Frequently asked questions
Sections on this page
- What is shared ownership?
- How much do I need to earn to be eligible?
- Who is eligible?
- How does shared ownership work?
- What will shared ownership cost me?
- When is the occupancy charge payable?
- Who is responsible for repairs and maintenance to the property and common areas?
- What should I do about buildings and contents insurance?
- Are there any other outlays associated with shared ownership?
- What if I fall behind with my payments?
- What if I want to move?
- I’m interested – what do I do now?
Shared ownership is a form of low cost home ownership that combines "renting" with buying. It is aimed at people who want to have a stake in the ownership of their home but who are unable to buy outright at present.
Prospective shared owners normally need to have an minimum income (or joint income) of £15,000 a year.
Priority is normally given to applicants who are first time buyers, currently living in rented accommodation, people who have experienced relationship breakdown or are unable to meet their housing needs on the open market.
You can choose to buy a 25%, 50% or 75% share at the outset (for which you may need to arrange a mortgage). A monthly ‘rent’ known as the ‘occupancy payment’ is paid to Link based on the size of the share we still own.
You have the right to purchase further 25% shares or the remainder of the property after a year from your date of entry. If you decide to exercise this right, an independent surveyor is appointed to assess the market value of the property at that time.
The valuation may be higher or lower than it was at the time of initial purchase, depending on how the market has performed. In turn, this valuation sets the price at which we would sell additional shares in the property to you.
An allowance can be made for any increase in value created by improvements or alterations completed by you. Please note that you are responsible for the costs of this survey report.
We would instruct our solicitor to issue an offer to sell the additional share to you (each party is responsible for its own legal costs). The process of buying further shares is called ‘staircasing’. There is no obligation to ultimately buy 100%.
What are the advantages of shared ownership? The cost for shared ownership is higher than if you were simply renting from Link but you do have a capital stake in the property and will benefit from any increase in its value.
The amount you pay back to your bank or building society depends on the size of the share you buy, the type of mortgage you choose (repayment, endowment etc.) and the interest rate at the time.
Please note that some lenders will only offer mortgages of 95% of the value of your share and you will have to fund the balance from other sources.
2. Occupancy Payment
The amount of the occupancy payment depends on the size of the share you buy – the larger the share you own, the lower the occupancy payment.
The occupancy payment, which is reviewed annually by Link, takes into account:
- that you are responsible for repairs and maintenance of the property
- the costs of the buildings insurance
- Link’s management fee
The occupancy charge is payable monthly in advance by standing order or direct debit. Rent allowances, payable by the local council, are available to sharing owners who qualify because of low incomes.
Like any other owner occupier, you are responsible for all internal and external repair costs for your property and any ongoing maintenance costs (except if a defect covered by the building contractors guarantee on new build properties).
Most modern properties will have a “factor” or property manager who will arrange for the repair and maintenance of common parts of the building (i.e. repair of door entry system in a block of flats) or services for common areas within a development (i.e. landscaping or stair cleaning).
You, as the sharing owner, will be responsible for the quarterly or half-yearly accounts issued by the factor for these services, repairs and any management fee payable. In many cases, the factor will be Link itself.
1. Buildings insurance
Link is required to insure the property on your behalf and you pay the premium to us. Link manages over 6,000 properties across Scotland and can consequently achieve very good premium rates. You should avoid taking out your lender’s building insurance where you are required to participate in a communal buildings insurance policy.
2. Contents insurance
You are responsible for arranging your own contents insurance.
1. Legal fees
These will be your main outlays at the start. Don’t be afraid to shop around for estimates before you instruct a solicitor.
2. Valuation fees
Your bank or building society will charge you for a survey before offering you a mortgage. They can advise you of the different types and costs of such surveys.
3. Reservation fee for new build developments
Successful applicants will receive a reservation form, which should be completed and returned with a reservation fee of £200.
The fee will be deducted from the cost of your share when the sale is completed. Please note that if you subsequently withdraw from the transaction, the reservation fee will not be refunded. You will also have household utility charges such as gas electricity and telephone – along with Council Tax payments.
It is important that if you miss any occupancy or mortgage payments you contact Link and or your lender immediately. If arrears persist, or you fail to make arrangements to repay them, your home could be repossessed and sold to cover the outstanding debts.
If you decide to move and want to sell your share, a valuation report is required to assess the current market value of the property, which would set the marketing price.
We try to maintain our portfolios of shared ownership homes for the benefit of other people unable to purchase on the open market. Therefore, the property can only be offered for sale in the first twenty eight days in the following ways:
1. Direct sale of the share
Sharing owners can sell their share in the property to another purchaser subject to the approval of Link. Please note that the purchaser will need to complete an application form and satisfy Links’ allocation policy. The outgoing sharing owner would be responsible for our legal expenses for the transaction.
After this twenty eight day period, the property can still be sold by the direct sale of the share but also by:
2. Joint Open Market Sale
The property can be sold outright on the open market for the best price possible. The sale proceeds (less legal costs) are split between each party on the basis of the shares held for example if you own 50 percent; the split would be 50:50.
If you have already exercised your right to buy out our share and then want to move, the house can be sold as any other normal owner–occupied property.
Prospective buyers must complete an application for shared ownership. Your application will be assessed against our allocation policy for shared ownership properties. The shared ownership property must be used as the applicant’s sole or main residence. Applications from companies or purchasers looking to rent out the property will not be approved.
Your application will then be placed on the waiting list and you will be contacted when a suitable property is available (this currently applies to new build only).
Your details will remain on our records for six months. If after six months you have not found a suitable property please let us know and you will remain on our register. If you don’t let us know, we will assume you do not wish to remain on our register. You are free to reapply at any time and a new application will be sent to you.
If you need any more information about shared ownership, please contact us by emailing firstname.lastname@example.org