How the shared ownership scheme works in the UK

This article was written for and published as original content in the East Anglian Daily Times property section.

The shared ownership scheme helps people to get on the property ladder when they might otherwise not be able to due to limited resources. Under this scheme, you can buy a share of a property (usually 25% - 75%) and pay rent on the remaining share which would be owned by a housing association or similar. In the majority of situations buyers have the option to buy further shares in a process called staircasing allowing them to reach 100% ownership.

To qualify for the scheme, buyers must meet specific criteria, including income limits and they must also be first-time buyers. Once eligibility is confirmed, buyers need a mortgage to cover their share of the property. Properties are typically sold on a leasehold basis, meaning buyers have the right to live in the property for a set number of years, but do not own the land itself. If the property is a house then the buyer will generally have the right to acquire the freehold once they have staircased up to 100%.

Legal implications for buying and selling shared ownership properties

When buying a shared ownership property, the legal process involves several key steps. Buyers must first secure a mortgage and agree to a leasehold agreement, which outlines the terms, including rent payments and maintenance responsibilities.

When selling, the process becomes more complex. Pre-emption rights often require the housing association to be offered the option to buy the property back before it can be sold on the open market. The seller must also ensure the lease is transferred to the new buyer, who will inherit the rent obligations and staircasing rights. Legal fees, valuations, and any outstanding financial commitments must be settled during the sale.

As with all leases, restrictions may be imposed on the buyer such as on subletting or making alterations to the property. Buyers and sellers must fully understand the terms of the lease to avoid legal issues. Legal advice is highly recommended to navigate these processes effectively.

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