Although both joint ownership and shared ownership sound the same, they are actually different schemes with one involving buying with friends or family, the other involves buying a stake in a property which is typically in the social housing sector.
Joint Ownership in the context of residential property is quite simply where more than one person owns a property together. If the joint ownership of the property involves a mortgage, then the mortgage will be on the basis of ‘joint and several liability’. That is, all parties to the mortgage are jointly and severally liable for repaying all of the mortgage.
Sharetobuy.com specialise in these schemes and offer legal contracts for such arrangments.
If you would like to own your own home, but cannot afford to buy on the open market, shared ownership could be for you. You will have sole occupancy rights – you do not have to share your home with anyone else.
Shared ownership allows you to buy a share of a property (usually 50 per cent) from a housing association and pay rent for the remainder. Your monthly outgoings will include repayments on any mortgage you have taken out, plus rent on the part of the property retained by the housing association.
Later, when you can afford it, you can increase your share until you own the whole property. The purchase of further shares is based on the current market value of the property, whether it has gone up or down.
Part-buy, part-rent schemes have strong appeal for first-time buyers because they only need to find a fraction of the deposit and mortgage amount needed to buy a similar property on the open market. But for a percentage of the cost, you only buy a percentage stake in the property, usually 25 to 50 per cent – from a social housing landlord – and so miss out on some of the equity growth as well.
You can, however, ‘staircase’, which means buying another portion of the property later on.
Many of these schemes, which often offer properties at a discount, are open to all comers through housing associations. The government’s much-publicised – if complex and unfinal-ised – plans for the expansion of shared homeownership schemes – are largely aimed at those with social housing needs.
This avenue is popular with first-time buyers, suggests Abbey, with some 70 per cent of its shared homeownership mortgages going to novice homeowners.
The Housing Corporation’s offices can give you the names of housing associations that are developing shared ownership or other home ownership schemes, in the area in which you wish to buy. Priority for the shared ownership scheme may be given to existing tenants of housing associations and councils, or those on the local authority or housing association waiting lists.
Your local housing advice centre or Citizens Advice Bureau should be able to give you helpful advice and more detailed local information. Your local council may be able to help, and some fund their own shared ownership schemes or have home ownership departments. Other organisations (eg building societies) also offer schemes, but without government funding.
Bear in mind that demand for shared ownership houses is high and that there are relatively few houses available. In some areas there may be none. Even if you are accepted as a suitable applicant, you may have to wait some time before a property becomes available.
To read more visit the Directgov website
