Buying a shared ownership property

You'll probably need to take out a mortgage to buy into a shared ownership property, and you'll have to find a solicitor to help you with the legal work involved. This page explains the buying process, and what you can do if you want to buy additional shares in the property, or sell your shares.

Do I need a mortgage?

Unless you have a large sum of money in savings, you'll probably need to get a mortgage to pay for your share of the home. If you are buying your share with other people, you may need to take out a joint mortgage.

Make sure you understand what will happen if you can't keep up your mortgage payments for your shared ownership home - you can ask your solicitor to explain this to you.

You can get information and advice about mortgages from an intermediary or direct from a lender, such as a bank or building society.

The section on getting a mortgage has more information on the different kinds of mortgages on the market, and what you can do if you are having problems

Working out your finances

When you're working out how much you can afford to borrow, you'll need to take into account the other costs of buying a home, including:

  • a deposit - some banks may offer shared ownership buyers a 100% mortgage, but in most cases you'll need to provide at least 5% of the cost of the home upfront from your own funds

  • solicitors' fees

  • surveyors' fees

  • mortgage protection insurance

  • Land and Building Transaction Tax, if applicable - this will depend on the price of the whole property, not just the share you're buying.

You'll also need to consider other housing costs, such as:

  • council tax

  • buildings and contents insurance

  • service and factoring charges

  • household bills

  • other living expenses.

Will I need a solicitor?

Yes, you'll need to find a solicitor to give you advice and carry out the legal work involved in buying a home (called conveyancing). Your solicitor can also:

  • offer you advice about your occupancy agreement with the housing association

  • help you arrange your mortgage

  • help you arrange a survey of the property.

How does the buying process work?

Viewing the property

Once your application for shared ownership has been accepted, the housing association will invite you to view the property on offer, so you can check that it's suitable for you. If you're interested in buying a share, you can ask the housing association for a home report, which includes a survey and further information about the property.

Agreeing a price

The housing association will tell you the purchase price of the property, which will be based on a valuation report. You can then discuss what percentage of the property you will buy (25%, 50% or 75%) and how much your occupancy payments will be.

Understanding the occupancy agreement

The housing association should give you a copy of the occupancy agreement, which sets out your rights and responsibilities under the shared ownership scheme. If there's anything in the agreement that you don't understand or are concerned about, speak to the housing association about it. You should also ask your solicitor to look at the agreement for you.

Arranging a mortgage

At this stage, you'll need to arrange to take out a mortgage to pay for your share (see 'will I need to take out a mortgage' above).

Getting a survey

Before you agree to the sale, you may wish to arrange for a surveyor to check over the property, although you will have to pay a fee for this. This may be a condition of your mortgage.

Finalising the sale

Your solicitor and the solicitor acting for the housing association will then carry out the legal work necessary to transfer ownership of your share to you. Your name will be put on the title deeds, to prove that you own a share in the property, and your solicitor will register you as the part owner in the relevant land register. This can take some time, so don't worry if the process seems to be going slowly at this stage. Your mortgage lender will keep the title deeds to your home as security against the loan, and your solicitor should give you a copy.

How do I buy additional shares?

After a year, you will have the option to buy a further share in the property if you wish. To do this you'll need to contact:

  • the housing association, to find out the procedure you need to follow

  • your mortgage lender, to see if your mortgage can be increased so you can afford the extra share (unless you have a lump sum of money you can use to buy the share)

  • your solicitor, for advice and help with the legal work involved.

How much will it cost?

The cost of the extra share will be calculated according to the current value of the property, not the value when you bought your first share. The value may have gone up or down, but is more likely to have gone up. An independent surveyor will need to look at your home to assess its value. The housing association will discount any increase in value due to improvements or alterations you've carried out yourself. You will be responsible for paying the surveyor's fees, and also the legal costs of arranging the transaction.

Once you have purchased another share, your occupancy payment will be reduced.

Are there any restrictions?

In areas with a shortage of affordable housing, some housing associations may not allow you to purchase the home outright. If this is the case, the housing association will tell you this before you buy your first share.

What happens if I want to sell up?

You can sell your share whenever you like. If you decide to sell, you should contact the housing association to find out their procedure. Check your occupancy agreement as well - it may include information about what to do if you want to sell and any restrictions involved.

Selling your share

You can opt to sell your share to a new owner, who will then rent the part of the home they don't own from the housing association. However, the new owner will need to pass the housing association's criteria for shared ownership (for example, they won't be able to buy your share if they can afford to buy a home on the open market). The housing association should help you find a buyer.

Selling the home on the open market

You may be able to agree with the housing association to sell the home on the open market, and split the proceeds according to your share. Again, the housing association should help you find a buyer.

How much will I get?

Your occupancy agreement may state that the housing association has the right to restrict the price you can set when you sell your share, so you can't ask for more than the property is worth. This is to ensure that the home remains available to people in need of affordable housing. An independent surveyor or valuer will look at your home to see what it's worth. The value may have gone up or down since you bought your share, but is more likely to have gone up.

How much will it cost?

You will be responsible for paying your legal fees, as well as the other costs of selling, such as cleaning and decorating expenses, moving costs and any fees involved in transferring or paying off your mortgage. Bear in mind that you may be charged a large redemption penalty if you sell up and pay off your mortgage early, so talk to your lender about this and make sure you know exactly how much you'll have to pay before you decide to sell. If the penalties only apply for a certain amount of time, you may find it cheaper to wait a while.

What if I now own the home outright?

If you've bought all the shares in the home, you can sell it on the open market without the housing association's involvement.

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Last updated: 31 March 2015

Housing laws differ between Scotland and England.

This content applies to Scotland only.

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