What is shared ownership?

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1 What is shared ownership? Shared ownership is a form of low cost home ownership that combines renting with buying. It is aimed at people who want to have a stake in owning their home but can t buy outright at the moment. How much money will I need? You will need a mortgage for the price of the share, or have the money to buy the share outright. Anyone with a joint household income of over 60,000 is not eligible to apply for this scheme. Who is eligible? Priority is given to first time buyers living in rented accommodation, people who have separated from their partners and people who can t afford to buy a house on the open market. How does shared ownership work? You buy a share in the property (that you might need to arrange a mortgage for) and pay a monthly rent called an occupancy payment to Staffordshire Housing Association (SHA). The amount you pay to SHA will depend on the size of the share you have bought. What are the advantages of shared ownership? You will have a capital stake in the property. It may cost more than renting but you will benefit from any increase in value.

2 What will shared ownership cost me? 1. Mortgage The amount you pay back to your bank or building society will depend on the size of the share you buy, the type of mortgage you choose (repayment, endowment etc.) and the interest rate at the time. Please note that lenders will only offer mortgages of up to 95% of the value of your share. You will have to pay the remaining amount. 2. Rent (Occupancy payment) The amount of rent you pay will depend on the size of the share you buy the larger the share you own, the lower the rent. Your rent includes: The costs of the buildings insurance. SHA s management fee Your rent will be reviewed every year. When do I pay my rent? You will pay your rent in advance every month by direct debit. Low income shared owners may be able to claim welfare benefits from the local council to help with payments. You will need to apply to your local authority directly for this. Who is responsible for repairs and maintenance to the property? Like any other owner occupier, you are responsible for all internal and external repairs on your property and any ongoing maintenance costs (unless it is a defect on a new build property this will be covered by the building contractors guarantee). What should I do about buildings and contents insurance? 1. Buildings insurance. SHA is required to insure the property on your behalf and the cost is included in your rent. We advise you not to take out lender s building insurance.

3 2. Contents insurance. You are responsible for arranging your own contents insurance. Are there any other outlays associated with shared ownership? 1. Legal fees. You will need a solicitor. Don t be afraid to shop around and get lots of quotes before you decide on one. 2. Valuation fees. Your bank or building society will carry out and charge you for a survey before offering you a mortgage. They will advise you on the different types you can choose from and how much they cost. 3. Deposit for new build developments. If you are successful you will need to pay a reservation fee of 250. This will secure the property for you and we will take it off the market. This payment will be taken off the cost of your share when the sale is completed. Please note the valuation fee will not be refunded if you decided to pull out of the scheme at this point. 4. Utility Bills. You responsible for all of your utility bills; this includes your gas, electricity, telephone and council tax. What if I fall behind with my payments? It is important that if you miss any rent or mortgage payments you contact SHA and your bank immediately. If you repeatedly fall into arrears or you fail to make arrangements to repay them, your home could be repossessed and sold to cover the outstanding debts. What if I want to move? If you decide to move and want to sell your share, a valuation report will be needed to see how much the property is worth (current market value). This will determine the selling price. Our shared ownership homes are for people who can t buy on the open market so your property can only be offered for sale in the following ways for the first 28 days.

4 1. Direct sale of the share You can sell your property as a direct sale to another person as long as they have applied to SHA and meet the relevant criteria. The outgoing shared owner is responsible for the legal expenses of the sale. 2. Nomination by SHA We hold a register of people interested in owning a shared ownership home. We will contact people on our register to advise of the re-sale and invite them to arrange a viewing and, if interested, to make an offer to buy the property. If SHA has not found a suitable buyer with in the 28 day period you will be free to market the property yourself, this is usually done through an estate agent. Your Lease Once you have bought your home you are the leaseholder. Your lease is a legal document that explains yours and SHA s rights and responsibilities. The details in this handbook are intended for guidance only. The following sets out your rights and responsibilities under the conditions of your lease. Definition of Leaseholder and Freeholder Leaseholder A leaseholder is someone who owns a lease. Your lease gives you the right to live in part of the building for a period of time. The initial term of a lease sold is 125 years. As a leaseholder you do not own the land surrounding your home or the building that your home is in. You can sell the number of years remaining on your lease. Freeholder A freeholder is a person or company that owns the freehold of the building. This means that you will own your property on a lease, but the freeholder will own the property outright. In this case the freeholder is SHA, the landlord. What is the lease? The lease is the contract between you and SHA. It defines your building and estate (if applicable), and gives details about your home.

5 The lease is an important document that you need to keep a copy of. You should request a copy from your solicitor at the time you purchase your home. If this is not possible SHA or your mortgage provider can give you a copy for a small fee. Your rights under the lease Your rights are: To live in your home for the length of the lease. The quiet enjoyment of your home. If you are a shared owner, you have additional rights to: Buy more shares of the equity by staircasing (purchasing extra shares in your home). Buy the freehold if you have purchased 100% of the equity of a house through staircasing. This means that you will own 100% of the building and land and the freehold title will be registered in your name. What parts of the house are you responsible for? You will be responsible for all repairs and maintenance of your home. As a leaseholder, are you allowed to alter your house? You must get written permission from SHA if you want to make any changes to your home (changes to the internal layout or replacing windows for example). You are also responsible for getting planning permission if needed. Can you put up your own TV aerial or satellite dish? You must get written permission from SHA before putting up your own TV aerial or satellite dish. You may also need permission from the local council s planning department so you should contact them too. In certain situations we may not give you permission but we will always explain why. Nuisance behaviour You, your family and your visitors must not cause or be a nuisance to your neighbours or other people living on your estate. You must not cause any damage to your property. Your property can only be used as a private home and must not be used for any trade or business purposes.

6 Who insures your home? Your home is insured under a block policy that covers all of SHA s properties. Each property is insured for the full re-building costs. A summary of the cover will be sent to you in October every year. If you need to make a claim please contact SHA. We will then ask you to contact the broker directly. There is 100 excess on general claims and 1000 excess for subsidence, landslip and heave. The information contained in this FAQ does not constitute an offer or contract. Details provided are for guidance only and may be subject to change.