Conveyancing Explained

Shared Equity Schemes were introduced in 2006, and branded as “Homebuy”. This scheme means that instead of buying part of the home and renting the other part, a Shared Equity home is bought on the open market. The purchase of it is funded via a Shared Equity Mortgage and by an equity loan from a Registered Provider.

Generally speaking, you need to meet the following requirements in order to qualify for HomeBuy;-

1. Buyers must be a tenant of a Registered Provider or Local Authority, or on their waiting list, or;
2. Be a Key Worker.
3. Be a Priority First Time Buyer; and
4. Have an annual household income of less than 60k.

Some property developers also offer shared equity schemes – I know that Miller Homes offer several Shared Equity property developments in my area. I’m not sure whether all mortgage lenders offer Shared Equity Mortgages, but I do know that most of the big ones, Halifax, Royal Bank of Scotland, The Cooperative Bank do have particular Shared Equity Mortgages.

Shared ownership property was first introduced in the 1980s, with the aim of assisting people in need of housing to get onto the housing ladder who do not have enough funds to buy a house outright. People also seem to use phrases such as “Part Buy Part Rent property”, “Part Ownership Housing”, “Affordable Housing” etc. to describe this scheme. Essentially, a Registered Provider of Social Housing or “RP” as they are known, grants a lease of a percentage of the equity in a property and rents the remainder to the tenant. For example, the tenant might buy 40% of the equity and rent the remaining 60%.

There are two different schemes introduced in respect of property ownership – SHARED OWNERSHIP and SHARED EQUITY. Both are marketed under the “Homebuy” branding.

Dealing with Shared Ownership – the main points are as follows;-

1. You must be a qualifying person, usually a Housing Association or Local Authority tenant, those on Housing waiting listings, or key workers (i.e. Police Officers, Nurses etc).

2. The Shared Ownership is dealt with in legal terms by means of a Shared Ownership Lease. You can find sample leases currently in use on the Housing Corporation’s website at http://www.housingcorp.gov.uk/server/show/ConWebDoc.8720

3. Some Shared Ownership Leases offer the right to buy further shares in the property at a later date, sometimes with a right to eventually buy the freehold. Many New Build HomeBuy Schemes are likely to be granted in this way.

4. STAIRCASING is the ability to buy additional equity in the property in the future. Some leases restrict the amount of equity that can be purchased via staircasing, in particular those intended for the elderly, which may also have a minimum age limit for the owners.

5. General rules contained in Shared Ownership Leases are absolute prevention of the buyer subsequently letting the whole or part of the property to another person, a requirement to notify the Housing Association of an intention to sell the property to obtain their consent or their nomination for another person to buy, a requirement to pay a service charge (particularly for a flat), and an annual review of rent.

SHARED EQUITY is explained in a separate article, as this is another type of marketed HOMEBUY SCHEME.