Types of Shared Ownership
Although the basic principle of shared ownership remains the same, across the various different schemes, there are some subtle differences which should be borne in mind when trying to select the best overall package for your individual needs.
Home Buy Shared Ownership
Home Buy is a scheme that is, in theory, available to anyone who fits the eligibility criteria (more about this later). However, priority is given to current council and housing association tenants. In reality, this means non-council tenants will not generally be in a position to take advantage of the home buy scheme.
With Home Buy, the purchaser is still only purchasing a percentage of the property which is normally 75 percent. But, instead of paying rental on the remaining 25 percent, purchasers will be given a loan by the housing association for the value of the property, with the loan not being re-payable until the property is sold.
Property is selected by the purchaser on the open market and, therefore, purchasers are not restricted to the property or even the region that they currently live in.
Do it Yourself Shared Ownership
This scheme still requires the assistance of a housing association and works by the purchaser selecting the property they want to buy on the open market and then asking the housing association to purchase the remaining share of the property that the purchaser is unable to afford. Again, this is normally based on a 75 percent to 25 percent share, although this ratio can sometimes be negotiated.
Unlike the Home Buy scheme, the do it yourself strategy requires the purchaser to pay rent on the 25 percent share that is owned by the housing association. The advantage of this scheme is that the purchaser gets a free choice of the property that they can purchase. There is, however, an ongoing rental cost which makes this a pricier option compared with the Home Buy scheme.
Companies are now realising how popular the idea of shared ownership is and are offering the option to all potential purchasers. Commercial companies have total freedom in what they offer, which means that you can have a wide variety of options, including schemes that are similar to the Home Buy with no rental or, alternatively, do it yourself where a rental is payable. This offers a much wider choice of properties and flexibility in terms of the structuring of the finance. On the downside, there are not the same strict government regulations as housing associations have to comply with; this means that that any purchaser will have to be more astute and prepared to bargain, on an individual basis.
Within the umbrella term of shared ownership, there are many more individual schemes which offer different benefits to different buyers;
Home Buy is operated through a housing association and does not require the purchaser to pay any rent, but it does require the owner to pay a certain percentage back upon the resale of the property;
other schemes involve the payment of rent to make up for the non-owned part of the property;
commercial companies now also offer home share schemes, thus broadening the scope beyond availability through housing associations only.