FIRST STEPS Shared Ownership is the main low cost home ownership product available in London.
With FIRST STEPS Shared Ownership, you buy a share in a new or existing shared ownership home, starting at 25% of the full market value of the home, and pay a rent, which is initially capped at a maximum of 3%, on the part owned by the developer. If you buy an apartment, you will also have to pay a service charge to the developer to cover the cost of maintenance to communal areas and the grounds of your building.
You will need to have savings to cover any deposit required by your mortgage lender and the costs involved in moving.
FIRST STEPS Shared Ownership is designed so that you can buy a new or existing shared ownership (where a current shared owner is selling their property) home with a lower deposit and with monthly housing costs that are approximately 20% lower than if you were to buy the same home outright on the open market.
When you can afford to, you can take your next steps and increase the share you own; this is known as ‘staircasing’. The cost of the additional share that you buy will be based on the current market value of your home. You can staircase until you own your home outright. By buying an additional share through staircasing, you will reduce the amount of rent you pay. If you staircase to the point where you own outright, you will no longer have to pay rent.
To buy through shared ownership you will need to do what is known as ‘maximise your affordability’. What this means is that you will be required to take out a mortgage in addition to any deposit you may have. Even if you can afford to buy the minimum share of the property in cash, you will still be required to take out a mortgage. The rule may be waived for people who can’t get a mortgage due to age or disability. Before you purchase you will undergo a financial assessment. The financial advisor will calculate the share you can afford to buy, which must be adhered to except under exceptional circumstances. They can also offer help in obtaining a mortgage.
There are lots of good reasons to buy a home with FIRST STEPS Shared Ownership.
When buying a brand new home you:
Buying an existing shared ownership property can: