Shared ownership key information

We've put together the key information you need to know about shared ownership. If there is anything you'd like to know that isn't listed here, please contact us.

Shared ownership

Shared Ownership gives you the opportunity to buy a share in a home and pay rent on the share you do not own (which remains in the ownership of your Landlord, Silva Homes). The rights and responsibilities of shared ownership are set out in your shared ownership lease.

Eligibility for shared ownership

To qualify for shared ownership, you must meet the following criteria:

• Have a total household income of less than £80,000.
• Not own a property (including overseas).  If you are a current homeowner, you must sell your home before you complete on a shared ownership home.
• Not being able to afford to purchase a property for your current household needs.
• Meet the affordability criteria for Homes England.
• Have sufficient funds to cover your deposit and the associated fees and costs of buying.

Local eligibility

Most of our properties are subject to local eligibility criteria as well as general shared ownership eligibility. The eligibility requirements will depend on the local authority area where the property is located. Please check with your sales advisor to find out if you are eligible for a particular property.

Financial assessments

We have a duty to ensure that you have received an affordability assessment to ensure that your housing costs are within the guidelines allowed for shared ownership. We will not consider your application if you do not have an affordability check, or do not meet the deadline date for the assessment. You must contact the advisor for the assessment, even if you are not able to take out a mortgage to buy. If you are a cash buyer, we can only approve your application if you are unable to raise a mortgage, for example, due to your age. 

You will be assessed based on the property prices and will be approved for the highest share you can afford. This will be based on ensuring that your mortgage, rent and service charge costs do not go below 25% or above 45% of your net household income. 

You will need a good credit rating to purchase, if you think you may be affected by a poor credit rating, please discuss this with the mortgage advisor as it may affect your ability to pass the financial assessment.

If you are not a UK resident and do not have indefinite leave to remain in the UK, you will also need to discuss this with the mortgage advisor as this may affect your ability to pass your financial assessment.

You will not have to pay for the financial assessment.

The mortgage advisor that provides financial assessments for us is also able to arrange your mortgage for you. You do not have to use the same advisor to arrange your mortgage, but it is very likely to save you time by using an expert in shared ownership mortgages.  We do not have any financial arrangement with the panel advisor, so they are able to remain independent.

Please note that you will not be offered a property that is too small for your current housing needs.

Purchase costs

You will need savings to cover the costs of buying as well as your deposit. We cannot provide quotes for the exact amount as these vary but we have listed below some of the costs involved:

Mortgage Valuation/Surveyor Fees – payable at the time you arrange your mortgage, prices vary by the lender. 

Mortgage administration fee – this will depend on the best mortgage for you, some do not charge this fee, others charge upfront or sometimes it can be added to the loan.

Stamp Duty Land Tax (SDLT) – you do not normally have to pay stamp duty when you buy your first share, but that can affect what you pay later if you buy more shares.  You should talk to your solicitor about what is right for you. Further information is available online at Stamp Duty Land Tax: shared ownership property - GOV.UK (www.gov.uk)

Legal fees

You will need to cover your solicitors’ costs plus the costs they pay out on your behalf (known as disbursements). This will include land registry and search fees.  Your solicitor should explain fully what this is for. You may use any solicitor, but we strongly advise you to use a solicitor who is experienced in shared ownership leases, otherwise, there can be considerable delays in the transaction. 

We retain a panel of solicitors that act on behalf of shared ownership buyers, who have had positive feedback and charge reasonable fees. We have no financial arrangement with the panel solicitors, so they can remain independent and work on your behalf, not Silva’s.

Deposits

You will need a deposit of at least 5% of the share you will be buying, we do not permit 100% mortgages. The total deposit you need will depend on the amount of mortgage you can raise and still pass the affordability checks. You may use gifts from family or friends towards a deposit and your financial advisor will need to obtain written confirmation of the gift to comply with money laundering regulations. You cannot take out secured loans or have guarantors to raise funds for your purchase.

You must also take into consideration that when you complete on the purchase of your property you will need to make an advance payment on your rent and service charges to ensure that there is sufficient time to set up your direct debit and not leave your account in arrears.

At completion, our solicitors will collect the apportionment of the rent and service charge to the end of the month in which you are completing, plus one complete month. For example, if your completion date is in the middle of May, you will pay up until the end of June and your Direct Debit payments will start on the first of July.

Monthly payments

Your monthly housing payments in addition to your normal household bills will be:

Mortgage repayment 

Which you make to the lender. 

Rent

Which is payable to Silva on the first day of each calendar month.

Service charges

Which is payable to Silva and covers the cost of the upkeep of communal areas that are not adopted by the local authority. The service charge is based on the costs of maintaining the communal areas. This will relate to unadopted roads, communal gardens, parking bays and pathways. There will also be a charge which covers the cost of administering the service charge and for the management of your lease and rent account. 

Your solicitor will be provided with a breakdown of your service charge so you will be able to see what the payment is for. While you are a leaseholder, your building's insurance will be arranged by Silva and payable along with the service charge.

Council Tax

It is your responsibility to pay the Council Tax. Please check your local authority website for details. These properties are not yet registered as they are still under construction.

Contents Insurance

The Silva block policy only covers the fabric of your home, you must arrange your own contents insurance.

Shared ownership leases

Your lease sets out your rights and responsibilities as a shared ownership owner. However, these are complex legal documents, so it is important that your solicitor takes the time to explain these to you.

This is one of the reasons why we strongly advise you to use a solicitor familiar with shared ownership.

Standard Lease Obligations

Although initially, you will not own your property outright, you do have the normal responsibilities of a full owner. This means, for example, that you will be obliged to pay 100% of the outgoings relating to the property and to keep the property in good and substantial repair and condition.

The lease also contains other ‘standard’ obligations on the Leaseholder. For example, as the Leaseholder you will:

• If applicable, need to contribute towards the costs incurred by the Landlord in providing services.
• Need to seek the Landlord’s consent before making certain alterations; and
• If applicable, comply with regulations relating to the management of the estate of which the property forms part.

 

Rent reviews

The initial rent is usually calculated at 2.75% of the price of the share you do not own.

After that, each year on 1 April there is a rent review and your rent will rise by the Retail Price Index (RPI), plus 0.5%. This is set out in your lease and ensures that your rent increases are tied in with the cost of living. 

The rent will be reviewed on an ‘upwards only’ basis. This means that the level of rent will not go down when it is reviewed. However, any increase in the rent will be capped at a figure representing the RPI increase plus 0.5%. This means that where the RPI is zero or negative, the most the rent can increase by is 0.5%.

A worked example demonstrating how the rent is recalculated at review is set out in Appendix 2 of your lease.

You need to be aware that if you fail to pay your rent and/or fail to observe and perform your obligations in the Lease Silva may be entitled to terminate the lease (subject to obtaining any necessary court order). If the lease is terminated, you will lose (and will not be entitled to any compensation for) your shares in the property.

Please note that if you move into a property before the end of December, your rent will increase the next 1 April.

 

Buying more shares

You can buy additional shares until you own 100% if you wish to - This is called staircasing. The cost of the additional shares is based on the market value of the property at the time that you buy. If you increase your share in the property, your rent is re-calculated and reduced proportionately. When you buy the final share, there will be no rent and you will be given the freehold if you own a house, or head lease if you own an apartment at no charge. You will still be liable for the service charge, but it will be reduced because you will become responsible for your own building insurance. 

When you buy more shares, your rent will be reduced proportionately to reflect the fact that the Landlord’s (Silva Homes) interest in the property has been reduced.

You will be responsible for the cost of the valuation (carried out by a member of the Royal Institute of Chartered Surveyors (RICS) and your own legal fees.

When you are buying more shares, you will still need to take independent financial advice before you go ahead.

 

Selling your home

If you wish to sell your property before you own 100%, you will need to contact us and we will arrange for an RICS valuation to be carried out. Once you have seen the valuation, provided us with all of your up-to-date property information and confirmed that you wish to go ahead, we will have a four-week period in which to find a buyer. Your buyer will undergo similar affordability and qualifying checks to yours.

You will be responsible for paying for the valuation, all legal fees (including Silva’s solicitors' fees) and for the nomination fee (this is like an estate agent fee). We will support you through the sale and help chase the transaction through to completion.

If Silva is unable to find a buyer, you will be free to sell your shares on the open market or to arrange to sell 100% by simultaneously buying the remaining shares and selling outright.

You may also transfer your shares because of the divorce or death of the leaseholder.

Mortgagee protection provisions

Loans from banks and building societies to leaseholders would often require leaseholders to take out mortgage indemnity insurance or other forms of additional security which would increase the expense to the leaseholder. So, with the aim of cutting down or avoiding such expense, the landlord (Silva) agrees that if you, the leaseholder, default, the landlord will compensate the lender for some part of any loss incurred if the proceeds from the sale of the leaseholder’s share of the property are insufficient. For this reason, the leaseholder’s lender will need to obtain the consent of the landlord to the terms of the leaseholder’s mortgage. Silva has to see your mortgage offer and approve it before you can exchange contracts.

If the landlord must cover some of the mortgage debt in this way the leaseholder will become liable to pay the landlord back. In such cases, the landlord will be able to pursue the leaseholder to recover its loss and may also enforce any other security guarantees or insurance that were originally granted to the lender.

To assist the landlord and the lender in operating these compensation provisions, by signing the lease the leaseholder authorises the landlord and the lender to exchange personal information relating to the leaseholder in relation to various matters, including the terms of the lease, details of any arrears and any loan secured against the property.

 

Moving to another shared ownership property

You may be eligible to apply again and buy another home if you are in housing need, have Local Authority support from the borough that you are resident in and be in the process of selling your home. You should not spend any money on buying another property until you have had your application assessed and your eligibility confirmed.

Subletting and guests

You are not allowed to sublet your home as shared ownership is strictly for those who are unable to afford a suitable home for their housing need. Shared ownership is expected to be your principal or only residence.  Also, if you have a mortgage on your home, your lender will not allow you to let it to someone else.

If you need to move out temporarily for work purposes then Silva Homes may give you discretional permission, however, the rent cannot be more than your current service charge, rent and mortgage payment combined.

You are not allowed to have a lodger once you have moved in, but you can have guests to stay in your home who contribute to household costs. Guests cannot be counted as part of your household and cannot be part of the affordability assessment. You must also live at the property at the same time, and you cannot have a formal arrangement in place.

You should get legal advice if you intend to have a paying guest, as you must not breach the lease agreement by creating a sub-letting arrangement.

Home improvements

You can carry out minor work and repairs such as putting up shelves or decorating without consulting us. If you plan to carry out major work, such as taking down or putting up a wall or building an extension, you'll need our written permission (we cannot unreasonably withhold permission).

If you are doing structural work to your home, we'll need to see plans. You should also write to us and confirm that the work will be carried out by a reputable builder and will meet all necessary building regulations and planning requirements.

If you are planning to carry out any major improvements to your home, you should remember that your home won't always go up in value by the amount you spend on improvements.

Your lease states that you must keep your property in good repair.

 

Repairs and maintenance

As the homeowner, it is your responsibility to repair and maintain your new home. Your new homes will come with a guarantee that will cover defects in your home for the first year from the day it was built.  The guarantee covers defects in materials and workmanship.  More information about this will be provided to you before you complete your purchase.