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Affordable Housing

In Cornwall, the three most common schemes for helping local people to purchase a property are Shared Ownership, Shared Equity and Resale Restrictions, commonly referred to as Section 106 agreements, although the latter may also apply to Shared Ownership and Shared Equity.

Shared Ownership 

This type of scheme is also referred to as New Build Homebuy scheme. You, the purchaser buy a share of the property, between 25% and 75% of the full market value and you pay rent to a Housing Corporation on the part of the property that you do not own.

You need a mortgage to buy your share of the property, but be aware that many lenders do not offer mortgages for shared ownership and those that do offer varying types of deal and at different rates and fees.

As your income rises, you are usually able to purchase additional shares in the property until you own it all. This is known as Staircasing, however not all schemes offer this facility.

When you decide to sell the property, if you do not own it all, you must sell to someone nominated by your landlord (usually the Housing Association) who has a need for Shared Ownership themselves. If you own all of the property, you are free to sell it in the normal way, usually subject to certain restrictions. You will still benefit from the equity growth if you do not own all of the property.

To qualify for Shared Ownership, you need to prove that you have a need, i.e be a Key Worker or be on the local Council housing register and register on the Home2own website.

Shared Equity 

This type of scheme is also known as New Build Homebuy.

The difference is that although you own part of the property as above, you do not pay rent on the part of the property that you do not own, however on sale of the property, you pay a percentage back to the Landlord equivalent to their share of the property. i.e if you own 75%, you will receive only 75% of the equity when you sell.

Resale Restrictions 

In some cases, the local authority will place a restriction on the resale of the property. It is quite common to find that if you buy the property at 75% you may be restricted to selling at 75% of the full market value.

The other typical restrictions often put in place are that the applicant i.e. yourself and future buyers, must have lived and worked in the area for a number of years or show strong local connections. You usually have to prove that you cannot obtain a mortgage for the full amount and that you fit the local authority’s criteria.

As you can see, Affordable housing is much more complex than a “normal” mortgage and you need helpful, straight forward advice from myself. I am very experienced in this type of mortgage.