Shared ownership is a form of low cost home ownership which combines renting with buying. It is aimed at people who wish to have a stake in ownership of their home but who are unable to buy outright, at present. Priority is normally given to applicants who are first time buyers, currently living in rented accommodation, people who have experienced relationship breakdown or those who are unable to satisfy their housing requirements on the open market.
Purchasers choose to buy a 25%, 50% or 75% share at the outset (for which they may need to arrange a mortgage), and make an occupancy payment to the Association. The occupancy charge is a payment to the Association for the exclusive use of the property and takes in to account that the sharing owner is responsible for repairing and insuring the property. The occupancy payment is proportional to the equity share retained by the Association.
In addition to the monthly mortgage and occupancy charge payments, the sharing owner has similar responsibilities to a normal owner occupier that include:
- All future repairs and maintenance for the property (except if covered by the building contractors guarantee)
- Factoring charges for the maintenance and repair of communal areas.
- Council tax
- Household utility charges (gas, electricity and telephone)
Right to Purchase Additional or Remaining Share
The sharing owner has the right to purchase further 25% shares or the remainder of the property any time after the first 12 months from the date of entry. If a sharing owner decides to exercise this right, an independent surveyor is appointed to assess the market value of the property at that time. The sharing owner is responsible for the cost of the survey report. Thereafter, the Housing Association would instruct its solicitor to issue an offer to sell the additional share to the sharing owner (each party is responsible for its own legal costs).
Shared Ownership Property
If a sharing owner decides to move and wishes to sell their share, a valuation report is required to assess the current market value of the property, which would set the marketing price. Housing associations, endeavour to maintain their portfolios of their shared ownership properties for the benefit of other people unable to purchase on the open market.
On the fifth, tenth, and fifteenth anniversary of the settlement of a shared ownership/equity transaction, we will write to sharing owner(s) to remind them that they can purchase additional equity. At least 12 months prior to the end of the term of the Exclusive Occupancy Agreement entered into between a sharing owner and Forth we will write to the sharing owner(s) to advise them that the terms of the Exclusive Occupancy Agreement are due to expire and provide three options. Under the terms of your Exclusive Occupancy Agreement, you are required to buy the Association’s Stake at market value before the Termination Date. If you are unable to do this, the Association will have the right to buy Your Stake or sell the Property and divide the proceeds in proportion to our respective Stakes with the net proceeds being shared. Although not stated in the Agreement there is another alternative which is that the existing Exclusive Occupancy Agreement is extended for an agreed period and if following discussions with your advisers you wish to select that option you or your advisers should write to us setting out why you would like us to extend the terms of your existing Agreement. We will consider your request and we will be back in touch with you as soon as possible. If we do agree to your request, you will be required to enter into a new Exclusive Occupancy Agreement.
The Scottish Government's Mortgage to Rent Scheme
If you are in danger of having your home repossessed, the Scottish Government's mortgage to rent scheme could allow you to remain in your home as a tenant. Click on link below for how the scheme works and who is eligible to apply.