Shared ownership is a great way to buy a home of your own. You simply buy a share that suits your present income. In the future, you can increase your share and ultimately buy your home outright - or sell your share to another purchaser.
How does shared ownership work?
Shared ownership is what the name suggests. You buy a share in a property from Luminus Homes and pay rent for the share you do not own. The share you purchase is sold to you on a long lease. The minimum share you can buy to begin with is usually 50%. At any time after one year from the date of your initial purchase, you can apply to buy further shares. If you purchase 100% of the property, you will be transferred the freehold. Please note that for some schemes, you can only buy a maximum of 80%.
What will I have to pay?
The payments that you will have to make when you become a shared owner will depend on the value of the property, the share that you are buying and how you fund the purchase. Under normal circumstances, your monthly payment will be in three parts:
A payment to the bank or building society where you obtained your mortgage
A rent payment to Luminus Homes, which will depend on the size of the share you buy
A building insurance premium for the property, collected monthly with your rent.
The rent that is charged covers the cost to us of borrowing money to build the property and our management costs. The rent is reviewed every year and will generally rise in line with the Retail Price Index.
A service charge may also be payable if we provide communal services, for example a shared driveway or landscaping costs. All other outgoings such as council tax, water and fuel charges would be paid by you separately.
What other costs will I have when buying a property?
You will need to budget for such items as solicitors' fees, lenders survey and arrangement fees, and you may be liable to pay stamp duty. A mortgage indemnity premium (a one-off insurance policy levied at the beginning of your mortgage) may also be payable. If you cannot get 100% mortgage on the share you are purchasing, you will have to have enough savings to make up the difference between your mortgage and the cost of the share.
How and when can I buy further shares?
You may buy further shares in your home in 25% increments and up to the maximum value of your home at any time after the first year of initial purchase.
The price that you pay will depend on the full market value of your home when you apply to buy further shares. The valuation will exclude any major improvements you have made to your home and assumes that the property has been kept in good order (there is a fee for this valuation to be paid by you). The valuation is valid for three months. Luminus Homes will then tell you the price for each extra share and how much your rent would be reduced by for each share that you buy.
How would I sell my shared ownership home?
Share owners have a choice of how to sell their home:
- You can sell your share by selling the lease that you have. To do this, you must contact us - we then have four weeks from initial contact to nominate a prospective purchaser. The price that the share will be sold for is based on an independent valuation (the fee for this valuations paid by the shared owner that is selling). If we do not make a successful nomination within the four week period, then you are free to sell your share on the open market. Any purchaser that you find will have to be approved by us and they will be advised of our right to nominate purchasers should they wish to sell. We can make no claim on any profit you make when selling your share.
The property can be sold in full. To do this, you would simultaneously buy the remaining share form Luminus Homes, and sell the property to a new owner.
Who insures my home?
You are required to arrange buildings insurance for your home through an agency of Luminus Homes. As well as getting preferential rates, this also means you can spread the cost of your insurance by making monthly payments with your rent. This insurance would not cover your items of furniture and house contents. We would strongly advise you to take out insurance to cover such items.
Who is responsible for repairs and maintenance?
All repairs and maintenance of the property are the responsibility of the occupying owner. You can carry out your own improvements and alterations if you wish. The general appearance of your home and the interests of other residents need to be safeguarded. Consent and (where appropriate) planning permission is therefore needed before you start any building work.
Do I need a solicitor?
You will need a solicitor or licensed conveyancer to handle the purchase of your share. Your solicitor will do the legal work involved in the purchase. This will include local searches, registering your purchase at the land registry and any other legal work necessary.
How do I arrange a mortgage?
Most people need a mortgage for the share they are buying. The amount that you pay each month depends on the sum you borrow and the current rate of interest. Most mortgages are arranged through a building society or bank. There are a wide variety of mortgages available to suit your needs. We strongly advise you to contact a number of mortgage lenders to see what is available and who is offering the best terms
How long will it take to complete my purchase?
This depends on when the property of your choice is due to be completed by the builders. Assuming the property is ready when you reserve, you are normally given a period of six weeks from reservation to exchange of contracts on your purchase. This gives plenty of time for your lender to issue your mortgage offer and for your solicitor to sort out the legal work. Once contracts are exchanged, your solicitor can then arrange a "completion" or moving in date for you, usually fourteen days after exchange.
How do I qualify for the shared ownership?
This scheme is intended for those who would not otherwise be able to buy their own home. You will be asked to give details of your income and outgoings so that an assessment can be made for this purpose.
I'm interested in shared ownership - what do I need to do next?
If you would like further details on any of the homes currently available, please call on 01480 428317 or email firstname.lastname@example.org.