SHARED OWNERSHIP BUYERS' GUIDE - NET
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S H A R E D OW N E R S H IP B U Y E R S ’ G U I D E
If you can’t afford the mortgage on 100% of a home, Help to Buy Shared Ownership
offers you the chance to buy a share of your home and pay a subsidised rent on the
remaining share. The amount you end up paying out each month for the rent and
mortgage combined is less than buying on the open market. In fact, with a Bath and
North East Somerset Council Shared Ownership property, this could be less than you
would pay each month for a similar property privately rented so it is a great way to
get a foot on the home ownership ladder.
Later on, if your finances improve you could buy more shares and go on to own your
home outright. This process is known as ‘staircasing’.
Shared ownership has been helping people get their foot on the home ownership
ladder for over 30 years and it is a scheme that is supported and regulated by the
Government.
IMPORTANT THINGS YOU NEED TO KNOW
THE LEASE
Shared ownership is a leasehold tenure. The lease is effectively a contract between you and Bath
and North East Somerset Council who are the providers of the properties. Bath and North East
Somerset Council may engage managing agents to provide the ongoing management.
You will pay rent on the share you do not own. On apartments, there may also be a ground rent.
You may have heard about home owners who have difficulties with leasehold properties where
there is a ground rent that increases in cost by a rate much higher than inflation. This does not
B&NES Vs 2.5 Aug 2021 Buyers’ Guideapply to Bath and North East Somerset Council shared ownership properties. All ground rent
reviews are reasonable and written into the lease, (the contract), so the ground rent cannot be
increased more than this. Furthermore, the lease is drafted from a model drawn up by Homes
England, which is the Government agency that promotes shared ownership. Consequently, you
can be sure that the lease is a regulated and responsible contract.
MAIN RESTRICTIONS OF THE LEASE:
● No business to be carried out from premises.
● No subletting. Lodgers are allowed so long as you are still living there.
● No major alterations without the Landlord's permission.
● Written permission is often required for pets and can be withdrawn at any time if the pet
becomes a nuisance.
Your solicitor will go through the key points of the lease in detail and more information about
specialist shared ownership conveyancing solicitors is to be found later on in this information
leaflet.
THE RENT
You pay a rent on the share of the property that you do not own. So for example, if you owned a
60% share in your home you would have bought the 60% share through savings and a mortgage
and you pay a subsidised rent on the remaining 40% share. The lease referred to in the previous
section contains a clause that regulates how much the rent can be increased. It says that Bath and
North East Somerset Council is not allowed to increase your rent by any more than Retail Price
Index (RPI) inflation plus half a percent each year. Consequently, you can take comfort that your
rent will not be unreasonably increased each year and you can budget in advance knowing that
any increase will be capped at RPI inflation plus half a percent. On a new build property, the share
you can buy is based upon your affordability and the minimum share being offered. If you are
buying a pre-owned property from an existing shared owner, (this is known as a ‘resale’), the
share you buy is the same as the existing owner currently owns. However, you can buy more
shares to increase your equity, but you cannot own less than the existing resident owns.
SERVICE CHARGES
You will also pay a service charge that will cover a number of things at your development. It covers
the maintenance of the communal parts, for example, the car park, grounds maintenance and
upkeep of the communal parts, (such as stairs, hallways, lifts, etc.) The service charge also covers
the building’s insurance so you will not need to buy that. This is important because if you go to a
mortgage broker who is not familiar with shared ownership they may try to sell you this as part of
their service. Do not buy it - you do not need it as this is covered in your service charge. You will
also pay a small amount each month into a long-term repair fund so when there is a large
expenditure on the communal parts you will not have a large bill to pay that year. Also included in
the service charge will be a management fee.
Each year Bath and North East Somerset Council or its managing agent will prepare an estimate of
the service charge for the coming year and at the end of it, the accountants will see exactly how
much has been spent. If there has been an underspend you will get a credit and if there's been an
B&NES Vs 2.5 Aug 2021 Buyers’ Guideoverspend you will be recharged. You will get a statement of expenditure at the end of the year
outlining what has been spent.
REPAIRS
Shared ownership is for people who want to be home owners but can't afford to buy on the open
market. Bath and North East Somerset Council will try to make living in your shared ownership
home as close as possible to that of an open market property in terms of your rights but also your
responsibilities. Consequently, Bath and North East Somerset Council will not collect money from
you to pay for repairs to your home. Maintaining your property is your responsibility just as it
would be if you had bought on the open market. There is an exception to this. For the first 10
years from when your home was first built, Bath and North East Somerset Council will refund you
up to £500 per year to cover any essential repairs you need to carry out that are not covered by
any of the warranties you have with your home. You will be given more details of this benefit
should you proceed to buy a home from Bath and North East Somerset Council.
The common parts will be maintained and accounted for through the service charge as detailed
above. In the case of apartments, this will include the structure of the building however, not inside
your apartment but again, for the first 10 years from when the property was built, Bath and North
East Somerset Council will pay for any essential external repairs without using monies in the
reserve fund. On new properties, there will be warranties just like buying on the open market but
outside of these warranties it is your responsibility to maintain your home. This is regardless of
what percentage share you have bought.
GUARANTEES
LONG TERM STRUCTURAL GUARANTEE
All properties have a 10-year guarantee from new covering major structural items on your home.
This is underwritten by specialist insurance companies such as LABC. For the first part of the
warranty, the builder will be responsible for correcting any defects and you will be provided with a
helpline contact to call should the need arise. After this period you would contact the warranty
provider. One feature of these long term warranties is that they stay with the property. So if you
buy a resale property that is less than 10 years old you would get the benefit of the remaining
term on the warranty. However, it should be noted that they only cover the ‘big ticket’ structural
items. Full details will be given if you purchase a new Bath and North East Somerset Council shared
ownership property. If you buy a re-sale property the existing owner should have the policy to give
to you.
12 MONTH DEFECT REPAIR
In addition, on new build homes, there is a 12 month defect period after which the builder will
wish to come and inspect the property. It's quite normal for new build properties to ‘settle’ or dry
out with minor cracks appearing at certain points in the internal walls.
The builder will make a note of these at the 12-month inspection and if it is appropriate, will
arrange for a convenient time so they can come to repair and repaint any settlement cracks that
have appeared over the 12 months if they warrant filling. Note; they will only repaint the original
B&NES Vs 2.5 Aug 2021 Buyers’ Guidecolour so if you subsequently painted a different colour you will have to repaint the repairs
yourself. Also, it is strongly advisable that you do not put on wallpaper for the first 12 months as
this may slow the drying out process and hide any defects that would normally be picked up at the
12-month inspection.
APPLIANCE WARRANTIES
You will also get warranties for supplied appliances such as the cooker, hob & extractor unit, etc.
The details of the warranties will be in the supplied booklets in your home and we advise you to
take a look through these warranties because in some cases the appliance suppliers will provide
you with an extended warranty free of charge in exchange for you registering the product with
them.
STAIRCASING
If your finances improve you may want to consider buying more shares in your home. This is
known as staircasing. As you buy more shares your rent goes down in proportion so when you own
100% you don't pay rent at all. You will continue paying the service charge for any communal
services you get the benefit of. Bath and North East Somerset Council will tell you what to do
when you want to staircase, but essentially you need to engage a qualified surveyor to value the
property and the price you pay will be in proportion to the additional equity you are buying. So the
key thing is the price you pay is based on the value of the day, not the value of the home when
you originally bought it. You will need to engage a solicitor and possibly arrange a mortgage for
the additional shares. The exception to this is if you wish to purchase an additional 1% share
without resorting to a mortgage. In this case, the House Price Index is used to value your share and
details will be provided at the time
In the case of a house, you usually obtain the freehold once you own 100%.
MOVING ON
When you want to sell up and move on you must go back to Bath and North East Somerset Council
to ask them to find someone to buy your share. The lease gives Bath and North East Somerset
Council a fixed period of time to do this, (usually around four weeks), but if they fail to do so you
are entitled to sell your home on the open market through an estate agent. Although the lease
gives Bath and North East Somerset Council the right to charge a fee for this service, it is generally
lower than the fees charged by estate agents. As with staircasing, you need to engage a qualified
surveyor who will set the price of your property. Bath and North East Somerset Council should be
able to signpost you to such qualified surveyors. You will not be able to sell your property for more
than the value set by this surveyor.
B&NES Vs 2.5 Aug 2021 Buyers’ GuideSHARED OWNERSHIP CONVEYANCING
When you buy any property you will need a conveyancing solicitor to undertake the transaction
for you. Similarly, you will need a solicitor if you are buying extra shares with a shared ownership
property. However, the shared ownership transaction is quite different from buying on the open
market so we strongly advise you to engage a conveyancing solicitor that has experience with
shared ownership transactions. Bath and North East Somerset Council or its selling agent can
signpost you to experienced conveyancing solicitors for you to engage if you so choose.
SHARED OWNERSHIP MORTGAGE ADVISORS
Many lenders are keen to lend on shared ownership properties including some of the big high
street names. However, if you go into the branch they may not be aware of the shared ownership
product because quite often these mortgages are underwritten by specialist teams at head office.
We strongly advise you to engage a specialist mortgage advisor who has a good knowledge of the
range of shared ownership products and lenders out there and who can advise you on the best
product for yourself. These advisors earn their income from commissions from the mortgage
lenders and sometimes advisory fees they charge their clients. Bath and North East Somerset
Council or its selling agent can signpost you to such specialist shared ownership mortgage
advisors.
SERVICES AND UTILITIES
It is your responsibility to inform the relevant suppliers you have moved in (utilities, council tax,
etc.) Make sure meter readings are carried out on your move-in date as you are liable for bills
from this date. You are free to change the current electricity and gas supplier.
PARKING
You are free to park your car in any available space at the development where this is provided.
With shared ownership houses you may have a parking space as part of your property. Where the
parking is not part of a property, they are not allocated and you can park in any free space.
MANAGING AGENT
Bath and North East Somerset Council might engage a Managing Agent who will contact you
within the first few weeks of you moving in to give you information about how to pay your rent
and service charges and what to do if you have any problems.
B&NES Vs 2.5 Aug 2021 Buyers’ GuideHOMES ENGLAND INFORMATION
Bath and North East Somerset Council is receiving grant from Home England, a Government
Agency, to help finance the build of these homes. It is a requirement when receiving grant that
three Key Information Documents produced by Homes England are passed to you as you go
through the purchasing process. Some of the information in these documents you would have
read in this guide. Your solicitor also needs to have these documents but B&NES will send copies
to them.
GENERAL DATA PROTECTION REGULATIONS (GDPR)
When you complete a shared ownership application form with Bath and North East Somerset
Council, you will find a GDPR Privacy Notice attached to it. Bath and North East Somerset Council
take your privacy very seriously and this Notice gives full details of what we do with your data and
how we look after it. It is a comprehensive Privacy Notice detailing not only what we do with your
data concerning you buying your home, but also concerning the ongoing management afterwards.
Consequently, you will not have to complete another one should you go on to buy a property from
Bath and North East Somerset Council. Bath and North East Somerset Council engage agents to
sell its new build shared ownership homes and they may also provide you with their own Privacy
Notice.
INTERVIEW
If proceed to purchase a shared ownership property from Bath and North East Somerset Council,
apart from a short application form you need to complete, you will also be asked to undertake a
very short telephone interview. This will give you the chance to clarify any outstanding queries you
might have about the shared ownership tenure.
B&NES Vs 2.5 Aug 2021 Buyers’ GuideDECLARATION
If you are offered a B&NES shared ownership home and decide to proceed with the
purchase we need you to complete this declaration. It is important that you have
read the above information, have understood it and have made enquiries with Bath
and North East Somerset Council or its agents for any matters you are not clear on.
Before we can proceed with transacting your purchase we need you to sign, date
and return this page to confirm you have read and understood the information
provided in this leaflet along with the three Homes England documents.
Applicant One - Print name____________________________________________
Applicant One - Signed ____________________________________________
Applicant One - Dated____________________________________________
Applicant Two - Print name____________________________________________
Applicant Two - Signed ____________________________________________
Applicant Two - Dated ____________________________________________
Please scan this page and email it to: enquiries@gregorys.click. A good quality
photograph from a mobile phone is acceptable. Alternatively you can post it to
Gregorys Estate Agent, 1 Market Square, Keynsham, Bristol BS31 1FS
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