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Shared Ownership FAQs: Finance

Shared Ownership FAQs: Owning part of a property



6. FAQs

Choosing and purchasing a home is an exciting experience and one of the most important decisions you can make. To help you understand the home-buying process here is some information to help you with your decision.

 

Can I combine Shared Ownership and London Help to Buy?

No, they are two separate schemes and cannot be combined. However, a Help to Buy ISA can be used towards a Shared Ownership deposit as long as the full market value of the property is under the threshold, not just the share.

 

Can I sell the property before I’ve purchased 100% of the shares?

You can sell your home at any time. The price you sell your share for will be based on the market value at the time you choose to sell. Like any home, the value can rise and fall along with the housing market. Learn more about selling your property.

 

How long is the lease for?

You start off buying a share in your home on a lease (usually 125 years but this may vary). Your lease sets out certain conditions such as:

  1. How often your rent and service charges can increase and by what amount.
  2. Restrictions on sales and prohibition on subletting.
  3. How to purchase additional shares of the property.

 

What do I pay each month with Shared Ownership?

Each month you will pay your mortgage (on the percentage share of the property you purchased), your subsidised rent (on the percentage share that L&Q own), and your service charge.

 

What do I pay each month with a Help To Buy equity loan?

If you are using the London Help To Buy equity loan scheme, you will also need to pay back your mortgage plus the deposit loan you obtained from the government plus any interest on this loan. This is not a fixed sum and varies according to the value of your property.

 

Do I need to pay a deposit with Shared Ownership?

You will need to pay a deposit equivalent to 5% – 10% of the price of your share. The deposit needs to be paid when you exchange contracts. Like the reservation fee, the deposit is taken off the price of your share.

 

Do I need to pay a deposit with a Help to Buy equity loan?

If you are using the London Help To Buy equity loan scheme, your deposit will 5% of the full property value, this can be boosted using a loan from the government for up to 40% of the value of your home. You will need to pay back this loan, plus any interest it incurs.

 

Who will I share my home with?

As owner-occupier you have full control over who lives in your property. You will only share your home with the people you choose to live with.

 

Do I pay Stamp Duty Land Tax (SDLT)?

Stamp Duty Land Tax is a government tax on buying a home. You will need to check the stamp duty thresholds with your solicitor, because these can change depending on how much you pay for your home. Your solicitor will be able to tell you the exact cost. You pay the SDLT to your solicitor on the completion date.

 

Do I need to pay a deposit?

You will need to pay a deposit equivalent to 5% –  10% of the price of your share. The deposit needs to be paid when you exchange contracts. Like the reservation fee, the deposit is taken off the price of your share.

 

Can I buy additional shares of the property?

You can buy additional shares of the property whenever you can afford to do so. Buying additional shares in your home is known as ‘Staircasing’. You can do this a maximum of 3 times during the term of the lease and the minimum share you can purchase each time is 10%. The price of the additional shares will be based on the market value at the time. Like any home, the value can rise and fall along with the housing market. Learn more about staircasing.

 

What is the Next Steps scheme?

L&Q have developed a new way to help our existing shared owners who want to move home but also stay in Shared Ownership. Next Steps by L&Q helps you buy a home that is suitable for your current housing needs. It enables you to buy a home on the open market, meaning you choose the type and style of home to suit you.

The Shared Ownership grant that is secured on your current property would be transferred to the new property, with a top-up to help cover the increase in price for the property you are buying. You will be able to purchase a share in a property between 35% and 75% of the full market value and pay a subsidised rent on the remainder.

You will need to visit a financial advisor to make sure you can afford to buy your new home and that you will be able to get a mortgage.
Eligibility for Next Steps:

  • You must be a current shared owner with L&Q.
  • Your current Shared Ownership accommodation is overcrowded and you require at least one or more extra bedrooms.
  • Your annual household income must be less than £90,000.
  • You cannot be in rent arrears or have been in arrears during the last 12 months.
  • We will expect you to put any equity you have acquired in your current home into your new property.

Please note that the Next Steps scheme has limited funding available. Applications will be assessed on a first come first serve basis, terms and conditions apply. For more information please email: nextstepso@lqgroup.org.uk

 

Why choose Next Steps?

  • You can buy a larger home to suit your current housing needs.
  • You can remain in a Shared Ownership property rather than buying outright on the open market.

 

What guarantees do I have when I buy a home from L&Q?

For added peace of mind, all L&Q homes come with an L&Q Warranty. This lasts for 2 years from the date of legal completion and covers items not included in the NHBC Buildmark cover. For the 2-year period, L&Q guarantees items supplied as part of your new home, covering repairs needed due to faulty workmanship or materials.

The NHBC Buildmark cover is valid for 10 years from the date the building was finished. Your Sales Negotiator can provide you with more details on the L&Q Guarantee and the NHBC Buildmark cover.

 

What is meant by the term Intermediate Market Rent (IMR)?

If you cannot afford to buy your first home yet but you want to save for a deposit to buy a home at a later date, IMR is designed to help you. IMR offers you the opportunity to rent a home at less than the market rate. You can expect to pay rent that is around 20% lower than you might pay for a similar home in a similar area if you were renting from a private landlord. This enables you to save for a deposit. As well as being more affordable, as an L&Q resident you’ll also have the assurance that your home is being delivered, managed and let by a registered housing provider.

If you are interested in renting an IMR property, please send your name, telephone number, and the size and location of properties you are interested in to Imrlettings@lqgroup.org.uk. Our lettings team will be contact with you to discuss the IMR properties we have available that may be suitable for you.

 

What is meant by the term ‘resale property’?

Resale properties are Shared Ownership properties that were built and sold previously but are now available for purchase again on a part buy, part rent basis because the existing owner wishes to sell.

 

Didn’t find the answer you were looking for? You can read more about buying a Shared Ownership home in our Buyers Guide