Shared ownership homes: buying, improving and selling
Costs
You’ll need to plan for all the costs when buying a home.
When you’ve found the home that you want to buy, the landlord will pass you to a mortgage adviser. The mortgage advisor will assess your income and outgoings to make sure you can afford the payments for your home.
Read the ‘key information document’ about the home to check the costs. The landlord will give you a copy of this before you reserve your home.
Reservation fee
When you find a home you want to buy, you’ll usually need to pay a reservation fee of up to £500 to the landlord.
When you pay the fee, no one else will be able to reserve the home for a fixed period. The landlord will tell you how long the fee secures the home for.
The fee will be taken off the final amount you pay on the day you buy the home (‘completion day’).
If you do not buy the home, you will usually not get the fee back. Check with the landlord before you reserve it.
Buying costs
You’ll need to pay a deposit (usually between 5% and 10% of the share you’re buying) when you exchange contracts.
When you buy your home you’ll need to pay:
- your solicitors’ fees
- your monthly mortgage repayments
- rent to the landlord
- any monthly charges (for example, a service charge to pay for the maintenance of communal areas)
You may also need to pay stamp duty.
Your solicitor will give you a list of buying costs. They’ll go through it with you and explain what you need to do.
Once you own the home, you’ll need to pay buildings insurance. You may need to also pay:
- a service charge
- an estate charge
- a management fee
- into a repairs reserve fund
Service charge
You usually need to pay a monthly service charge when you buy a shared ownership home. This covers the cost of cleaning and maintaining communal areas, such as communal gardens or the external windows of a block of flats.
You can ask the landlord for a summary showing how the charge is worked out and what it’s spent on.
Estate charge
For some homes, you’ll need to pay an estate charge. This is to cover the cost of maintaining any communal areas that are not covered by the service charge, such as roads.
Management fee
For some homes, you’ll need to pay a fee to the landlord to cover their administration costs.
Repairs reserve fund
You may need to pay into a reserve fund (also called a ‘sinking fund’). The fund covers major works, like replacing the roof. Reserve funds usually apply to flats, but some house developments have them.
You can find out how landlords must manage these funds on the Leasehold Advisory Service website. You will not usually be able to get back any money you pay into them. For example, if you move home.
Extending your lease
If the remaining lease on your home is too short, it may become difficult to sell or remortgage your home. This can affect the value of your home.
You’ll need your landlord’s permission to extend your lease. Check with your landlord before you buy what rules they have for shared owners who want to do this and how much you will have to pay. When the remaining lease drops below 80 years, it can be much more expensive to extend.
You can read more about extending a lease on the Leasehold Advisory Service website.