Shared Ownership Eligibility

tzkbjj

My daughter is moving to London to study and work. I have been looking at shared ownership properties but I'm not sure about eligibility. She has never owned a home and because she will be a student and only doing part time work, her income will be below £90,000 per year. If she was eligible for shared ownership, my plan would be to sell my current (and only) property and move into rented accommodation. I expect that the equity in my current property would enable me to give her the shared purchase price without needing a mortgage and I’m not wealthy enough (and hopefully not yet old enough) to be worried about inheritance tax. I can’t figure out from the information online whether she would be eligible enough to buy the property. Any ideas how I can find out? Thanks.

Snookie12cat

Why are you looking into shared ownership? With a £90k deposit she would be able to buy a standard house on the open market, would she not?

Shared ownership is really a good option for those who can not get enough money from the bank to buy, generally because of low salary. Its not a great option if you have alternatives. Shared ownership keeps you trapped paying rent to the housing association and playing to their tune until you staircase. Rent goes up with RPI, or CPI yearly and they can insist you do certain things to your own property and do not contribute to the costs.
Would it not just be wiser to have a mortgage with the bank and eventually own 100%? Resale is easier also. 

 Here is some of the criteria, and they might have more depending on the scheme provider. 

• You can buy a home through shared ownership if both of the following are true:

  • your household income is £80,000 a year or less (£90,000 a year or less in London)
  • you cannot afford all of the deposit and mortgage payments for a home that meets your needs

  One of the following must also be true:

  • you’re a first-time buyer
  • you used to own a home but cannot afford to buy one now
  • you’re forming a new household - for example, after a relationship breakdown
  • you’re an existing shared owner, and you want to move
  • you own a home and want to move but cannot afford a new home that meets your needs

tzkbjj

Thanks @Snookie12cat - That's really helpful. Based on that I think she would be eligible as even with the full deposit that I could give her, it wouldn't be enough for her to also be able to get a mortgage on her own studio / one bedroom flat in London because she wouldn't be able to afford the repayments due to low income. 

With the kind of shared ownership property that we are looking at (2 bedroom flat in East London), it looks like the rent (paid to the other owner) and the maintenance fees would easily be covered by letting the 2nd room out to another student. If she can do that she would essentially be living rent free and mortgage free and have a foot on the ladder. I'll be paying rent having had to sell my house, but in a much cheaper part of the country and I expect that the value of (her share of) the property in London will increase more than my current home is likely to. Maybe this way would give her a head start.

Snookie12cat

tzkbjj said:

Thanks @Snookie12cat - That's really helpful. Based on that I think she would be eligible as even with the full deposit that I could give her, it wouldn't be enough for her to also be able to get a mortgage on her own studio / one bedroom flat in London because she wouldn't be able to afford the repayments due to low income. 

With the kind of shared ownership property that we are looking at (2 bedroom flat in East London), it looks like the rent (paid to the other owner) and the maintenance fees would easily be covered by letting the 2nd room out to another student. If she can do that she would essentially be living rent free and mortgage free and have a foot on the ladder. I'll be paying rent having had to sell my house, but in a much cheaper part of the country and I expect that the value of (her share of) the property in London will increase more than my current home is likely to. Maybe this way would give her a head start.

In that case do it. My sister is doing it because of her low salary she can only get lent £100k. It gets her on the ladder and she is actually able to get UC for the 60% rent share. 
Right now she pays £1200 rent with no help due to her deposit, so shared ownership is going to make her so much better off as it seems like it will for you and your daughter. 

Just double check the contract in detail as it may prohibit letting any part of it out. If it's a housing association with the other share, which a lot of the new build ones are, the contract gives them what appears to be as much rights if not more to the property than a mortgage lender would have. Miss a few payments, don't keep up with the repairs and you have breached the contract and they can look to take back the property.