What is shared ownership?

Shared Ownership helps people who cannot afford to buy a home outright to purchase a home in stages. Suffolk Housing Society owns the freehold of the property and sells a shared ownership lease to the occupier.

Applicants buy a share of the home (usually 50%, but it could be more or less) and pay Suffolk Housing Society a reduced rent on the rest. The total monthly costs of the mortgage and rent are generally lower than the cost of a mortgage needed to buy the property outright.

Shared Ownership homes are good quality, newly built properties or older properties where the current owner is selling the lease.

Who can apply?

Buyers can take advantage of shared ownership homes where they can show they are unable to afford to buy a home on the open market. Each of our schemes is slightly different but priority will be given to:

• Housing Association and Council tenants
• Those with a household income of typically £18-36,000 pa
• People on the Havebury waiting list
• Those living and working local to the shared ownership property concerned
• First time buyers

It is important to note that Suffolk Housing Society has the right to nominate the next purchasers when you wish to sell your home. This is to ensure that the property remains available to someone who cannot afford to buy on the open market.

What does it cost?

The amount of mortgage and rent you pay each month will depend on the price of the property and the size of the share you buy. It will also depend on mortgage rates and the length of term of your mortgage. The larger the share you buy, the higher the monthly costs of the mortgage but the lower the rent. The figures shown in the table below give an indication of costs. Please note that this is for guidance only and rates may change. Your mortgage lender will calculate the cost of your mortgage and Suffolk Housing Society will tell you what the monthly rent will be.

In most schemes you will also be required to pay a service charge. The service charge usually covers the costs of maintaining common areas within the scheme and could include costs relating to parking areas, gardens, security measures or communal areas in buildings containing the flats.

There are other costs involved in buying a shared ownership home and you will need approximately £3,000 to finance the following:

• Legal fees (to your solicitor)
• Valuation fees (for a survey on the property which is required by banks and building societies. You may also wish to have your own independent survey of the property carried out.)
• Mortgage arrangement fees (check with your lender)
• A reservation fee of £250 to secure your home. This fee will be deducted from the agreed purchase price should you subsequently complete the purchase.

In addition you may also have to pay for the following:

• Stamp Duty Land Tax (this varies and your solicitor will provide full details.)
• One month's rent in advance to Suffolk Housing Society
• Hiring a van or lorry to move your belongings
• New fittings or furniture. Carpets and curtains are not provided.

Day to day running costs of being a shared ownership home owner include:

• Rent/service charge (to Suffolk Housing Society)
• Mortgage (to your lender)
• Life assurance, mortgage or income protection costs
• Contents insurance (for your personal belongings)
• Council Tax (to your local authority)
• Gas, electricity, water rates, telephone and internet charges
• Other bills such as TV rental and licence
  
• All repairs, decoration and maintenance costs in respect of the property - as a shared ownership owner you are responsible for these

NB: For illustrative purposes only
Based on:
1. 100% repayment mortgage at 4.59% standard variable rate
2. 25 year mortgage
3. Monthly rent calculated on the unsold share

Service Charge

You will have to pay a service charge covering costs such as:

• Day to day and future repairs and maintenance to the outside of the building and all the shared areas. In the case of a flat this could be the roof, communal TV aerial, bin store and anything that is used by everyone in the apartment block
• Cleaning and gardening of the communal areas
• Lighting and heating of communal areas
• Buildings insurance

We will give you an estimate of the service charge relating to your particular property before you decide to buy it. The service charges are checked by professional auditors and we will give you a statement each year showing what has been spent on your behalf.

Maintenance

If you buy a flat some of the money collected through the service charge is put into a "General Reserve Fund". This fund is kept in a separate bank account and covers the costs of major repairs in the future, such as roof repairs, redecorating shared hallways etc. You will be responsible for all internal repairs within the flat.

Insurance

As freeholder, Suffolk Housing Society will insure the structure of the building but will pass back the cost of this to you through your service charge. Under our policy there is currently an excess of £50 which you may have to pay if there was a claim. If you purchase your home outright the Society may remove your property from its insurance policy and you will be responsible for arranging your own buildings insurance. This will be a requirement by your lender if you have a mortgage.

The Society is not responsible for any of your personal effects and we strongly advise you to arrange suitable contents insurance from the date you move in with a reputable company.

What information is included in the Lease?

When you purchase a shared ownership home you will be granted a lease, usually for 125 years. The lease entitles you to live in your home as an owner occupier and sets out how you can purchase further shares in the property (this is known as staircasing) and the terms of selling on the property.

Other clauses in the lease set out your responsibility for repairing the property and paying the rent and service charges. It will also set out how these may be increased. It should be clear that although you have not bought the property outright you will have the normal rights and responsibilities of a full owner occupier.

How can I buy a bigger share of my home?

Usually you can buy a further share of your home after you have lived there for one year. This process is known as staircasing. The share that you purchase will be based on the current market value of the property, which may have changed since you originally purchased a share. You will have to pay the valuer's fee and if you wish to proceed you will be allowed three months to arrange the mortgage and complete the purchase of the further share. Your rent will be adjusted to reflect the smaller share that you will be renting.

Can I make improvements to my home?

If you wish to make alterations or additions to your home you must discuss your proposals with Suffolk Housing Society via Linnet Property Management and obtain written permission. You may also need to get permission from your mortgage lender. If your request is approved you will be responsible for obtaining local authority building and planning consent and for paying for all costs. If you sell your home you may only get your share of the increase in value due to the improvement.

What if I fall behind on my mortgage repayments?

The mortgage contract is between you and your lender. If you start to have financial problems and cannot keep up with your repayments you should speak to your lender straight away. If you do not agree to a solution there is a risk that they may take possession of our home and sell it. You would normally be entitled to your share of the money received after all your debts have been paid.

What if I fall behind on my rent and service charges?

Under the terms of your lease with us you are obliged to pay the rent and service charge. If you have any financial problems you must contact us straight away so that we can try and advise you. If arrers do build up then you risk losing your home.

What can I do if I want to sell my home?

You may sell your home but you must let us know in writing if you want to move. Your lease will specify the terms which normally allow you to either sell the part of the home you own or if you are able to buy the remaining share you can sell the property outright. You benefit from any increases in the value according to the share that you own but you should be aware that you may also be affected by any fall in values.

Clauses in the lease usually allow Suffolk Housing Society to nominate prospective buyers for your home and to restrict the sale price to an independent valuation. The reason for this is that shared ownership homes should remain available to the people for whom the scheme is intended.