Industry expert comments on shared ownership and its impact on the conveyancing sector
Shared ownership schemes are aimed at first time buyers who do not earn enough to buy a home outright.
The scheme is a cross between buying and renting whereby the borrower owns a share but rents the remaining share at a reduced rate.
Getting on the property ladder is becoming more and more difficult for first-time buyers. From April this year, the Government have relaxed eligibility rules, meaning those households earning less than £80,000 and £90,000 in London can now use shared ownership schemes to own property.
But what will be the impact on conveyancers and what are the long-term practicalities for first-time buyers?
Sarah Sams, Solicitor at Dutton Gregory Solicitors comments: “Whilst it is correct to say that buyers will be responsible for 100% of the service charges, with many houses the majority of the service charge will usually be made up of the buildings insurance for the property, which buyers would have to pay whether or not the property is shared ownership. Even with being responsible for 100% of the service charge, paying the service charge, together with the rent and mortgage can still be cheaper than renting.
“There are additional stipulations imposed on shared ownership properties, but these shouldn’t cause any confusion to either conveyancers acting for buyers or to the buyers themselves, if the conveyancer is able to adequately advise on the provisions of the lease. Shared ownership properties that are grant funded will need to be sold using the model leases issued by Homes England, meaning that all leases granted on this basis will contain the same fundamental clauses and will have identical provisions in nature. This should make shared ownership leases easier to deal with and make it more straight forward to advise on the provisions contained in the lease.
“The restrictions on the re-sale of a shared ownership property, after completion of final staircasing, have actually been reduced with former shared ownership leaseholders, in many cases, no longer having to offer to re-sell the property back to the Registerd Provider.
“The Registered Providers that I deal with are very transparent at the outset about the costs that have to be paid by a leaseholder, including setting out the rent payable, the service charge payable and a full breakdown of the service charge. Leaseholders shouldn’t therefore be hit with hidden costs.
“Whilst Registered Providers are doing a great job with promoting shared ownership schemes, there is still some confusion from prospective buyers as to what shared ownership entails. My experience from attending Help to Buy shows is that prospective buyers don’t understand that they will actually own the property with the property being registered in their name.”
As a conveyancer, how do you think it will impact the industry and do you think this is the future for first-time buyers?