The Government has recently invested £12 billion into their Affordable Homes Programme, with the goal of making the housing market more accessible to those with lower incomes. Part of this investment has led to changes in the Help to Buy Shared Ownership scheme, with a new model being implemented in April of 2021. The new model aims to help more buyers onto the property ladder by significantly reducing the minimum share required to join the scheme, as well as providing more guidance to assist people to find housing that meets their needs. In this article we will discuss the key changes in the newest model and how they can benefit those looking to purchase a home.
Lower minimum shares
Previously, the minimum share a buyer can purchase when using the Shared Ownership scheme was 25%. In the new model, this minimum will be lowered to 10%, drastically reducing the requirement of deposit levels which is beneficial to those who don’t have the capacity to save large amounts of money. This can be particularly useful in highly populated areas such as London, where property values at some of the highest in the country making deposit levels unattainable for many people.
Buy additional shares
In the previous model, the government have introduced a ‘staircasing’ process which allows owners to choose to buy additional shares in their Shared Ownership home in 10% increments. However, in the new model, owners will be able to ‘staircase’ in 1% increments, allowing those who are looking to acquire greater equity to do so without the pricey upfront cost.
Repairs and maintenance period
In the new Shared Ownership model, a 10-year period has been introduced whereby landlords or housing associations who own equity in the property will cover the cost of essential repairs and maintenance in the home. Shared Owners can claim up to £500 in repairs every year, and anything more than this will be the responsibility of the owner. In addition, Shared Owners will have the opportunity to roll over up to one year’s maintenance cover if unused.
The only caveat in this maintenance liability period is that it will only apply to new-build properties, for the first decade of the property’s life or until Shared Ownership reaches 100% equity. If the property under the Shared Ownership scheme is sold within this 10-year period, the remaining years of cover will be transferred to the new Shared Owner.
Shorter nomination periods
Currently, if a Shared Owner wants to sell their home the scheme provides an 8-week period in which the property can be placed on the market. If the property is not sold after the 8-week period, the owner can choose whether to sell the property privately or on the open market.
In the new scheme, Shared Owners will have the right to end the 8-week period after 4 weeks if they would rather pursue an open market sale – providing them with greater control over the resale process.
A Right to Shared Ownership
Under the new model, many more rental homes will be applicable to the Right to Shared Ownership scheme through the Affordable Homes Programme. This will provide many tenants looking to get onto the property ladder the opportunity to purchase equity of their home without the upfront cost incurred when putting down a deposit. The following criteria must be met in order to be part of the Right to Shared Ownership scheme:
- You have been a social tenant for a minimum of 3 years and have lived in the property for a minimum of 12 months
- Your household income is no more than £80,000 (£90,000 in London)
- You can demonstrate your ability to afford and sustain homeownership via an affordability assessment
- You are not subject to bankruptcy proceedings
The Shared Ownership experts
Stay up to date with changes in homeowning legislation by investing in a reliable mortgage advisor like Choice Mortgage Solutions. We are dedicated to ensuring you choose the best path when purchasing a home and have access to a large intermediary of lenders to provide a tailored that meets your individual needs.
Get in touch with one of our specialists to discuss your mortgage requirements today.