Prince Evans – A Guide to Shared Ownership Resale Properties

Shared ownership resales: An Affordable Homeownership Option

Shared ownership resales are fast becoming an affordable homeownership option since the end of the Help to Buy Scheme. Coralie Phelan, Partner at Prince Evans Solicitors LLP, considers the key issues when purchasing a shared ownership resale property.

WHAT IS RESALE SHARED OWNERSHIP?

Resale shared ownership is the purchase of an existing home that was originally purchased through the shared ownership scheme and is now available for sale, similar to purchasing an existing property on the open market.

AM I ELIGIBLE?

Yes, if you:

• Have a household income of less than £80,000 or £90,000 if you want to buy in London.
• Are unable to purchase a property on the open market.
• Must have sufficient savings to cover legal costs, pay the deposit, pay Stamp Duty, and other moving costs.
• Have a good credit history.
• Each housing association has its own affordability criteria.
• Cannot own another home.

I THINK I AM ELIGIBLE – WHAT IS THE NEXT STEP?

Your local housing association website will have information on all the properties that are currently available. Many estate agents advertise shared ownership properties, and some housing associations also advertise resale properties for sale on various websites. Once you have found a property or properties that you would like to view:

• Speak to the housing association sales team to check whether you meet the eligibility criteria.
• Arrange a viewing of any properties you are eligible to purchase.
• You may need to pay a fee to reserve a property.
• Speak to a mortgage adviser regarding all the mortgage products available for shared ownership.

I FOUND MY DREAM HOME, HOW LONG WILL IT TAKE?

The honest answer is that this depends on a number of factors and is very difficult, if not impossible, for your conveyancer to estimate. Each transaction is different, as is each property. The national average is approximately 10-12 weeks. The factors that might affect time frames are as follows:

• The length of the chain.
• Search results.
• Your mortgage.
• How quickly the seller’s solicitors respond to enquiries.
• Whether the Building Services Act 2022 applies.

HOW DOES SHARED OWNERSHIP RESALE WORK?

• You will need to apply for a mortgage (unless you are a cash buyer).
• You will need to have a deposit of between 5% and 10% of the share price.
• You can purchase a share of the property usually between 10% and 75% subject to eligibility criteria.
• You may have to purchase the maximum percentage share that you can afford.
• You pay rent to the housing association on the percentage you do not own.
• You will have to pay a service charge for any shared services or estate maintenance.
• You will not be able to rent out or sublet until you own 100%.
• Your lease will outline your repair and maintenance responsibilities.
• The lease will provide for annual upwards-only rent increases.

WHAT’S THE LEGAL PROCESS?

The resale conveyancing process at a glance:

1. Instruct your conveyancer: You and the seller will need to instruct separate conveyancers. It’s advisable to obtain at least two or three quotes. Once instructed, your conveyancer will request certain information, and you will need to fill out initial questionnaires and provide evidence of your identity and the source of deposit by way of bank statements and other evidence.
2. Contract papers: Your conveyancer will confirm instructions with the seller’s solicitor and request draft contract papers.
3. Title investigation: Once your conveyancer has received the draft contract pack, the papers will be reviewed, and enquiries raised to ensure that you receive a good and marketable title to the property.
4. Mortgage: Your conveyancer acts for both you and your lender and will review both your mortgage offer and report to you on the terms.
5. Report on Title: Your conveyancer will prepare your report on title once they have the results of your searches and replies to enquiries. This report is the most important document of all and will explain the terms of the contract and lease and supporting documents. You will be invited to sign the contract once you have read the report. You will be asked to pay your deposit at this stage.
6. Exchange of Contracts: Once you have signed the contract, all parties in the chain can discuss a completion date, and you will be asked to provide your authority or consent to exchange of contracts. Once exchanged, the contract becomes legally binding, and the completion date is fixed.
7. Completion: Your conveyancer will send you a completion statement between exchange and completion and collect in the balance of funds due from you to complete your purchase.
8. After completion: Your conveyancer will apply to the Land Registry to register your ownership.

CAN I PURCHASE MORE SHARES LATER ON?

You can purchase more shares through a process known as staircasing. You can usually purchase shares in increments of 10%. You will need to apply to the housing association, who will value the property at your expense. You have 12 weeks to complete the staircasing from the date of valuation. It’s imperative that you instruct a firm specializing in staircasing, such as Prince Evans Solicitors.

HOW DO I SELL A SHARED OWNERSHIP PROPERTY?

When you want to sell your shared ownership home, you should serve notice on your landlord of your intention to do so. Depending on the terms of the lease, your landlord usually has eight weeks to either:

• Decide to buy back your shares termed as accepting a surrender of the lease, or
• Nominate a buyer from its waiting list. If you sell to a buyer nominated by the association, you may have to pay a resale fee, much in the same way as you would pay an estate agent commission if you sell on the open market. If your landlord does neither, you are then free to sell your share on the open market. Each lease is different depending on the age of the lease, and your conveyancer will advise you at the point of purchase as to the sale provisions.

HOW DO I KNOW IF SHARED OWNERSHIP RESALE IS RIGHT FOR ME?

There are many benefits to purchasing a resale property. Resale properties come in all different shapes and sizes and have charm and character. You can speak to the seller directly regarding the property during the purchase process. There is the added advantage of being able to fix a completion date on exchange. The conveyancing process is largely the same as with an open-market purchase. Shared ownership resale is a great option for first time buyers and provides a range of properties varying in size, age, and lease term. It’s imperative to instruct a conveyancer specializing in resale shared ownership conveyancing to guide you through the process.

Prince Evans specializes in all aspects of conveyancing. Please contact Prince Evans for all your conveyancing needs and for a friendly no-obligation quote on 020 8567 3477 or nbh@prince-evans.co.uk.