Shared Ownership

Making home-ownership more accessible for your customers

ONLY FOR USE BY MORTGAGE INTERMEDIARIES

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What is Shared Ownership?

Criteria

Benefits and considerations

Housing associations and developers

Frequently asked questions

Additional help

What is Shared Ownership?

Shared Ownership makes home ownership accessible for more customers by allowing them to purchase a share of the property.

They could buy a share of a home, for example, 25%, 50%, or 75%, and pay rent on the remaining portion to the housing association.
Housing associations will have their own rules relating to specific share sizes customers can purchase, particularly when they are staircasing.
They pay rent on the part they don’t own.
They could increase their share later if they want to. This is called staircasing.

We support Shared Ownership/Co-ownership properties. These mortgages are not attached to a specific product, so your customers could utilise this for new build properties up to 95% LTV. Also they can select from our fixed rate products including Green products on a Capital and Interest repayment method.

This scheme is known as Co-ownership in Northern Ireland.
New build incentives are applicable. We'll accept up to 5%. We still require a minimum personal deposit of 5%.

For a Shared Ownership property your customers usually pay each month:

Their mortgage payment.
Their rent.
A service charge (for things like cleaning shared areas or fixing things).

Criteria

How to calculate LTV?

Share size and Loan to Income

Share size

Minimum share is 25% - subject to scheme rules.
Customers can purchase a share of a home, typically in increments from 25%, 50% or 75%.
If customers are looking to purchase a more specific share, housing associations will have their own rules relating to this. These rules will also stipulate what share increments customers are able purchase when staircasing.

Loan to Income

Loan to Income will be capped at 4.45x.

Remortgages

Customers could remortgage to us like-for-like or they could raise additional funds for buying a larger share in the property (Staircasing). This is the only scenario where remortgaging with additional borrowing is acceptable.
Where the customer is 'staircasing' to 100% ownership this should be keyed as a standard remortgage.
Please note, we do not offer a fees-assisted service for shared ownership remortgage applications. Free Legal products should not be selected.

Additional borrowing (Standalone or with a Product Transfer)

Customers could raise additional funds for buying a larger share in the property (Staircasing). This is the only scenario where additonal borrowing is acceptable.
To secure additional borrowing once the mortgage is live, they must have made their first six mortgage payments.
Our standard additional borrowing critieria will apply.

How much deposit does my customer need?

Benefits and considerations of Shared Ownership

Benefits

Customers don’t need to buy the whole home at once
They could start with a smaller share, which means a smaller deposit and mortgage.
It could be more affordable
Customers are only buying part of the home, their monthly costs could be lower than buying outright.
They could buy more later
If your customer's money situation changes, they could buy more shares over time. (Staircasing).
Available for both buying a new home and remortgaging
Whether they're getting on the property ladder or switching their current Shared Ownership mortgage, this option gives them flexibility.
They are still a homeowner
Even if customers own just part of it, it’s theirs. They can live in the home and make it their own.

Considerations

Customers will pay rent and mortgage
They will pay rent on the part they don’t own, as well as their mortgage payments. When we calculate affordability, we’ll use either the payment entered or 3% of the share the customer doesn't own, whichever is higher.
There may be extra costs
Like service charges or fees when they buy more shares (staircasing).

Customers will need to sell their share if they move
They can’t rent it out or keep it — they'll need to sell their share if they want to leave.
Customers can port their mortgage rate when moving from a Shared Ownership property to a Non-Shared Ownership property. Shared Ownership/Co-Ownership mortgages can't be ported between Shared Ownership properties. Porting from a Non-Shared Ownership property into Shared Ownership is also not permitted.
Consent to let will not be available.
Only registered scheme providers will be accepted.
Loan to Income will be capped at 4.45x.
Minimum share is 25%.
The lease must allow staircasing up to 100% of the value of the property.

Housing associations and developers

Not every home is available through Shared Ownership.
It depends on what housing associations and developers are offering in your customer's area.

To find a Shared Ownership home, customers will need to contact their local scheme provider. The name of the scheme depends on where they live:

England
Scotland
Wales
Northern Ireland (covers most providers but not all)

Customers can check their local scheme’s website to see what homes are available and how to apply.

Frequently asked questions

Can customers choose how much of the home they buy?

Who can apply for Shared Ownership?

Can customers sell their home if they want to move?

Yes. They can sell their home at any time.

If they own less than 100%, they’ll need to tell the housing association that owns the rest that they want to sell.
This gives the company a chance to find someone to buy their share.

At point of sale, the customer will receive their share percentage of the sales proceeds.

Are there other costs customers should know about? (Including Stamp Duty).

Yes. There are a few extra costs to think about when buying a Shared Ownership home:

Legal fees – customers will need a solicitor to help with the paperwork
Survey costs – to check the condition of the home
Service charges – for things like cleaning shared areas or fixing things
Rent – they'll pay rent on the part of the home they don’t own yet

Customers may also need to pay Stamp Duty*, depending on the price of the home and your situation.

If Stamp Duty does apply, there are two ways to pay:

Pay on the whole home – customers will pay more now, but they won’t pay again if they buy more shares later.
Pay just on their share – customers pay less now, but they might pay more later if the home’s value goes up.

*Stamp Duty is known as Land and Buildings Transaction Tax in Scotland.

Frequently asked questions

Can a customer port their mortgage when Shared Ownership is involved?

Customers can port their mortgage rate when moving from a Shared Ownership property to a Non-Shared Ownership property. This allows them to retain their existing product rate, even as they transition out of the Shared Ownership scheme.

However, there are a couple of scenarios where porting isn’t available: