LEADING IN HOUSING, SUPPORT AND RIGHTS FOR PEOPLE WITH LEARNING DISABILITIES
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Shared ownership and family investment

This page has technical information about how someone can part-own a property - and how a family can fund that share and also about shared ownership - an arrangement where you buy a share of a property.In normal outright purchase you buy 100% of the equity, in shared ownership you only need to buy a portion of the equity: 30, 40, 50%. The point about shared ownership is that it makes it cheaper to become an owner. A disabled person can get all of the benefits of ownership for a fraction of the cost of full ownership. The part that you do not purchase remains with the landlord or developer who rents it to the shared owner. Shared ownership is therefore simply described as 'part-buy, part rent'.

As an example if a suitable bungalow is for sale at £200,000 someone with a learning disability who has just inherited £70,000 could acquire a 35% share.

How to access


There are three ways of getting a shared ownership property:

  1. Most property for sale on shared ownership terms is developed by housing associations (Registered Social Landlords). There are a number of shared ownership programmes promoted and financed by the Homes and Communities Agency (HCA) called 'HomeBuy' and of particular relevance 'Home Ownership for people with Long-term Disabilities' programme (HOLD). These are explored in a separate leaflet. Properties may be new or second hand.
  2. A small number of housing associations offer shared ownership for disabled people outside the Homes and Communities Agency rules and limitations. In these the subsidy that the HCA provides is replaced by an equivalent investment by a relative or a Discretionary Trust. The two leading providers of privately funded shared ownership are: Advance Housing and Progress Care. Both operate over a large part of the country, offer different financial arrangements and are H&SA members. There are a small number of other organisations beginning to offer different versions of shared ownership without grant
  3. Buy an existing shared ownership/ HomeBuy property on the second-hand market. The way to do this is usually to get on the waiting list of an RSL that has a big shared ownership programme in the area you want to live in and ask them to nominate you when a suitable property becomes available. This is possible because most shared ownership leases give the landlord (the RSL) a short period (typically 21 days) to put forward someone to buy a shared ownership property from an existing owner when they want to sell.

A housing subsidiary of Mencap called Golden Lane may also be prepared to consider shared ownership. Private developers occasionally offer a form of shared ownership (or some form of low cost ownership), usually to boost sales on developments that are not selling. These are not intended for disabled people and many offer short term savings only so will need careful examination.

Pros and cons

Pros:

  • Offers all of the advantages of ownership for a disabled person at a fraction of the cost
  • May be a route for a family who cannot afford to buy a property outright for a relative, but who nevertheless would like them to have all the advantages and security of owning a home
  • Shared ownership can be combined with Support for Mortgage Interest to also make owning a suitable house possible without any family contribution
  • If the lease is correctly drawn so it places repair and maintenance responsibilities on the landlord this solves the problem of getting maintenance done when the owner is disabled. Also funding the maintenance since the rent element should be covered by housing benefit for anyone eligible and this includes an element for maintenance.

Cons:

  • More complex than outright ownership
  • Lease may have restrictions, for example on sub-letting
  • As with buying any property there are legal, survey and other expenses of buying to be met
  • Support for Mortgage Interest is not a guaranteed source of income and can be subject to change. It is important that further advice is taken from your benefit advisor and/or financial advisor.

How the money works


The part of the equity that is purchased may be paid for by:


  • A mortgage – most commonly with a disabled person the interest is paid through Income Support using Support for Mortgage Interest (SMI) (see separate leaflet)
  • A family put up the money. This may simply be a 'gift' directly invested in the property but under some family funded shared ownership arrangements the money is given as a loan to the housing association. There are some technical reasons for this to do with housing benefit. From the families perspective it in property prices
  • Inheritance on the death of a relative and the sale of the family home. The scenario here is commonly that the money available is insufficient to buy a suitable property outright perhaps because the estate has to be divided between several siblings. However, it may be sufficient to buy a share. If this is not done the probability is that the disabled person will cease to receive any means tested benefits until such time as their assets fall below the relevant capital thresholds
  • A Discretionary Trust of which the disabled person is a beneficiary buys a share. The share that is retained by the landlord is rented to the shared owner. This rent should be eligible for housing benefit where the landlord is an RSL or charitable body.

Other issues


Families cannot do shared ownership in the way described here using different welfare benefits themselves. The ownership of the property must be shared with another prescribed organisation.If they wish, shared owners can 'staircase up' to full ownership i.e. buy more of the equity.

A family may write a will or have other arrangements such as an endowment policy to repay the capital on the mortgage at some point and/ or provide additional funds to allow stair casing to full ownership. On sale the shared owner usually receives the market value of the share they own, including any appreciation.

So if a half share of a property with an open market value of £200,000 is purchased for £100,000, in five yearsí time when the property is worth say, £250,000 the shared owner gets back £125,000. Of course if they have a mortgage the capital outstanding will have to be repaid to the lender from this sum at this point.
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Learning Disability England
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Learning Disability England
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