Shared Ownership - who decides What %

LChantler

Hi Guys
just looking for some information regarding the part buy part rent scheme. We initially were looking at a 40% ownership but the housing company are now saying due to our deposit amount we have to buy a 50% share. We decided on a 40% share after looking at the affordability calculator and decided that’s the highest we would be most comfortable at, 50% would really stretch our finances. Some of our deposit was gifted which is why we are fortunate enough to have a large amount to put down upfront but it’s not necessarily a reflection of our affordability. Surely it’s our decision what % we want to purchase or is it right that they decided? 

TIA

annetheman

Are you buying in England? Individual Housing Associations will decide their policies but almost all use the Shared Ownership Initial Eligibility Assessment Calculator from Homes England.
You can read the guidance notes here.

If they follow the guidance, they will say that you must by the highest %age you can afford using the calculator i.e. whatever percentage takes you close to but not over 45% affordability.

I don't know what the logic behind that is, but if you can afford to purchase OVER 50% I am not sure why you would buy Shared Ownership. At that point, I'd much rather buy open market, as really there are many drawbacks to it. I myself am a SO purchaser so made the balance between drawbacks and benefits in my own specific circumstances, but if I could buy open market alone in the SE, I would have.

Guess that's just another SO drawback!

Edit to add: you also have to staircase by the highest %age affordable if/when you staircase. Also don't know the logic. Maybe to avoid people who can afford open market from benefiting from the low-compared-to-market rent on un-owned portion and lower  equity loss liability? Not sure!

HanPop

The housing association will decide how much is the most that you can afford and go with that, when we bought our first property which was shared ownership they calculated that at 75% which is the top threshold that you can have.

[Deleted User]

Between 25% and 75%.   Housing association calculator will be done and will be hard to buy 25% if it shows you can afford 60%.
Its up for negotiation though.  For a start you might pass the calculator at a certain level but fail mortgage approval so that will also drive the %.
I had a client who wanted 30%,  calculator showed he could go to 45% and everyone settled at 35%. 

Its really variable as housing associations will hwve a target % for a site so if everyone so far has bought under it then they might hold out for a higher % next time to bring the average up

princeofpounds

Slightly tangential question - what is the length of the lease you are buying? Are you aware that you have no statutory right to lease extension in shared ownership properties?

Sotts

I have a large deposit but the HA decided on the % i could buy.  I assumed i could buy a bigger share based on my deposit but it's down to what the HA says you can afford based on their affordability calculator