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Government scheme allows tenants to buy share of their homes

by Sorcha DugmorePosted on

As part of the Right to Shared Ownership scheme, residents in social and affordable housing can now apply for the chance to buy a share in their rental home. 

The government is positioning this scheme as an alternative route to buying a home for those who would have previously found the step challenging. Lucy Frazer, Housing Minister, suggested that this scheme has been put into motion to provide tenants with the chance to live in a home of their own. 

What does this mean for tenants? 

Affordable and social housing tenants will be provided with the opportunity to own a share of their home as a leaseholder. The tenant will usually be required to pay monthly service charges on the building which will include maintenance charges. 

What does this mean?

  • Tenants will be able to buy a share of their property worth between 10 and 75 %
  • Having a share of the property provides the tenant with more control over the home they live in
  • Becoming a shared owner would require the tenant to take out a mortgage while continuing to pay rent on the remaining equity, increasing living costs for the tenant
  • The Right to Shared Ownership scheme is not available in Scotland, Wales or Northern Ireland.

Which Tenants could be eligible to use this scheme? 

Tenants can apply to buy a share of their home when:

  • It is the tenant’s main home
  • The tenant has lived in the property for at least 1 year
  • They have been a tenant of social or affordable housing for at least 3 years
  • The property is eligible for the Right to Shared Ownership scheme (Landlords will be able to confirm this)

 The UK Government plans to make the Right to Shared Ownership an option that is available to more tenants in the coming years.

What does this mean for Landlords 

  • The tenant will become a leaseholder and be liable to pay service charges for necessary maintenance on the property at the same rate as someone who owns 100% of the equity on the property
  • There is an ‘initial repair period’ whilst the scheme is implemented. Meaning that costs such as structural repairs and installations will continue to be the landlord’s responsibility for 10 years after the property was built
  • If a shared owner does not pay their rent, there are measures in place for landlords to regain full possession.