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Who can benefit from Shared Equity Schemes?

Publised date : 01 Mar 2019

Many would-be first time buyers discover they can’t afford the home they really like, either as a new build or on the open market.

If you find yourself in that frustrating position then help could be at hand… through one of two Shared Equity schemes that can make home ownership more affordable.

The Open Market Shared Equity (OMSE) Scheme

The New Supply Shared Equity (NSSE) Scheme

Established by the Scottish Government, the schemes can help if you are looking to buy your main residence (not a property to rent to others), so long as you fall into one of the Government’s priority groups.

To be eligible you must qualify under at least one of the following criteria

  • The intended mortgage holder must be aged over 60
  • You must currently be renting your home from the council or from a housing association
  • You qualify if you are disabled
  • You also qualify if you are a serving member of the armed forces, or a veteran who has left service within the past two years; or you are the widow, widower or partner of a member of the armed forces who died within the past two years whilst still in service.

Since the schemes are aimed at households with low to medium incomes, you will be assessed to see if you qualify. You must demonstrate that you simply can't afford to buy a home that meets your needs without help from either scheme. If it looks like you could, then you won't be eligible.

The schemes can also only help you to buy your main residence: you can’t use the home to rent out to others.

The New Supply Shared Equity scheme can sometimes help if you have owned a home previously but are currently living in rented accommodation after a significant event such as a divorce. The Open Market Share Equity scheme is only available to first time buyers.

What’s the alternative”

As well as the Shared Equity schemes (above) you might consider Shared Ownership, which operates in a different way to help you buy a home without having to fund the full price straight away.

Under Shared Ownership you must buy a property through a participating Housing Association. You can choose the size of the initial share (this is usually either 25, 50 or 75%). In addition to funding this, you then pay a monthly occupancy payment to the Housing Association on the balance they still own.

After 12 months of shared ownership you can purchase blocks of 25% of the outstanding value of the property. (The occupancy charge will then reduce in proportion.)

Housing Association’s normally give priority for Shared Ownership to:

  • first-time buyers
  • people living in rented accommodation
  • people who have experienced relationship breakdown
  • people who cannot meet their housing needs on the open market

Applicants normally need a household income of at least £15,000 a year to be considered and your monthly housing costs should not exceed 40% of your net monthly income.

You don't have to be a first-time buyer to purchase a shared ownership property, but you cannot already own a home. The property should be your main residency as shared ownership is not for buy to rent purchasers.

Shared ownership for people with disabilities

To help people with disabilities own a home that meets their needs, some Housing Associations in Scotland have developed a specific shared ownership scheme called Access Ownership. It is open to people with any disability, including physical impairment, learning difficulties or mental health support needs, and is available to those who are looking to buy a more suitable home and to those who own a property but need to reduce their financial commitments.

More information

For further information on any of the schemes contact: jamesirvine@positivemortgages.co.uk

General

Your home may be repossessed if you do not keep up repayments on your mortgage.

The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.

 

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James Irvine is not authorised to give financial planning advice but could refer any queries to a financial adviser within Positive Solutions (Financial Services) Limited.

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