shared ownership scheme.
E - Eligibility
To be eligible to apply for shared ownership you will need to meet the following criteria:
- Your household income must be less than £80,000
- You must be over the age of 18
- You cannot own another home
- If you are currently a homeowner, your property must have a sale agreed to apply.
E - Exchange of Contracts
Once both yours and our solicitors are satisfied with all the documentation and we have received your full mortgage offer, it’ll be time to exchange contracts. You sign a contract to buy the home, and we sign another to sell it to you. Your solicitor will now ask you to pay your deposit. Exchange of contracts is the point at which the transaction is legally binding.
E - Energy Performace Certificate (EPC)
An EPC is a document that details how energy efficient a property is. It also shows the potential savings that could be achieved if you improve the energy efficiency of your home by implementing the recommendations.
Common recommendations include:
- Double glazing
- Solar panels
- Lower energy lighting
EPC’s are valid for 10 years. If you are wishing to sell your home, or buying a ‘pre-owned’ shared ownership home, it is the sellers’ responsibility to arrange an EPC if needed.
E - Enquiries
Conveyancing enquiries are questions that are raised by your Solicitor acting on behalf of you and your mortgage lender during the purchase of a property. These questions can relate to the contract or the local search results. Your solicitor and mortgage lender will not advise you to exchange contracts until all enquiries have been satisfied to protect you as a buyer.
F - Financial Assessment
You will need to call one of our approved Mortgage Advisors to complete your application. They will discuss your affordability and ensure that shared ownership is the right option for you. This is a good opportunity to discuss any financial questions you may have. The Mortgage Advisor will then send your assessment to us on your behalf for approval.
G - Gifted Deposit
If you are given your deposit as a gift by a friend or family member to secure your home we will need to provide the same proof of finance, and follow the anti-money laundering procedure to anyone involved in that transaction.
H - Housing Association
An organisation that helps people to live in affordable homes, either shared ownership, affordable rent or social rent. We are here to play our part – to help everyone find a place of their own.
H - Help to Buy for Shared Ownership
Help to Buy for Shared Ownership is a government scheme designed to help buyers get on the property ladder in a way which they can afford. You will need to register on Help to Buy South where you will complete an application form as part of your application for a property. They will help assess your eligibility & affordability and guide you through the process of purchasing your home along with your housing association.
H - Help to Buy ISA
The Help to Buy ISA was set up by the government to help you to save for a deposit to buy a home, savings are tax free and this ISA has the added incentive of a 25% government bonus. The scheme is now closed to new applications, however if you already have an account you can continue paying into it until 2029.
H - Handover Date
The handover date is when the build of the property is complete and the keys have been given from the Developer to Sovereign. This means, as long as you have exchanged contracts, we can arrange your move in date and hand over the keys to your new home!
I - Independent Solicitors Panel
We would recommend that you use one of our approved Solicitors as they are experienced in shared ownership transactions. This is likely to make the transaction smoother and quicker, getting you into your new home as fast as possible.
L - Local Connection
Local connection restrictions can apply in certain areas, meaning you need to live, work or have immediate family within the same local authority as the development. This is put in place by the local authority as part of the planning permission procedure.
L - Local Authority
The area in which you live falls under a local authority. Each authority has counsellors and a local government who look after each area. They implement the local connection criteria that is applied to our homes.
M - Mortgage Advisor
A mortgage advisor is there for you to discuss your finances, and advise you on your affordability. A mortgage advisor is qualified to give you advice on a range of financial products when purchasing a property.
A mortgage advisor will make sure that the repayments are affordable on your shared ownership mortgage.
M - Mortgage
A mortgage is a loan you secure on the property from your chosen bank or lender.
Your mortgage advisor will advise you on the most appropriate mortgage for your circumstances and you will pay the mortgage lender back monthly over an agreed period of time. Different types of mortgage are available depending on your circumstances and personal preferences.
M - Mortgage Application
Once you’ve reserved your new home, you will need to begin your mortgage application with your chosen lender. Once the lender is satisfied with all the information provided and a mortgage valuation has been carried out, they will issue you with a full mortgage offer.
M - Memorandum of Sale (MOS)
A memorandum of sale is a written document confirming the start of the sale process, informing all parties the details of the sale. This documents the start of the conveyancing process but please note, the sale is not legally binding until you have exchanged contracts.
N - NHBC
The ‘National House Building Council’ supports the house-building industry in improving the quality of new homes for buyers. NHBC is the leading provider for warranty and insurance for new homes, they assess, inspect & insure new homes registered with them.
P - Proof of Finances
Once you have been offered one of our homes, you will need to supply full proof of funding in order to secure the property. The easiest way to do this is to provide an AIP (mortgage agreement in principle) and bank statement(s) confirming your deposit. If your deposit is being gifted, the giftee will need to supply proof of the deposit in their account, along with a gifting letter confirming the amount they will be gifting to you.
If your deposit is coming from the sale of another property, you will need to provide proof of equity. This can be:
- A memorandum of sale to confirm the sale price of your current property
- A current mortgage statement showing the remaining balance on your mortgage
- If you do not currently have a mortgage, you will need to provide confirmation of this through the HM Land Registry
P - Pre-Owned Shared Ownership
Often referred to as a ‘resale’ or ‘pre-owned’ property, this is the same shared ownership scheme as when buying a new build but the properties have been previously lived in.
R - Rent
You pay your mortgage to the mortgage lender for the share of the property you own, and pay Sovereign a monthly rent for the share that we own. For example, if you buy a 40% share and Sovereign retain the remaining 60%, you will pay a monthly rent based on the share you don’t own. The higher percentage you own, the less rent you will pay.
R - Reservation
Once you’ve had the good news that your application for a property has been successful, you’ll receive a reservation form to complete which will require a £250 reservation fee to secure your new home. From this point, we aim for a 6 week exchange deadline.
S - Sales Progression
When your purchase has been agreed, our Sales Progression team will take over and guide the process to completion. They speak to each party and ensure the sale completes as smoothly as possible.
S - Service Charge
A charge where each household on a development, or within an apartment block, contribute each month for the upkeep of an area or service which benefits their home – this could be paying for gardeners or cleaners in communal areas or tending to maintenance of roads or drainage. It also includes building insurance for your property.
S - Searches
Property searches are completed by your Solicitor and are required if you are buying a home with a mortgage. They work with the local authority as part of the home buying process to uncover any potential unknown factors about the local area and the property. This could be any proposals for new roads or schools nearby, or if there are any conservation requirements which may affect your plans for the property.
S - Staircasing
Once you’ve settled into your new home, you may want to consider buying more shares – we call this staircasing. The more shares you own, the less rent you pay to us. Almost all of our homes can be purchased outright, which means you could own 100% of your home in the future.
S - Stock
A stock plot is when the building work has finished and we have been given the keys from the Developer. This means that once you have completed your application, we can arrange a viewing with you.
S - Solicitor
Once you’ve reserved and instructed your solicitor, we will issue your memorandum of sale to all parties. Our solicitor will then contact yours and they’ll liaise throughout the purchase to satisfy the legal work.
S - Shared Ownership
We partner with you to share the cost of buying your own home. It’s an opportunity to buy the home that’s right for you without needing the large deposit or the mortgage that goes with it. You’ll pay a reduced rent to us on the share we own and a monthly service charge.
S - Share
Shared ownership homes work in percentage shares – in some cases you can start from as little as a 25% share, and can gradually increase these as finances allow. Your shared ownership mortgage will be based on a share of the full market value of a property, meaning the mortgage will be a lot more affordable.
S - Subject to Contract
Once an offer or reservation is accepted on a property, the property is sold ‘Subject to Contract’ (STC). This just means that whilst you have secured the property, the paperwork is not yet complete. Please note, the purchase is not legally binding until contracts have been exchanged.
S - Survey
There are three main types of survey:
- Mortgage valuations survey - This is undertaken by the mortgage provider and is done to reassure the lender that the property is worth the amount they are lending you.
- Home Buyers survey – this is an optimal survey in which the property is inspected top to bottom by a qualified surveyor in order to report to you any potential issues they find. The results will often be presented in a traffic light system.
- Full structural survey – This is usually the most in depth survey. This is also an optional survey carried out by a fully qualified structural surveyor. This is not commonly used on a new build property as they come with a structural warranty.
V - Valuation
A valuation is the estimated value of a home determined by an inspection of the property and its comparison to recently sold homes in the area. With new build properties, the valuation is reviewed every three months to reflect any changes in the market. If exchange of contract has not taken place, the price of the property could increase/decrease depending on market conditions.
W - Warranty
New homes will come with a warranty which is designed to protect home owners from structural defects. The warranty starts from the date that Sovereign takes ownership of the property.