If you want to buy a home of your own, but don’t quite have enough money to do so, shared ownership could be a good option for you.
What is shared ownership?
Shared ownership is a scheme designed to help those who might not otherwise be able to purchase a home of their own. With shared ownership, you buy a percentage of your home and pay a reduced rent on the share you don’t own.
When your finances allow, you may have the option to buy more shares until you own your home outright. This is called staircasing. Some of our rural developments have restricted staircasing to ensure the property remains affordable for future generations of local people. For rural homes you will only be able to staircase to a maximum of 80% ownership.
How does shared ownership work?
You buy a percentage share of a home that has been independently valued at full market value. Depending on what you can afford, this initial share may be as little as 10% or as much as 75%. The minimum share you can buy depends on your household income and savings. You take out a mortgage on the share you own and pay rent to Hastoe on the remaining share, along with a service charge. The service charge covers costs such as buildings insurance and estate maintenance. If you eventually own your home outright, you’ll no longer pay rent but may continue to pay a service charge.
Do I qualify?
You may qualify for shared ownership if you have an annual household income of less than £80,000 and can afford the combined cost of mortgage repayments, rent and service charges based on the percentage available. You’ll also need to be able to secure a mortgage with an approved lender and provide a minimum cash deposit of between 5% and 15% of the value of the share you are buying. You should also have around £4,000 in savings to cover additional costs, such as solicitors’ fees.
Who gets priority?
Priority for shared ownership homes is given to Ministry of Defence personnel. If no priority household succeeds in securing the property, it will be made available to all other applicants who meet the buying criteria. These criteria are often specific to each individual housing development.
Rural priority
If you’re interested in a shared ownership home in a rural area, you will usually need to demonstrate a local connection to the parish where the homes are located or to surrounding parishes.
Generally, a local connection means you:
- Are currently a resident in the parish.
- Previously were a resident in the parish but were forced to move away because of a lack of affordable housing in the area.
- Have close family who live in the parish (parents, children or siblings).
- Have permanent employment in the parish.
In some cases, a close connection to a neighbouring parish or District may also make you eligible. We may ask the parish council or local authority to verify the local connection information you provide.
7 Steps to buying a Hastoe home
Step 1: Registering your interest
If you would like to apply for a shared ownership home, you will need to let us know which property you are interested in. All available shared ownership homes can be found on the Share to Buy website.
Step 2: Applying for a Hastoe home
Once you have identified a property, you will need to complete an application form and pass a stage 1 affordability assessment.
Read our first come first served policy
Read our minimum surplus monthly income policy
Step 3: Viewing
Once you have been deemed eligible, we will arrange a viewing of the property.
Step 4: The offer
Our sales team will send you an offer pack containing an ‘acceptance of offer’ form. To accept, you will need to complete and return this to Hastoe within one week. You will also need to provide details of your chosen mortgage lender and solicitor, and pay a reservation fee of £500 if the property is a new build. At this stage, you will complete a stage 2 affordability sign off to determine the share you can afford.
Step 5: Sales progression
Once we have received your offer paperwork, you will need to appoint a solicitor to carry out your legal work. They will:
- Review the property lease.
- Talk to your mortgage lender to make sure everything is in place.
- Carry out searches to check for legal, environmental and planning issues that could affect your home in the future (such as new developments or roads).
- Make sure that all the relevant paperwork is in place so the sale can go through.
Solicitors’ costs will vary so we recommend that you check their fees before you appoint one as you are responsible for paying your own costs.
Step 6: Exchange of contracts
Once your solicitor has completed the legal work, you will be given a report with the findings of the searches and any other relevant information. You will then need to provide your deposit to your solicitor, which is paid to Hastoe’s solicitor, or the seller's solicitor, on exchange. After you have paid your deposit and signed the contract, the exchange of contracts can take place. At this point, you are legally committed to buying the home.
Step 7: Completing and moving in
Completion will happen on a date agreed by you, Hastoe, and both solicitors. This may occur anywhere from one day to one week after exchange. Upon completion, you’ll be expected to pay the first month’s rent and service charge in advance.
If your home is still being built when you buy it from us, we’ll let you know when it is ready, and when you can set your moving date. On the day of completion, your mortgage funds are transferred from your solicitor to ours. If you are purchasing a new build property, our solicitor will notify us that completion has taken place, we will then arrange for you to collect the keys or have them sent to you. If you are purchasing a resale property, the collection of keys will be agreed with the seller.
The costs of purchasing a shared ownership property
As explained above, you will need access to at least £4,000 in savings to cover the costs of the buying process. This will include:
- Reservation fee - When you are offered a new build property by Hastoe, you will be asked to pay a £500 reservation fee. This fee is deducted from the final purchase price when you complete. This is not required for resale properties.
- Mortgage costs - Your lender will arrange to value the property to check it is worth the funds they are lending. This cost varies between lenders but is typically around £400.
- Mortgage arrangement fee - Your mortgage lender will also charge you a fee for arranging your mortgage. The amount depends on your lender and the length and terms of your mortgage. This fee will range from £400 to £1,500 and is not refundable.
- Solicitor fees - Typically, it will cost between £800 and £1,500 including fees, searches, land registry fees and expenses. We can provide you with a list of experienced solicitors if required.
- Stamp duty land tax - This is a government tax that may apply when buying your home. The rules on stamp duty change from time to time, so your solicitor will advise you of current rates.
- Deposit - Your mortgage lender will require a minimum deposit, usually between 5% and 15% of the value of the share you are buying.
The costs once you have moved in
You need to consider your costs in three parts: mortgage, rent and service charge.
- Your mortgage payments may go up or down depending on interest rates and the type of mortgage you have chosen. If you are a cash buyer, you will not require a mortgage.
- You will pay rent on the share of the home you do not own. Your rent is reviewed each year and will increase in line with inflation.
- Your service charge is reviewed each year and may go up or down depending on the costs of services.
In addition to these housing costs, you will be responsible for other everyday household expenses. These include contents insurance, council tax, water, electricity, gas and other utilities such as broadband and satellite TV.
What happens if I miss mortgage payments?
Your mortgage is a legal agreement between you and your bank or building society. If you fall behind with your payments, your lender may take steps to repossess your home and sell it to recover the money they are owed.
What happens if I miss rent or service charge payments?
Your rent and service charge payments form part of your contract with Hastoe. If you fall behind with your rent, we will contact you to agree a payment plan. If this is not successful, we may contact your lender to recover the arrears, which could be added to your mortgage.
If your income has reduced, you may be entitled to housing benefit, and we can offer guidance on where to seek independent debt advice. If you remain in rent arrears and no positive action is taken, we may take legal action through the courts to forfeit your lease. This means you would have to sell the property.
What are your rights and responsibilities?
When you buy a shared ownership home you take on a Lease and become a Leaseholder. You’ll have the same rights and responsibilities as a full owner-occupier.
How do I buy further shares in my home?
Staircasing enables you to buy further shares in your home. Most people who live in shared ownership properties staircase to reduce the rent they are paying.
What happens when I want to sell?
The shared ownership home you purchased from Hastoe must be sold through us in the first instance.
How to sell your shared ownership home
