Shared ownership schemes allow someone to own a portion of a property and to rent the remainder from a housing association. For years, Co-ownership Housing has been the best known scheme for people who want to buy a home but who cannot afford to purchase 100% of the property they’re interested in. Recently, a new shared ownership scheme called FairShare started operating in Northern Ireland. This scheme allows people to partner with a housing association to buy a property. Currently, Apex, Choice and Clanmil housing associations are participating in this scheme.
Buying a home with Co-ownership
You can apply to buy a home through co-ownership if
- you are over 18
- you could not afford the property without using the co-ownership scheme
- you don’t own any other property and you don’t have any unpaid debt relating to an old mortgage or secured loan
- the property you wish to buy is not a Housing Executive or housing association property
- the property you want to buy is not valued at more than £165,000
- your total debt is not more than £6,000 or not more than £12,000 if you are applying as a couple.
There are 9 starter shares available for homebuyers, with a minimum of 50% and a maximum of 90%, in steps of 5%. You can buy as much as you can afford initially, up to 90% of the property value.
You will have to pay a monthly mortgage on the part of the property you own and you have to pay rent to NICHA for the share of the property they own. You are responsible for all repairs in the property.
Once you’ve found a property that you would like to buy, you should contact Co-ownership to start the application process. There are a number of lenders that will provide mortgage for co-ownership purchases, including Ulster Bank.
Buying a home with Fair Share
You can apply to buy a home through Fair Share if
- you do not own any property or shares in property in the UK or abroad
- you cannot afford to buy a 100% share of a home suited to your needs that is within reasonable distance of your work
- you can’t afford to rent a place within reasonable travelling distance of your work
- you are eligible to get a mortgage for at least 50% of the purchase price
- your salary meets FairShare’s affordability guidelines for potential purchasers.
There are a number of properties listed on the FairShare website which can have been preapproved for the scheme. If you’re not interested in these, but have found another property that you’d like to buy with the help of this scheme, you can contact Fair Share to see if it is eligible under the scheme’s rules.
Getting a mortgage
You will need to apply for a mortgage for the portion of the property that you intend to purchase.
If you are buying through the FairShare scheme, you can apply for a mortgage with Lloyds, including Halifax, Nationwide or Santander.
A number of lenders, including First Trust, Ulster Bank and Bank of Ireland, offer mortgages to eligible customers who wish to purchase a property with the assistance of Co-ownership.
You must pay a £400 fee when you apply to buy a property through Co-ownership. This fee covers the application process, valuation fees and legal services. If your application does not proceed, you may get up to £210 of this refunded. Fairshare does not charge any application fees, but you will have to pay the normal fees that anyone buying a home must pay. This will include fees for things like valuation, mortgage, stamp duty and legal costs to your solicitor.
You will have to pay rent on the portion of the property that you do not own. When you apply, you will be given an idea of how much rent you will pay over the first few years you are in the property. If you fall behind on your rent or on your mortgage, you could lose your home so it’s important to get advice urgently if your finances are stretched.
Increasing your shares in the property
As your financial circumstances change, you may want to increase your shares in the property. This is called staircasing.
If you bought with FairShare the amount that you will pay for additional shares in the property will depend on the value of your property at the time you apply for extra shares. If the property’s value has gone up the price of shares will be based on this new valuation. If the property’s value has decreased, the price will be based on the value of the property at the time you first purchased it. FairShare requires that you staircase up in blocks of 10%.
As part of the staircasing process with Co-ownership, a valuation will be carried out on the property and the report from this process will explain how much your new shares will cost. Find out more about staircasing from Co-ownership's website. Co-ownership allows you to staircase up in blocks of 5%. You can read more about staircasing with FairShare on its website.
If you increase your share in the property and use a mortgage to finance this purchase your mortgage payments will go up accordingly. However, your rent payments will reduce as you increase your shares in the property.