Shared Ownership

When you’re considering a Shared Ownership home, it’s helpful to understand the potential costs involved in the process to ensure that it is the right choice for you. Please see a snapshot of expected costs below:

Upfront Costs

Deposit for the purchase. When you buy a Shared Ownership home, you’ll need to pay a deposit based on the share you’re purchasing. This usually ranges between 5% and 10% of the value of your share.

For example:
If you buy a 50% share of a home worth £300,000, your share is valued at £150,000. A 5% deposit would be £7,500 required to proceed with the purchase.

Solicitor Fees
You’ll need a solicitor or licensed conveyancer to handle the legal work on your behalf. Be sure to choose one familiar with Shared Ownership and who is approved by your mortgage lender, as your mortgage offer will need to be approved by bdht.

Mortgage Approval Fee

Bdht does charge a fee for the approval of your mortgage which is a requirement of the purchase process.

Stamp Duty

If you’re a firsttime buyer, you may not be required to pay any Stamp Duty. However, Stamp Duty can be complex, so it’s best to ask your solicitor early in the process to confirm what you may need to pay. This can be calculated using the official gov.uk Stamp Duty calculator for guidance.

Mortgage Broker Fees

Many mortgage brokers charge a fee, either a fixed amount or a percentage of the purchase price. Your broker should explain their fees clearly before starting any work for you.

Monthly Costs Once You Move In

Mortgage Payments

Each month you’ll make repayments on your mortgage until it has been repaid. Your payment amount will depend on:

• the size of the share you bought
• your deposit
• your mortgage term remaining
• the interest rate

Rent

Shared Ownership homes are sold on a leasehold basis. When your lease is first issued, rent is typically set at 2.75% of the share still owned by bdht.

Rent amounts vary depending on the share you buy and the value of the home at the time of purchase, on a re-sale property the rent amount for the same equity share as the prior owner would remain the same, increasing on an annual basis as per the terms of the lease.

Service Charge

Service charges cover the cost of maintaining shared areas and essential services to bdht such as:

• Communal repairs and maintenance
• Building insurance
• Lifts, lighting, cleaning, grounds maintenance, door entry systems
• Estates Management fees

Service charges can increase or decrease each year, as long as the change to the charges remain reasonable.

Insurance

• Buildings insurance is normally arranged by the freeholder (usually bdht) and is usually included within your monthly service charge. This insurance covers major damage to the structure of your building, including the external walls, roof, and communal areas. It protects you against events such as fire, storms, floods, leaks, or subsidence. Please note that buildings insurance does not cover daytoday repairs or general maintenance.

• Contents insurance, which protects your belongings, is your responsibility. It’s not compulsory, but it’s strongly recommended for every Shared Owner.

Ongoing Home Ownership Costs

As a shared owner, you’ll be responsible for:

• All repairs and maintenance inside your home (as set out in your lease) Sometimes these can be covered within the initial defects period or NHBC if your property has been recently built.
• All utility bills
• Council Tax
• Decoration

Once you’ve moved into your shared ownership home, you’ll have the opportunity to purchase additional shares: a process known as staircasing. Under the terms of your lease you can choose to purchase more shares of your home.

Why should I Staircase?
There are many benefits to increasing the share of your property that you own, some being:

• If you choose to purchase more shares, your mortgage will increase while your rental payments will decrease at the same time.
• In some instances, you can purchase up to 100% of your home, in which case you would no longer pay any rent, just your mortgage along with any service charges and ground rent.
• The more of the share you own, the more you will benefit from increased property prices.

As an example, if you initially purchased a 50% share in your home and went on to buy an additional 20% down the line, you would then own 70% of the property. When this transaction has completed you would only be paying rent on the remaining 30% value of the home. This allows shared owners to build the percentage share that they own in their home and in some cases work towards 100% private ownership.