What is the scheme?
Under a Shared Ownership scheme you part-own and part-rent your home.
The minimum share bought in a property is usually 25% and in some developments it can be higher than 25%. The maximum initial share you can purchase is 75%.
- Help to Buy : Equity Loan
This scheme helps you by keeping your mortgage payments lower.
If you can offer a deposit of 5% of the home’s total value then you can borrow up to 20% (or 40% in London) of your home’s value from the government. This loan is interest free for the first 5 years.
Who is eligible?
First time buyers, or people who previously owned a home and have since sold but are unable to buy on the open market. You must have a combined household income of less than £90,000 within London and £80,000 outside of London.
For specific development eligibility criteria please see the property listing.
- Help to Buy : Equity Loan
First time buyers or people who have sold, or are in the process of selling, their other home. From march 31st 2021 the scheme will change.
What type of property can I buy?
A new build property or a re-sale property that was built and sold in the past and is now being sold by existing shared owners, or has previously been part of the Shared Ownership scheme.
- Help to Buy : Equity Loan
The home must be a new build and worth less than £600,000. From March 31st 2021 there will be Regional price caps in place.
How much deposit do I need?
At least 5% of whatever share you’re buying. For example, on a 25% share of a £400,000 home, this would be £5,000.
- Help to Buy : Equity Loan
At least 5% of the worth of your entire home. For example, on a £400,000 home, this would be £20,000.
What about my monthly repayments?
You’ll pay the mortgage on your owned share. You also pay subsidised rent on the remaining share. The rent is increased annually in accordance with the lease.
You also pay a service charge to maintain the building.
- Help to Buy : Equity Loan
You will pay mortgage payments. You will also pay £1 per month as a management fee for your equity loan.
After 5 years you will be charged monthly for the equity loan if you have not yet repaid it. If the property is leasehold then you will also pay a service charge to maintain the property.
What about stamp duty?
There are two ways you can pay stamp duty.
You can pay either a one-off payment based on the full market value of the property as if it had been purchased outright from the beginning, or staged payments paying the amount due on the initial share, and then only paying further amounts when the shares purchased exceed 80% of the value of the property (source: Greater London Authority).
Your solicitor will be able to tell you the exact cost.
- Help to Buy : Equity Loan
You’ll pay stamp duty as normal on the value of the entire home.
Read more about the Stamp Duty Holiday here.
Anything else to repay?
No.
Although, if you wish to buy more shares or sell your home there are costs involved. Read more about those costs here.
- Help to Buy : Equity Loan
The loan is interest free for the first 5 years and after that you’ll pay a fee each month.
What about selling?
An independent valuation of your home will be carried out. L&Q are given first opportunity to sell your home themselves within the Shared Ownership scheme. If they are unable to find a buyer within an agreed timescale, you can sell it yourself on the open market. Read more about selling your Shared Ownership home here.
- Help to Buy : Equity Loan
If you haven’t repaid the loan by the time you come to sell the property, the government will reclaim its percentage stake in your home at its current value.
For example, taking a loan of 40% means you may be paying back 40% of the sale price of your home to the government when you sell. You’ll need to obtain an independent valuation prior to sale to determine the amount to be repaid.