Changes to shared ownership ‘will help more people buy a home’

The government is planning changes to the shared ownership scheme to make it easier for people to buy more of their own home, including allowing them to buy in 1% increments. Linsey Hayes Conveyancer provides an update.

At present, they have to buy an increased share in 10% chunks, which can be as much as £45,000 each time. This process of increasing the stake until the property is bought outright is known as “staircasing”.

People use shared ownership to buy a proportion of their home – which can be as little as 25% – and then pay a subsidised rent on the rest.

The government published these case studies to explain how the changes will help:

How will it work?

£150,000 shared ownership property

• A family in a £150,000 shared ownership 2-bedroom property could buy an initial 25% stake with a mortgage for £37,500 while paying subsidised rent on the remainder.
• They would then have to save up £15,000 at a time to increase their stake and decrease their rent – which is beyond the reach of many.
• Under the new arrangements, shared owners would be able to save up 1% at a time – or £1,500.

£200,000 shared ownership property

• A family in a £200,000 shared ownership 3-bedroom property could buy an initial 25% stake with a mortgage for £50,000 while paying subsidised rent on the remainder.
• They would then have to save up £20,000 at a time to increase their stake and decrease their rent – which is beyond the reach of many.
• Under the new arrangements, shared owners would be able to save up 1% at a time – or £2,000.

£450,000 shared ownership property

• A family in a £450,000 shared ownership 4-bedroom property could buy an initial 25% stake with a mortgage for £112,500, while paying subsidised rent on the remainder.
• They would then have to save up £45,000 at a time to increase their stake and decrease their rent – which is beyond the reach of many.
• Under the new arrangements, shared owners would be able to save up 1% at a time – or £4,500.

We shall keep clients informed of developments.

If you would like more information about the legal aspects of buying or selling a home please contact Linsey Hayes on 016979 27012 or click here to send her an email.