Shared ownership – the legal process

We all know that property prices in our area are amongst the highest in the country and many first time buyers find it difficult to find enough money for the deposit to put down on their first home. One option that is becoming increasingly popular is Shared Ownership. This scheme is managed by local housing associations and gives potential buyers the opportunity to buy a percentage stake in their home, usually between 25% – 75%, and rent the remainder from the association. They then have the opportunity to purchase the remaining stake at a later stage, a process that is commonly referred to as ‘Staircasing’.

The conveyancing process for this type of purchase is more complicated as it involves arranging a leasehold for the un-purchased share. A shared ownership resident will hold a lease on a long term basis, usually in excess of 99 years. In this complex area you should strongly consider using a solicitor that has experience in this type of purchase to make sure the transaction goes smoothly and that all potential issues are attended to.

Once you have found a property that you like and have had your offer accepted by the housing association you should instruct a solicitor as soon as possible. The earlier you instruct a solicitor the more opportunity they will have to make sure the process runs to a smooth completion.

The following is a basic outline of the legal process that is taken when you purchase a house through the shared ownership scheme and it only applies to transactions in England and Wales.

The legal process will begin once your solicitor has received the Memorandum of Sale from the Housing Association.

Your solicitor will receive a copy of the draft contract and documentation from the sellers solicitor and a copy of the lease from the housing association.

Your solicitor will receive a copy of your mortgage offer and make sure that all the terms and conditions are acceptable.

Your solicitor will carry out searches on the property and investigate the title. They will also ensure all the terms of the lease are satisfactory and raise additional enquires in order to protect both you and your mortgage lender.

Once all the documents and enquires have been returned to the solicitor they will be reviewed and if they are acceptable the solicitor will send you a copy of the contract together with a comprehensive report on title.

At this stage you will need to make sure the money for the deposit has been transferred into the solicitor’s bank account.

Once everything is in place the contracts can be exchanged. At this stage both parties are legally bound to carry out the transaction. If either party pulls out the other one can claim compensation.

When the contracts are exchanged your solicitor will send the deposit to the seller’s solicitor

After the contracts have been exchanged your solicitor will draw up the transfer deed which allows the property to be registered in your name as soon as possible after completion.

On the completion day the purchase fund are transferred to your seller’s solicitors and you can collect the keys and move into your new home.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

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