A new model for Shared Ownership homes

Shared Ownership is a government scheme that helps people get onto the property ladder by purchasing a share of a home rather than the full value of the property. This scheme was revamped in April 2021 under the new Affordable Homes Programme (AHP), which has allocated a budget of £12 billion for the housing sector, aiming to build 180,000 new homes across the country. In this blog post, we'll explore the new Shared Ownership model introduced under the AHP and how it differs from the previous model.

Changes in the Shared Ownership scheme

The Shared Ownership scheme has been modified in several ways under the new model to make it more affordable and accessible. The minimum initial share required to purchase a property has been reduced from 25% to 10%, making it easier for people to get onto the property ladder. Shared owners will also receive a 10-year repair warranty, during which they will be supported by their housing provider/landlord to pay for essential repairs.

The new Shared Ownership model also features a 1% gradual staircasing model that enables shared owners to purchase more shares in smaller instalments compared to the previous 10%, with heavily reduced fees. Shared owners will be able to take control of the resales process from the landlord at an earlier point, giving them greater influence over the sale of their home.

Which homes will be affected?

The new Shared Ownership model will be applied to all new build Shared Ownership homes delivered through the Affordable Homes Programme from April 2021, running for five years up to 2026. Some homes will be available through the new model from 2022. However, the government will continue to fund the current Shared Ownership scheme through the AHP until 2023, meaning that there will be a transition period in which both the old and new Shared Ownership models will be available.

The new Shared Ownership model will apply to all Shared Ownership homes delivered through the AHP, including Home Ownership for people with long-term disabilities (HOLD), Older Persons Shared Ownership (OPSO), homes in rural protected areas, and homes purchased through the Right to Shared Ownership. The new model also applies to new Shared Ownership homes funded from April 2021 using receipts from the Voluntary Right to Buy programme.

Staircasing in the new Shared Ownership model

Shared owners can increase the share they own in their property at any time during the term of the Shared Ownership lease, known as 'staircasing'. Under the new Shared Ownership model, there are separate staircasing arrangements depending on which Affordable Homes Programme the property was funded by.

For homes provided through the AHP 2016 to 2021, as well as previous programmes, the minimum staircasing transaction will be 10%. This includes Shared Ownership homes that are completed from April 2021. While for homes funded through the AHP 2021 to 2026, the minimum staircasing transaction has been reduced from 10% to 5%. Shared owners will also have the option of purchasing an additional share of 1% per year for the first 15 years

How does this impact you?

If you are interested in purchasing a Shared Ownership home, make sure you double check whether you are purchasing one with what’s commonly known as the “New Lease” as opposed to the old one. The Housing Association selling the property should be able to tell you. If you already live in a Shared Ownership property and you are on a “New Lease” then you’ll be able to take advantage of lower staircasing thresholds and a 10 year repairs warranty.

Interested in trying a 1% staircasing transaction? Sign up to the Stairpay app for automated staircasing.