What does shared ownership cost?
Starting off
When you enter into any low cost home ownership purchase there are initial expenses involved, as there would be with any property purchase. You will need to consider these costs carefully to make sure that you can afford to proceed.
The following is an explanation of the expenses that you can expect to have to meet.
Mortgage Valuation
If you are raising a mortgage to buy your share of the property, your mortgage lender will usually arrange to have the property valued before they will agree to lend you the money. This is because they want to be sure that the value of the property is sufficient for their security. A mortgage valuation fee is usually levied by lenders.
Legal Fees
You have to engage a solicitor to handle the conveyancing on your behalf as you would for any property purchase.
Land Registry
The Land Registry will be organised by your solicitor. The cost of this may vary, and the money will usually be payable to your solicitor as soon as you engage them as this charge will have to be paid at the time of the application on your behalf. This charge is usually in addition to the basic legal fees.
Stamp Duty
Please check with the Homescope team for the latest legislation on Stamp Duty costs.
On-going costs
Once you move into your new home you need to be aware that there are additional costs that you must meet each month:
Rent (only applicable for Shared Ownership properties)
The rent payable to Sentinel each month is calculated as a percentage of the unsold equity (the share you don’t own). This percentage is calculated on a scheme by scheme basis. Rent is due on the first day of each month in advance and will be increased annually by the previous year’s Retail Price Index (RPI) (Inflation) plus up to 2%.
If you are buying a resale property you will be advised of the current monthly rent.
Service Charge
A service charge may be payable in additional to the rent each month. This charge may include items such as buildings insurance, estate services such as communal cleaning, lighting, gardening, and a contribution towards five yearly redecoration of communal areas where appropriate. A management fee may also be payable, which will be communicated to prospective buyers prior to purchase.
Mortgage Repayments
Your monthly mortgage payments will probably be your single biggest expense. The actual amount of payments will vary according to the amount of the loan and the prevailing interest rate.
You must pay your mortgage each month. A mortgage lender can repossess your property if you default on the loan, in spite of the fact you only own a share.
Council Tax and Utility Bills
You are fully responsible for paying any Council Tax that is due on your home. The amount of Council Tax you pay is directly related to the value of the property. The fact that you do not own the property in full does not affect the level of Council Tax payable.
As a leaseholder you are also responsible for your own gas, electric and water rates.
Repairs and Maintenance
If you purchase an apartment you are responsible for all internal repairs and decoration. If you purchase a house you are also responsible for all external repairs and decorations. All new properties will have a warranty period where Sentinel will be responsible for some specific repairs or maintenance obligations on the property, for a specified period of time. This will be outlined in the contract.
IMPORTANT
You should seek advice from an Independent financial adviser (IFA) and from your solicitor to make sure that you understand the financial and legal commitments that you will need to make.
You may use any IFA and solicitor of your choice. Sentinel, however, have a panel of IFA’s and solicitors who may be able to assist you with the purchase.
Using a panel solicitor tends to enable quicker and smoother sales.
