AD. Shared ownership provides first-time buyers with the ability to purchase a share of the property’s value. This helps make it a more affordable option for many who might not be able to afford the larger percentage of deposit that traditional purchases would cost. With that in mind, if you’re a first-time buyer, then here are some of the costs that come with buying a shared ownership home.
The Key Costs of Shared Ownership
There are some key costs that come with shared ownership that are worth knowing before diving into the treatment.
Deposit
The deposit for a shared ownership is usually around 5-10% of the share purchase, rather than the full property value.
Reservation Fee
A reservation fee of up to £500 will be paid to the housing association to secure the property and is usually non-refundable.
Monthly Costs
The cost of buying a shared ownership home isn’t just the initial costs, but the monthly costs too. These monthly costs will include mortgage payments made on the share you own, as well as rent paid on the remaining share owned by the landlord.
Service charges and ground rent are also charged in the form of monthly fees for maintenance of shared areas and buildings.
Initial Fees
There are a few initial fees to consider, which include:
- Solicitor/conveyancing fees - Approximately around £1,500-£2,500+ that often come with a shared ownership supplement fee.
- Mortgage broker fees - 1-2% of the loan amount will be charged in mortgage broker fees.
- Stamp duty - First-time buyers may end up qualifying for relief on properties of up to £625,000.
Staircasing Costs
Staircasing costs are part of buying shares in order to own more of the property. These fees can include valuation and legal costs.
Eligibility of Shared Ownership
So who is eligible for shared ownership? To be eligible for shared ownership, there are several criteria to meet.
Income
When it comes to income, you’ll need a combined annual household income that must not exceed £80,000 outside of London or £90,000 in London.
Ownership status
You must be a first-time buyer, or a previous homeowner who can’t afford to buy property now. It could also be an existing shared owner who is looking to move.
Property sale
If you already own a home, then you must have formally accepted an offer and be in the process of selling it. The completion also needs to occur on or before your shared ownership purchase.
Financial standing
You must have a good credit history and no major bad debts or CCJs. You’ll also want to be able to afford the mortgage, rent and service charges.
Usage
The home must also be your only or principal home, and you must not sublet it.
It’s highly important to be aware of the costs of buying a shared ownership home, in order to get on the property ladder or to continue on it.
