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What is shared purchase?
This covers both shared ownership and shared equity sales where an interest can be acquired for up to 75% (shared ownership) or 80% (shared equity) of a property's open market value. Shared ownership generally secures the purchaser's stake in their property by way of a lease, with the freehold held by another party. The traditional methods of shared ownership require a rent to be paid on the unpurchased element although the Landspeed model requires nothing other than a ground rent (that will not exceed £260 a year). Shared equity will pass the full ownership to the purchaser with any 'unpurchased' element secured by way of a legal charge in favour of the beneficial party. Some lenders treat the two models differently when considering the amounts of money they will lend.
Can anyone buy a Landspeed shared purchase home?
Not where there is a requirement to provide Affordable Housing. In such an instance you must be unable to buy an equivalent property on the local market outright and, equally important, be able to afford the costs of ownership.
Generally, applicants must either live, work or have a family connection within the Council area although some schemes may be available where specific criteria do not need to be met.
How will I know whether I qualify?
You will complete an application form and we will check that you satisfy the qualifying criteria and notify you accordingly. The next step will be for us to refer your application form to an independent financial adviser who will carry out financial checks to ensure that you can afford and sustain a purchase. You will be informed of the decision and, if 'approved' advised of the next steps.
What will be the initial costs?
You are strongly advised to seek independent financial advice, but your costs will include both legal and mortgage application fees. Stamp Duty does not need to be paid if the purchase price falls below the prevailing threshold and your solicitor can advise in this regard. It is generally estimated that around £1,500 will be needed to cover the initial costs and you should have access to this amount as a minimum without the need for further borrowing.
I haven't got access to any savings, does this exclude me?
Generally yes for shared ownership purchase because lenders may only lend up to 95% of the price. Some shared equity schemes may allow you to borrow 100% of the purchase price. But, where this cannot happen, your only option will be to borrow the money, adding to your monthly costs, unless of course your family can help. If you wish to discuss this in confidence, then please do not hesitate to contact us.
How do I get a mortgage and ensure I can afford the repayments?
You are strongly advised to visit a reputable bank, building society or financial adviser. We are currently working with an independent financial advisor who has experience of arranging shared ownership and shared equity mortgages and has knowledge of our schemes. We can provide their details, as this may be helpful to you, but this is not a recommendation - you are entirely free to talk to other companies.
Can I buy with someone else?
Yes, but you must become legal joint owners and all applicants must meet the qualifying criteria. It is important that the application form clearly indicates this and provides details of both applicants' savings and incomes.
Can I buy a property for one of my family members or as an investment?
No. The applicant must be the person who will be funding the purchase and whose name will be on the lease. The share purchased must also be funded by a mortgage in their name (or in the case where one or more people are buying, all names must be on the mortgage). In short, the applicant must be the person(s) who will live in the property.
What will be my rights, responsibilities and costs?
The lease will define, and your solicitor will advise. Generally, you will be responsible for: any annual service charges and ground rents; maintenance and decoration of your home; council tax; services (gas, water, electricity etc); regular gas safety checks; buildings insurance (on houses) and contents insurance and of course your mortgage repayments. On flats the landlord will be responsible for: maintaining the outside of the building; cleaning and maintaining communal areas; payment of the landlords supplies of electricity, water, gas etc and insuring the building.
Can I make alterations to the property?
You must obtain the landlords written consent to any structural alterations or improvements. Consent of the developer will also be required during the period covered by the building guarantees.The lease will define in full and you should seek advice from your solicitor.
Can I buy further shares in the property?
Generally, yes, although some schemes may be restricted. Acquiring a further share is known as 'staircasing' and, where applicable, you can staircase to full ownership-usually in more or more equal steps. Your solicitor will advise when you first acquire your property.
What about when I want to selll?
You can sell at any time but you must give your landlord notice in writing. They will then have a set period in which to nominate a buyer after which you are free to sell your share on the open market at the discounted price or,i n the case of some shared equity schemes, at full open market value with any beneficiary securing their share at that time.
You will benefit from any increase in the value of your share of the property at that point in time, although you should be aware that you will also be affected by any fall in values. You will be required to pay for an independent valuation and any other costs associated with the sale of your home.
