New homes shared ownership & shared equity housing

This section outlines the help that is available and who is eligible. For further information, please refer directly to the Government and community links.

Shared ownership/shared equity was introduced to help people who cannot afford to buy a home outright. Several schemes are available, some via Government agencies and local authorities and some via house builders and mortgage providers.

Through shared ownership you buy a share of the property and pay a rent, or possibly interest, on the remaining share you do not own. Gradually you may buy further shares and eventually own your home outright.

There are two shared-equity HomeBuy schemes:

1. New Build HomeBuy

Purchasers will buy a minimum initial purchase of 25% of a newly-built home. A housing provider will own the remainder. The provider will be able to levy a charge of up to 3.0% on its share. A lower target average for the charge will be set at 2.75%.

Purchasers may buy further shares in their home when they can afford to do so - a process known as “staircasing”.

The First Time Buyers Initiative - using public sector land in an innovative way to provide affordable housing - will be a form of New Build HomeBuy. English Partnerships is currently developing the scheme and further details can be found on: http://www.englishpartnerships.co.uk

There will be flexibility within the HomeBuy framework for providers to offer schemes that meet the needs of people with long-term disabilities. This will include the option for people to purchase homes on the open market that are suitable for them, on a shared ownership basis.

2. Social HomeBuy

This scheme allows tenants of local councils and housing associations to buy a share in their current home at a discount

Other schemes available:

1. Discount schemes

These are offered by social (council and housing association tenants) landlords and give their tenants the chance to buy their rented home outright at a discount, which is calculated according to where you live.
The two main discount schemes are ‘Right to Buy' for council tenants and ‘Right to Acquire' for housing associations tenants. Follow the links below for more information on the schemes.

The Right to Buy scheme

Right to Acquire - help to buy your housing association home

2. Cash Incentive Schemes

Your council may also run a cash incentive scheme where it offers you money to move to a smaller property, so that they can use your home to house other people on their waiting lists.

The details of the scheme vary from council to council, and not all councils offer the scheme. To find out more contact the housing department of your local council.

Find your local council

3. Equity loans

This is a loan where the lender shares in any rise (and sometimes any fall) in the value of the property over the course of the loan.

These are schemes where the builder or a bank or building society lends you money for part of the cost of the property. You may have to pay interest on the amount you owe but it is limited to a fixed rate set by the lender. The lender’s share may be purchased in installments and any outstanding lender’s share is repaid at current valuation when the property is sold or at the end of an agreed period.

This scheme may be for you if you are able to meet most of the costs of buying a home. An example of the equity loan scheme is the ‘Open Market HomeBuy' scheme.

Questions and answers

What is a housing association?
They are non-profit making organisations who provide and manage homes for rent and sale for people in housing need who cannot afford to rent privately or buy. Most housing associations provide housing with the help of public money given by the Housing Corporation or a local authority; in some cases, the association may provide housing using its own money.

Housing organisations registered with the Housing Corporation are legally known as registered social landlords (RSL's).

Where does the Housing Corporation fit in?
The Housing Corporation was set up by Parliament in 1964. Its job is to fund homes built by housing associations from money it gets from central government ( known as a Grant). It also makes sure that the money is well spent and provides good quality homes and services for residents.

Housing associations must be registered with the Corporation before it can give them public money. Once registered, housing associations are monitored and regulated by Corporation staff to help maintain a good standard of management of their property and finances.

Who can buy through the shared ownership scheme?
The scheme is intended for people who cannot afford to buy a suitable home in any other way. They must be unable to afford outright purchase. Priority may be given to existing public sector tenants or those on local authority or housing associations' waiting lists.

Although you have not bought the property outright, you will have the normal rights and responsibilities of a full owner-occupier.

You are advised to ask your legal adviser as well as the housing association if there are terms you do not understand.

Can I buy a shared ownership home with someone else?
Up to four people can become joint owners but all joint applicants must individually and jointly meet the eligibility criteria. Ask your solicitor/licensed conveyancer to advise you.

What kind of property can be bought through shared ownership?
Shared ownership homes may be new or renovated flats or houses which are sold through housing associations. Prices vary according to location but are expected to be within the means of those people who cannot afford the prices of properties available for sale in the open market.

How does shared ownership work?
The scheme allows you to purchase a share of a property usually from a housing association. The share you purchase is funded by a mortgage which you will need to arrange with a bank or building society. The remaining share you do not own is rented from the housing association.

The size of the share to be purchased will depend on your income and savings. Normally applicants buy a 50% share but you may purchase a smaller or larger share (to start with, you can buy as little as 25% or as much as 75%). The higher the share you purchase the less rent you will have to pay. You will also have to pay a service charge when you buy a flat. Later on, sometimes after 12 months, if you wish to and can afford to do so, you can buy further shares until you own the property outright.

Remember that house prices can go up or down. This means that sometimes you might pay more for buying additional shares or have to sell at a price less than you originally paid.

When you purchase through shared ownership, the housing association will grant you a lease which sets out your rights and responsibilities.

What does the shared ownership lease entitle me to?
Whether you buy a house or flat under shared ownership terms, the housing association will grant you a lease usually for 99 years. It will entitle you to live in your home as an owner-occupier. It will also entitle you to buy further shares in the property and sets out how you can do this. It also states that you can sell your property.

Other points covered in the lease set out your responsibility for repair and payment of rent and service charge. Although you have not bought the property outright, you will have the normal rights and responsibilities of a full owner-occupier.

The information below is a synopsis created from the Government's published advice.

There are many different ways you can get help buying a home if you cannot afford to buy.

Each individual scheme will have its own criteria and demand for these kinds of schemes is high. Some local councils and housing associations may limit the scheme to those who are on their housing lists.

The schemes are briefly outlined below and further information can be found by clicking the links. This will open a new window showing the information supplied by the Government.

Please note that as this website is specifically for newly-built property, the New Build HomeBuy is perhaps the most appropriate and hence listed first, under the new HomeBuy scheme heading. To find developments in these schemes in your area, please select the ‘shared ownership' button when you search for developments on www.NewHomesForSale.co.uk.

Are you eligible?

You may be eligible if you are:
* A council tenant
* A housing association tenant
* A key worker (eg teacher or police officer)
* An intending first-time buyer who can't afford to buy a property, as identified by the Regional Housing Board

The new HomeBuy Scheme

The new HomeBuy scheme enables social tenants, key workers and other first-time buyers to buy a share of a home.

HomeBuy is sometimes also called shared ownership or shared equity. It gives you help to buy a share of a home and pay rent for the remainder. Your monthly outgoings will include repayments on any mortgage you have taken out, plus a monthly charge on the share of the property kept by the landlord.

Later, you can increase your share until you own the whole property. The purchase of further shares is based on the market value of the property at the time, whether it has gone up or down.

The schemes will help:
1. Tenants of councils and housing associations, and those who are on the housing register, waiting for a council, or housing association, home to rent.

2. Those working in the public sector in health, education or community safety - such as teachers, nurses and police officers - in areas where high house prices are affecting recruitment and retention. Any assistance will need to be repaid if participants leave qualifying employment.

3. Households who have been identified as eligible and prioritised for assistance within the region by the Regional Housing Boards. Read more about other first time buyer groups.

Interested applicants will need to contact the relevant HomeBuy agent for their area. Enter your location in the search box on the right to find contact details for your local authority.

Tenants interested in the Social HomeBuy option are advised to contact their landlord (local authority or housing association) to see if the scheme is available to them.