Buying
Today, saving up for a deposit can be a huge burden. For many Londoners, buying a property can seem to be unattainable.
But with the new shared ownership scheme that came into force last April 2021, the aspiration of buying a property for the first time could happen. The new shared ownership scheme was launched by the Government to help first-time homebuyers get a foot onto the property ladder.
What is a Shared Ownership Scheme?
Shared ownership is a scheme by the government in order to help people get into the property ladder with small deposits. You can buy a small percentage of a property, and the you will rent on the rest. This scheme helps first-time buyers get into the property ladder more affordable.
What is the New Shared Ownership Scheme?
The new shared ownership scheme launched in April 2021 has a lower minimum deposit requirement. Previously, the minimum share that can be bought with Shared Ownership Scheme was 25% and pay rent on the rest, the new scheme only requires 10% of the property and pay the rent on the rest. And you will only need to pay a mortgage on the share that you are buying. For example, the property is £450,000, 10% of it is £45,000. When you get a mortgage for it you’ll need a 20% deposit of £9,000.
This is beneficial for those who could not afford to have a typical deposit requirement.
Moreover, you can eventually own 100% of the property by 'staircasing'. Meaning, you can step up your share by buying more percentage of the property as low as 1% increment when paying in cash. For example, the value of the property is £450,000, and you already bought 10% of the property, when you want to step up your share, you can start with 1% of the value of the property which is £4,500.
And when your share with the property increases, your monthly rent on that property decreases. But be aware that rents will increase over time with inflation.
Who qualifies for the New Shared Ownership Scheme?
If you’re in London, you must have a household income of £90,000 or less (£80,000 or less in other regions).
You used to own a home, but could not afford to buy a home now
You’re an existing shared homeowner
Must not be going through bankruptcy proceedings.
Applicants must undergo an affordability assessment to prove that they can afford to own a house.
What will happen if you fall behind on rental payments?
Although you own a percentage of the property, if you are unable to pay your rental payments on that property, it will become null and void. The housing association may take possession of your property and you won’t get back any money you’ve put into the property.
Who will cover the repairs and maintenance of the property?
For a period of 10 years, the landlord or housing association will cover the cost of any repairs and maintenance.
And lastly, shared ownership properties are always leasehold and shared owners will remain responsible for legal fees.
BLUESTONE PROPERTIES
If you are selling your home, or if you’re looking to buy a new home in south London area, contact us and see how we can help you in finding better deals. Get it touch with us by calling us on 0208 355 3405 and we’ll help you take out the stress of the process in buying or selling your home.
