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

November 11th 2020
 

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.

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