Shared ownership

Shared ownership is a Help to Buy product that allows first time buyers and those that do not currently own a home to buy a share of a property.

As a smaller deposit is required to purchase a share of a property, shared ownership creates a more accessible opportunity to get onto the property ladder.

How the scheme works

Shared owners pay subsidised rent on the remaining share that they don’t own, which is retained by us. They have the option to buy further shares in the property, a process called staircasing, until they own the property in full.

Buyers can start by purchasing as little as a 10% share of the property and staircase gradually over time.

The share you can buy depends on your financial situation. Typical purchases are between 10% to 75% of the property.

You will need to purchase the maximum share you can afford to purchase and sustain as advised by a financial advisor.

Who can apply

You can buy a home through shared ownership if both of the following are true:

• your household income is £80,000 a year or less (£90,000 a year or less in London)
• you cannot afford all of the deposit and mortgage payments for a home that meets your needs

One of the following must also be true:

• you’re a first-time buyer
• you owned a home previously but cannot afford to buy one now
• you’re forming a new household, for example, after a relationship breakdown
• you’re an existing shared owner, and you want to move
• you own a home and want to move but cannot afford a new home that meets your needs
• for some homes you may have to show that you live in, work in, or have a connection to the area where you want to buy the home

If you already own a home

When you buy a shared ownership home, you must:

• have formally accepted an offer for the sale of your current home (called 'sold subject to contract' or 'STC')
• possess written confirmation of the sale agreed (called a 'memorandum of sale') including the price and your intention to sell

You must have completed the sale of your home on or before the date you complete buying the purchase of your shared ownership home.

Your shared ownership home

A shared ownership property will be your home. The properties by Sheffield City Council are new build and so will be sold with certain fixtures. Beyond this, the shared owner is responsible for the furniture, fittings and interior decoration as well as home and contents insurance.

However, there are limitations, for example you will not be able sublet the property nor make any major or structural adaptations. These restrictions will be outlined in your lease.

Should you wish to sell your property, you can do so even if you haven’t staircased to owning 100%. The only restriction to this is you will need to contact us and give us 4 weeks to sell the property before you can take it to open market.

Repairs

As the leaseholder you are responsible for keeping the property in good condition.

For the first 10 years, the external and structural repairs are part of a new build warranty, and any work required that is covered under a warranty/guarantee should be claimed through the policy by the policy holder.

For some internal repairs, there is a 10 year period where the shared owner will be able to claim up to a maximum of £500 in repairs and maintenance costs each year, or £1000 maximum on a roll over year of no previous claims. How to apply for this and the relevant restrictions will be outlined in the lease.

Financial costs

There are a number of costs involved in purchasing a home.

Deposit

Your required deposit will depend on the cost of the property you are intending to purchase, the price of which will be provided in the listing and the legal documents.

In most cases you will need at least 5 to 10% deposit of the share you are intending to purchase to get a shared ownership mortgage.

Example

For a £160,000 property, when purchasing a 25% share, you will only need a mortgage to pay for the portion you are buying. 25% of £160,000 is £40,000.

A mortgage often asks for a minimum deposit of 5% to 10% of the £40,000. In this case that would be a £2000 to £4000 deposit required respectively.

The remaining 75% of the property would be owned by us – to which you’ll pay rent on.

You may also buy your share as a cash buyer, however to remain eligible for shared ownership, you would need to prove you are unable to afford to buy on the open market outside of a help to buy scheme.

Other costs of purchasing a home

In addition to a deposit, there are other costs of purchasing a home:

• we charge a reservation fee to reserve the property you wish to purchase
• some lenders will charge you an administration fee for a mortgage arrangement – lenders will also require a valuation fee and will arrange this for you (these costs vary between lenders)
• you will need to instruct a solicitor to act on your behalf (the solicitor will give you an estimate of the legal fees you will have to pay) – this will include their own fee, stamp duty (if applicable), land registry fees and other associated costs
• the general costs of living in the home such as utility bills and council tax will be the responsibility of the Shared Owner. (Some properties may also have a service charge, the cost of which will be outlined in the property lease)

How to apply

Please contact the Shared Ownership Team at sharedownership@sheffield.gov.uk to register your interest in the scheme.

We will let you know if we have any properties available and what the next steps in the process will be.

At this stage you should also consult with a Financial Advisor to find out if buying a shared ownership property is financially viable for you and apply for a mortgage in principle.

What happens next

Once you have obtained a mortgage in principle we will need to see the following documents:

• customer verification form
• application form
• financial advisor verification form
• Homes England calculator completed by your financial advisor
• mortgage in principle / proof of funds

You will also need to provide:

• proof of your identity (a full colour copy of your passport, photo driving licence)
• proof of address
• bank statements for the last three months
• payslips for the last three months or proof of consistent income
• documents showing details of any loan agreements
• credit card statements for the last three months
• memorandum of sale (if applicable)

When your application has been accepted, if we still have properties available we will contact you to discuss paying the fee to reserve your shared ownership home.