A halfway house on the road to ownership - Business - News - The Independent

A halfway house on the road to ownership

Earning a regular salary but still can't afford to buy a house? Amanda Jarvis tells how she realised her impossible dream

A YEAR ago, I was devoting my spare time to flat hunting. But with only pounds 60,000 to spend on a property in south-west London I was getting nowhere, and after several months I gave up.

A year later I have my own two-bedroom house with garden, fitted kitchen and bathroom - in south-west London. How? No, I haven't won the Lottery, I did it with the help of the shared ownership scheme run by the South London Family Housing Association (SLFHA).

Shared ownership is a halfway house between renting and owning and is suitable for people with a regular income who can't afford to buy a home outright. "Shared ownership fills a niche, particularly in London and the South-east where house prices are high," says Jenny Wilson, policy officer for the National Housing Federation, which represents housing associations. "Many people aren't considered a priority by local authorities and don't qualify for social housing, yet they don't earn enough to buy a decent home," she adds.

There are 104,000 housing association-funded properties in England. Shared ownership can be arranged through local authorities or any non-profit- making housing company registered with the Housing Corporation, the body that funds shared ownership in England. Scotland, Wales and Northern Ireland have their own schemes.

Housing association and council tenants, and those on waiting lists, have priority for shared ownership but others on low incomes can apply. Applications are assessed individually. Debbie Theobold, manager of low- cost home ownership at the SLFHA, says: "The minimum salary for a single person we consider is pounds 12,500. The maximum varies. We won't accept anyone who could buy the property they want on the open market."

You buy a share of the property - between 25 per cent and 75 per cent - with a mortgage and pay rent on the balance. You can increase your share - known as staircasing - in chunks of at least 10 per cent until eventually you own the house outright. It's tempting to staircase, but mortgage payments can become onerous. There can also be drawbacks when it comes to moving, says Ms Theobold. "If you staircase over 75 per cent but don't intend to buy outright, you may have difficulty selling."

The first step is to call the Shared Ownership Information and Advice Line. You'll be asked some basic questions and if they think you suitable your details will be placed on the Housing Mobility Exchange Service (Homes) central register. You will be put in touch with shared ownership providers in your area - councils and housing associations - and be told of properties for resale. Alternatively, contact the Housing Corporation which will send you a list of associations in your area which run shared ownership schemes.

Once a property becomes available, you have to express an interest. There's lots of paperwork, and you will then be interviewed and asked detailed questions about your income and expenses. If you're accepted, the next step is to arrange a mortgage. There are very few lenders which back shared ownership and fewer still offer 100 per cent mortgages. If you need a 100 per cent mortgage, Paragon is the only lender offering a fixed rate.

You will need a good solicitor, preferably one with experience of shared ownership as some aspects differ from conventional purchase. I asked my lender, the Portman building society, to suggest solicitors it had used before.

As well as the usual costs of buying a property, such as legal fees, valuation and survey, you have to pay stamp duty at 1 per cent if the value of your property exceeds pounds 60,000. Stamp duty on shared ownership is complex and it is advisable to pay the lot upfront. I paid pounds 730.

You can pay initial stamp duty of 1 per cent on your share only, but then you'll also have to pay stamp duty at 12 per cent on the average rent paid over the term of the lease. You'll also have to pay duty on each 10 per cent "staircase" at the current market value, so it could be expensive.

You have to pay rent as well as a mortgage, and this generally rises annually. My rent increases each year at inflation plus 2 per cent, which means it could go up significantly. But paying rent on a shared ownership home will always be much cheaper than paying the equivalent mortgage - unless there is a dramatic drop in interest rates.

I own 45 per cent of a house valued at pounds 73,000 and I have a 100 per cent mortgage on my share. The monthly cost is pounds 360: pounds 240 for the mortgage and pounds 120 rent (which includes buildings insurance). A mortgage for the full value of the property would cost pounds 576 a month. There is a service charge of pounds 25 and the usual costs of council tax, gas and electricity and TV licence.

If you decide to sell, you have to contact the housing association or council which will try to find a suitable buyer from their waiting lists. If they can't find a buyer within a reasonable time (usually three months), you can sell on the open market. Any profit is divided between the owner and the housing association or council.

If you are already a social housing tenant and want to buy a home, there are other options. Housing association or council tenants can qualify for a cash grant of up to pounds 16,000 towards the cost of buying a home in the private sector. Tenants may also qualify to buy the property they are living in at a discount.

q Contacts: Housing Corporation, 0171-393 2000 (Wales, 01222 741500; Scotland, 0131 313 0044; Northern Ireland, 0800 333644). Shared Ownership Information and Advice Line (Homes central register), 0345 585757.

q These lenders offer mortgages to people buying a share of 25 per cent or more in a property owned by a housing association:

Abbey National, 0800 555100; Bank of Ireland, 0118 951 0100; Birmingham Midshires, 01902 302000; Bradford & Bingley, 0800 570800; Dunfermline BS (Scotland only), 01383 627727; Nationwide, 0800 302010; Paragon, 0800 440099; Portman, 01672 517230.

Life and Style
tech
Arts and Entertainment
Robin Thicke's video for 'Blurred Lines' has been criticised for condoning rape
music
News
Paper trail: the wedding photograph found in the rubble after 9/11 – it took Elizabeth Keefe 13 years to find the people in it
newsWho are the people in this photo? It took Elizabeth Stringer Keefe 13 years to find out
Voices
Yes supporters gather outside the Usher Hall, which is hosting a Night for Scotland in Edinburgh
voicesBen Judah: Is there a third option for England and Scotland that keeps everyone happy?
PROMOTED VIDEO
Arts and Entertainment
Matt Damon as Jason Bourne in The Bourne Ultimatum (2007)
filmMatt Damon in talks to return
News
peopleThe report and photo dedicated to the actress’s decolletage has, unsurprisingly, provoked anger
Arts and Entertainment
Evil eye: Douglas Adams in 'mad genius' pose
booksNew biography sheds light on comic genius of Douglas Adams
Life and Style
tech... and together they're worth at least £100 million
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig is believed to be donning skies as 007 for the first time
Arts and Entertainment
Fringe show: 'Cilla', with Sheridan Smith in the title role and Aneurin Barnard as her future husband Bobby Willis
tvEllen E Jones on ITV's 'Cilla'
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Bono and Apple CEO Tim Cook announced U2's surprise new album at the iPhone 6 launch
tech(but you can't escape: Bono is always on your iPhone)
Sport
Tim Wiese
sport
Life and Style
Kim Kardashian drawn backlash over her sexy swimsuit selfie, called 'disgusting' and 'nasty'
fashionCritics say magazine only pays attention to fashion trends among rich, white women
Arts and Entertainment
TVShows like Agents of S.H.I.E.L.D are little more than marketing tools
Arts and Entertainment
Hit the roof: hot-tub cinema east London
architectureFrom pools to football pitches, rooftop living is looking up
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Payroll & Accounts Assistant

£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Senior BA - Insurance **URGENT**

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week