Resale shared ownership

Last updated: May 2024 | 3 min read

In the case of a shared ownership resale property, the usual process involves acquiring the share of ownership that was previously held by the existing shared owner. Read on to learn about the nuances of shared ownership homes for a clearer understanding of buying this type of property.

On the road to buying your new home, you might face a shared ownership resale prospect. In case you can't afford the deposit and mortgage payments for a house that you desire, shared ownership offers a way of buying only an initial share worth between 10% and 75% of its market value.

Here are more schemes to help first time buyers achieve their goal of home ownership.

What is a resale shared ownership?

A resale shared ownership occurs when you buy an existing shared owner's portion of a property.

Unlike typical home sales, the sale involves only a part of the property's full market value.

As a buyer, you're purchasing a share from the current owner. You will pay rent to the housing provider on the remaining portion.

This arrangement makes entering the housing market more attainable for you, especially if your income limits options for full ownership.

How it differs from new build shared ownership

Resale of a shared ownership and new build shared ownership have distinct traits.

In resale shared ownership, you're buying an existing lease from a current owner. The property has already been lived in and the price reflects the open market's valuation.

Contrastingly, new build shared ownership involves purchasing a share of a property off-plan or just after construction.

This type of ownership often appeals to those who fancy starting fresh, but it may come with longer wait times and uncertainty about the finished product.

Resale properties, being pre-owned, offer a quicker route to homeownership with a clear picture of what you're buying into.

Eligibility for resale shared ownership

Resale shared ownership homes present a different route into homeownership. To qualify as a shared owner, you'll need to meet specific criteria:

  • You must be at least 18 years old.

  • Your annual household income should not exceed a set threshold. This threshold varies depending on your location in the UK and the price of the property you're interested in.

  • Priority is often given to first-time buyers, or those who once owned a home but can't afford to buy one now due to circumstances like divorce or downsizing.

  • If you're already a shared owner looking to move, you might also be eligible.

Before proceeding, contact your local HomeBuy agent can provide clarity and personalised advice.

Why is there a household income threshold?

This scheme is tailored to help those with moderate incomes access the property market. Your total household income should fall below a certain limit. This limit ensures the scheme remains accessible to those who need it most.

The income assessment will include the total income of all home occupants.

It's not just about your salary; other income sources, such as bonuses or freelance work, count too.

Being aware of these details is important. After all, you're aiming for an affordable home, and fitting within these income brackets helps in securing a shared ownership home that suits your monthly outgoings.

Finding the right resale shared ownership property

Resale homes in shared ownership previously belonged to shared owners who have now decided to move on. You'll typically find these options listed by housing associations or through specialist resales teams. Their availability depends on current owners choosing to sell their share.

When searching for a resale home, start with housing associations' websites. These often list available shared ownership properties, including resales. Online property portals and estate agents also showcase shared ownership resales, giving you a broader spectrum of options.

Always check if the property is part of a resale shared ownership scheme and remember that buying a resale means purchasing at least the share that the current owner bought.

Through our insightful article, learn about how to save for a house deposit.

Comparing older properties vs. new builds

Deciding between an older resale property and a new build requires consideration of several factors. Older resale shared ownership properties might come at a lower price compared to new builds. However, they may also incur higher service charges due to age-related maintenance needs.

Service charges are a recurring cost, encompassing maintenance of shared spaces and sometimes building insurance. Resale properties might have established communities, offering a clearer picture of the neighbourhood and lifestyle. New builds, conversely, often feature modern design and energy efficiency but might lack the community feel of established areas.

Older properties might offer the chance to buy more shares, known as staircasing, earlier than in new builds. This can be advantageous if your long-term goal is to increase your ownership percentage. On the other hand, new builds often come with warranties and less immediate upkeep, which can be appealing if you prefer a more straightforward initial home ownership experience.

Assessing your priorities and financial situation helps in making this decision. Do you value community and potential cost savings over modern amenities and lower initial maintenance? Weighing these factors against the rent and service charge, legal fees, and the possibility of purchasing further shares will guide your choice.

Here we have a more detailed article on whether new builds are worth it?

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