How does Shared Ownership work when you sell?
If you want to sell your Shared Ownership property, the Housing Association has first refusal to buy their share of the property back. They will see if they can sell your share to someone else on the waiting list. If this is not possible, you may then be able to put your property on the open market.
Do I have to pay Stamp Duty If I buy a shared ownership Property?
Stamp Duty Land Tax (SDLT) is payable on property purchases over a certain value (currently £125,000 in England and Northern Ireland). Different transaction taxes apply in Scotland and Wales.
If you purchase a property on a Shared Ownership basis from an approved qualifying body, such as a local authority or Housing Association, you may have to pay Stamp Duty. The amount of Stamp Duty you owe is worked out each time you buy a share of the property.
When you buy Shared Ownership property, you can opt to either make a one-off Stamp Duty payment based on the total market value of the property (known as making a ‘market value election’), or you can pay it in stages.
If you choose to pay in stages, you must pay anything due on the first purchase of a property share, but don’t have to pay further Stamp Duty until you own more than an 80% share of the property.
What type of shared ownership property can I buy?
The Shared Ownership Scheme allows buyers to purchase shares of either new-build or existing properties, that are owned by an approved qualifying body. For the most part this means local authority and Housing Association homes, but it can also apply to properties owned by other bodies such as a housing action trust, a development corporation, the Northern Ireland Housing Executive, or the Commission for the New Towns. Shared Ownership properties are always leasehold.
What is the minimum share I can purchase?
Under the Shared Ownership scheme, the minimum share of a property you can purchase from a housing association, local authority or other approved qualifying body is 25%.
What is the maximum share I can purchase?
Under the government’s Shared Ownership Scheme, the maximum share of a property you can purchase from a Housing Association, local authority, or other approved qualifying body is 75%. If you want to own a share of more than 75%, you must buy the property outright.
Can I purchase more shares at a later date?
Yes, you can buy extra shares in the property up to a maximum of 75% of the property value, a process known as ‘staircasing’. If you want to own a share of more than 75%, you must buy the property outright. Most Housing Association and local authorities require a minimum 25% share purchase when staircasing, although some may allow smaller purchases such as 20% or 10% shares.
Be aware that the cost of purchasing more shares in the property will be based on a new market valuation of the property at that date. That means it may cost more or less than you paid for your first share, depending on whether the property has increased or decreased in value.
When can I buy more shares?
There are no time restrictions imposed by the government under the Shared Ownership Scheme. However, individual housing associations or local authorities may impose time restrictions or other staircasing restrictions in their lease conditions.
How is shared ownership rent calculated?
The exact rent calculation will depend on the individual Housing association or local authority. However, in many cases it is based on a percentage of the retained equity, typically around 3%. For example, if you bought a 50% share of a £200,000 property the retained equity would be £100,000, This is the share of the property on which you would pay rent. Assuming a typical rental calculation of 3%, the annual rent would be £3,000 which equals £250 per month.