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First-time buyer guide

Shared ownership Q&A for parents

Here are some of the most frequently asked questions about shared ownership − and the answers.

Isn't shared ownership just for key workers or people on the housing waiting list?

No. That's a common misunderstanding.
Your children can buy a home through shared ownership if:
 They cannot afford to buy a home outright.
 They're first-time buyers or used to own a home but can't afford to buy one now. They're renting a housing association or council home.

Can they buy the minimum share of 25% even if they earn the maximum amount?

Probably not. We have a formula that works out how much purchasers can afford to pay − somewhere between 25% and 75% of the home's value. The average is around 45% but the actual amount will depend on outgoings, any debts and savings.
 A purchaser needs to take out a mortgage to pay for their share of the home's purchase price and pay rent on the remaining share. We work closely with our purchasers to make sure that their shared ownership deal is truly affordable.

Do they need to provide a deposit? If so, how much?

Yes, a deposit is required but with shared ownership it is only a percentage of the share of the property being bought. The cash sum required is therefore less than with a traditional outright sale. Depending on the amount of savings available this can vary, but the minimum allowable deposit is 5% of the amount being purchased. To explain: if the selling price of the home is £150,000 and the share purchased is 25% (ie £37,500), the minimum deposit will be £1,875 (5%).

Can I/we contribute on a monthly basis to our son/daughter's rental, to give them a better opportunity?

Unfortunately, no. We have to allow for unforeseen changes in circumstance, and as you would not be living with them we cannot guarantee that you will maintain the payments.

Will they own (the freehold of) their home when buying through shared ownership?

As a shared owner they will have a leasehold interest in the property. If they buy a house the freehold may be transfered to them once they have bought 100% of the shares in the property. If they buy an apartment they will have a leasehold interest in the property even if they buy all of the shares. They will have a legal agreement with us − this is called a lease − which sets out our joint responsibilities.

How do they buy more shares and what are the benefits?

Buying more shares in a property is called "staircasing". This increases ownership and reduces the portion of the property that is rented and therefore reduces the rent payable. There is no requirement to buy more shares.
The cost of the new share will depend on how much the home is worth at the time of buying more. If property prices in the area have gone up, the price will be more proportionally than it was for the first share. If the home has dropped in value, the new share will be cheaper. When your children do decide to buy more of their home, they will need to arrange for an independent market valuation of the property to be carried out. We will then let them know the cost of their new share. They will have to pay the valuer's fee.
On the majority of our properties shares can be increased all the way up to 100%. This can be done in one go (if they can afford it) or in stages, whichever is the best for them.

How much rent do they have to pay?

The rent paid is calculated on the value of the share retained by Bromford at the time of purchase, usually at a rate of 2.75%. The rent is collected monthly. We also arrange the building insurance and the cost of this is added to the rent. The rent will increase annually in accordance with the lease.

If they only own a share of the property, do you share the cost of the maintenance?

Shared ownership is the same as owning your home outright but at a reduced monthly cost. Purchasers get all the benefits of home ownership and are fully responsible for the maintenance. If your children buy an apartment, we or another agent will be responsible for maintaining the structure of the building and/or any shared areas. The costs are shared between residents and recovered as service charges.

What happens when they move?

If they have "staircased" up and now own 100% of their home, they are the freeholder (or leaseholder in the case of an apartment) and it is now in their ownership. They can sell the property by themselves.
If they own less than 100% and want to sell their share, they will need to arrange for the property to be valued. They will need to pay for this valuation. A buyer may be able to purchase 100% of the property rather than a share. This is called "simultaneous staircasing". We will tell them the value and maximum amount for which they can sell their share. They cannot sell their share for more than it is valued at. They will need an Energy Performance Certificate (EPC) before their home can be marketed. Their Lease agreement will enable us to introduce a buyer before they can market through an estate agent. Once they have a buyer we will interview the buyer and check if they can afford the property. We have to agree to the purchase and approve the buyer's mortgage if they are purchasing a share.

How can we apply?

To buy a home through shared ownership call 0800 0852 499