A guide to being a Shared Owner
Below are details taken from our ‘Guide to being a Shared Owner’ handbook and is for those thinking about becoming a shared owner, including information and guidance on your rights and responsibilities as a shared owner of a Weaver Vale Housing Trust home. It describes some of the important responsibilities and commitments associated with being a shared owner with the Trust (please note that Prospa Homes is the brand name we use for our shared ownership activities).
The handbook is for guidance only, it is not a legal document and does not replace your lease which sets out the rights and responsibilities of both parties in full and should be your first point of reference should you have any queries. We hope you find it useful, please contact us with any questions and we would be more than happy to help.
For more information about who is eligible for shared ownership and the purchase process – check out our guide here
The Shared Ownership Lease
The lease is the legal document entered into by you and the Trust (in this document referred to as “we”/”us”) that sets out the rights and responsibilities of both parties.The lease provides you with long term ownership of your home. Normally it will be for a minimum term of 125 years, but if you have bought an existing shared ownership home rather than a brand new home then the lease may have fewer years to run, although it is possible to apply to us for a lease extension to increase the remaining term (please contact us for more information).
Normally, but not always, we own the freehold of the land on which your home is built. If we do own the freehold, we can transfer it to you when you purchase 100% of the shares in your home (please note this would not apply to apartments, please contact us for more information). When buying your home, you will have had the chance to read your lease before signing it and your solicitor should have explained the
terms of the lease and the responsibilities you were taking on.
Rent & Service Charge
How is rent calculated? The rent is the amount you need to pay on the share of your home which remains in our ownership. So, for example, if you have bought a 40% share, you would pay rent on the remaining 60%.
The rent you pay helps us finance the development of the property. Although you pay rent you have different rights, responsibilities and commitments as a shared owner than you would do if you were a general needs tenant of the Trust.
How and when your rent will increase is explained in the lease. Typically, your rent will increase on the 1st of April each year. The rent increase is normally based on the Retail Price Index (RPI) + 0.5%. The RPI figure used is based on the September published figure, unless the lease states otherwise.
About your rent
Rents will vary depending on the amount you own. Rent is calculated at 2.75% a year of the value of the share you don’t own at the time you buy. This means if you ever want to purchase 100% you won’t pay rent any more.
When is rent due & how to pay Rent and service charges are due monthly in advance on the first of each month. Your rent should be paid by direct debit. If you’ve not set up a Direct Debit to pay your rent and service charge, let us know and we can send you the relevant form to complete.
Unlike the unpredictability of renting privately, shared ownership rents will only increase at inflation +0.5% each year. Whether you’re a first-time buyer living with your parents, a tenant tired of renting while struggling to save for a deposit, or a former home owner who has sold/is selling their home, or you’ve had a change in circumstance such as divorce… shared ownership could be for you.
Buying more shares (known as staircasing)
When can I staircase?
You can buy a greater share in your home whenever you can afford to and want to, including up to 100% on most of our shared ownership homes. If you do not want to buy a larger share, then you do not have to; you can just retain your original share.
How do I staircase / buy a greater share?
The lease will outline how you can buy a greater share. You can buy shares in a minimum of 10% tranches. Once you reach 75% the next step would be to aim for 100% when you would become the full owner of the property and no longer a shared owner, and we may be able to transfer the freehold to you. Please note this would not apply if your home is an apartment (please contact us for further information).
What happens to my rent when I staircase (buy a greater share)?
Your rent will reduce proportionally when you purchase a greater share. The rent reduction is based on the extra percentage share you purchase, not what has happened to the value of the property. Your lease provides information on how the new rent will be calculated and we will also provide details when you contact us about staircasing.
Remember: If you purchase 100% then you will no longer pay any rent and you will own your home outright
What does it cost to staircase?
For example, if you wished to buy a further 40% and the property was valued at £160,000 at that point in time then the extra 40% would be £64,000. We would recommend you speak to your Financial Advisor or current mortgage lender to discuss additional borrowing and to confirm affordability.
The cost of buying a greater share is based on the market value of your home at the time you staircase (not the original value you paid when you first purchased). To work this out you will need a valuation. We would be happy to discuss your options for appointing a valuation surveyor. You will be expected to pay for the valuation along with any legal and mortgage fees. You will also need to consider whether stamp duty applies to this transaction. The surveyor you appoint must be a RICS qualified surveyor and have no interest in the further sale of the property.
For more details about being a Shared Owner including
- Insurance and property maintenance
- Reverse or downward staircasing
- When change happens
- Changes in the housing market
- Living in your home
- & more!
Download the full brochure here
- Terms and conditions apply
- Please obtain independent legal and financial advice before purchasing.
- If you don’t keep up rent and/or mortgage payments you may lose your home.