Trying to learn more about your homeowning options online, but keep getting tangled in the weeds of arcane lingo? We’ve got you covered, helping you to talk like a pro about all things Shared Ownership.
In this guide you will find the answers to essential questions about Shared Ownership jargon, including:
- What is a leasehold?
- Am I responsible for Shared Ownership building insurance?
- What is a first-time buyer?
- How long is the nomination period on Shared Ownership homes?
Keep reading to get the full list of definitions and explanations about every key term surrounding Shared Ownership.
Shared Ownership Jargon Glossary
Maybe you’ve read through the gov.uk pages on Shared Ownership, or every other guide online and are still confused about some key terms. Don’t fret; we’re breaking down every bit of Shared Ownership jargon in this beginner’s guide.
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- Tool that provides an initial assessment of your eligibility and finances to ensure that you could afford and sustain a Shared Ownership leasehold over a period of time. It’s expected that a mortgage lender or an IFA would follow up with a definitive affordability assessment after this initial calculation.
- Affordable Homes Programme (AHP) 2021 to 2026
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- Government programme announced in 2020 with the intention of delivering up to 180,000 new homes in a number of affordable ways, including: discounted rent, shared ownership, and using ‘modern methods of construction’.
- Agreement in Principle (AIP)
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- Confirmation of how much money your mortgage lender (e.g. a bank) is willing, in principle, to lend you for a mortgage based on some information about your finances.
- Also known as ‘Mortgage in Principal’, ‘Decision in Principle’, ‘Mortgage Promise’, or ‘Lending Certificate’.
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- They involve a soft credit check, which doesn’t affect your credit score. An AIP typically lasts for around 90 days, depending on the mortgage lender.
- Type of insurance that covers a building against damages such as fires, floods, or storms.
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- In Shared Ownership leaseholds, the landlord is usually responsible for insuring the building and this is factored into your service charges. Notably, the landlord is not responsible for contents insurance.
- Type of insurance that covers if items in your home get stolen, lost, or damaged, up to a specified value. Contents insurance does not cover everyday wear and tear, deliberate damage, or software viruses.
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- In Shared Ownership leaseholds, tenants are responsible for their own contents insurance, not the landlord.
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- Conveyancing refers to the overall legal process of transferring ownership of a property. This is typically conducted by a conveyancing solicitor on your behalf.
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- The money you pay upfront when purchasing a home which ensures you can be trusted to continue paying for rent and mortgages. Deposits for Shared Ownership homes are usually valued between 5–10% of the share you’re buying.
- If you “cannot afford all of the deposit and mortgage payments for a home that meets your needs”, you may be eligible for Shared Ownership.
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- Areas where property builders and owners have constructed many buildings, homes, and roads that are all connected. Typically related to new-builds, which are commonly bundled together on a development, forming a new community.
- Existing Homes, or Pre-Existing Homes
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- Homes which have not been freshly built and sold directly to you. In an existing home, you will not be the first person to have owned the property nor lived there.
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- A person who has not bought a home anywhere in the world before, though they may have rented or are renting currently. Those who have acquired a home (or “major interest in a dwelling or equivalent”) via inheritance or gift cannot be considered first-time buyers.
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- Type of private property where shared areas and facilities are not owned or looked after by the council. If you own 100% of your Shared Ownership home and it is a house, you become the freeholder of that property.
- Home Ownership for people with Long-term Disabilities (HOLD)
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- A scheme that helps people with long-term disabilities find housing that is more suitable to their needs than a landlord’s current shared ownership homes. Through HOLD, a prospective buyer identifies a home on the open market which the landlord then purchases and sells to them via Shared Ownership.
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- Organisation that offers homes of various types for purchase and renting. Plumlife Homes is a ‘profit for purpose’ housing organisation operating in the North West, Yorkshire, and beyond.
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- The combined income of the people who will live in the Shared Ownership home. Household income factors in “earnings from employment, private pensions and investments, and cash benefits provided by the state.”
- To be eligible for Shared Ownership, your household income must be less than £80K/year (or less than £90K/year in London).
- Independent Financial Advisor (IFA)
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- Specialist who can provide advice on how to manage your money. They can conduct an Affordability Assessment and advise how to save more to meet the requirements for Shared Ownership schemes.
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- With Shared Ownership, the landlord is the person who owns the shares you don’t. If you own 75% of the shares of your home, your landlord owns the remaining 25%. They charge rent based on a percentage of their shares and the current market value of the home.
- The landlord for your Shared Ownership home may be a property developer, private landlord, or housing association.
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- Agreement that permits you legal residence in a property for a fixed period of time. Ownership of the property returns to the landlord at the end of the lease.
- All Shared Ownership homes are ‘leasehold’ properties.
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- Your leasehold agreement will outline your responsibilities and rights within the property, including whether you need permission to alter the property, and what the ongoing maintenance costs will be.
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- Document outlining key details of the sale of a property, drafted by the estate agent or housing association selling it. Kickstarts conveyancing.
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- Type of loan, specifically used for buying a property. Repayments typically consist of the principal (amount initially agreed upon and lended) and interest (additional cost accrued over time).
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- A home that has been freshly built and offered for purchase. New-builds have not had previous residents or owners, and are typically found grouped alongside other new builds on developments owned by one housing association.
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- Period of time given to the landlord to find a buyer for shares on your Shared Ownership home you intend to sell. The specific duration will be outlined in your leasehold agreement.
- If the landlord cannot find a buyer within the nomination period, you are free to sell your shares on the open market yourself.
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- In housing, “selling on the open market” means selling at the fullest value possible without any oversight from a housing association. For shares in a Shared Ownership home, this means you are free to sell your shares at their full value, rather than through the landlord who takes a cut of the sell value.
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- A payment you make to reserve the home you’re buying for a fixed period of time so no one else can snatch it from you. This is paid to the landlord, and will be taken off the final amount you pay when you properly buy the property.
- Can be up to £500. If you don’t buy the home, you usually don’t get the fee back.
- Reserve (or Sinking) Funds
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- In a leasehold, you may have to pay into a fund which covers unexpected maintenance costs, such as replacing the roof or fixing a boiler leak. Typically, you won’t get this money back even if, for example, you move house.
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- A fee paid to the landlord which covers maintenance and servicing of communal areas. The details of your Shared Ownership home’s service charges are outlined in your leasehold agreement; it is a criminal offence for landlords to withhold this information.
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- The ‘percentage’ of a Shared Ownership home you own and don’t pay rent on. For example, if you own shares to a value of £100,000 on a property worth £400,000, then you own 25% of that property’s shares (and your landlord owns the remaining 75%).
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- Housing scheme aimed at making home ownership more accessible for first-time buyers wherein they buy a share of a property and pay rent on the remainder to a landlord. Shared Ownership features the ability to buy more shares of the property over time (in a process called Staircasing), allowing you to eventually own 100% of the property.
- Sold ‘Subject to Contract’ (STC)
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- If you see a property marked as Sold STC, it means that the seller has accepted an offer from a prospective buyer, but the conveyancing process hasn’t been completed yet so, technically, the sale isn’t legally binding.
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- Specific kind of tax that’s paid when purchasing a property. First-time buyers are exempt from stamp duty up to £300,000 and only pay 5% on the portion from £300,001–£500,000.
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- This is how you buy additional shares on your Shared Ownership property. Staircasing allows you to buy either a bundle of shares of 5% or more (Standard Staircasing), or shares of 1% each year (Gradual Staircasing). Specific shares bundle sizes will depend on your landlord, developer, or housing association’s options.
- The cost of additional shares is based on the property’s value when you want to buy new shares.
- By buying more shares, you reduce the amount of rent you pay to your landlord because you decrease the amount of shares they own.
Start Your Shared Ownership Journey with Plumlife
Start your homeowning journey today with a Shared Ownership home in the North West or Yorkshire through Plumlife. Contact our team to learn more, or browse range of Shared Ownership properties online.
More Blogs Like This
Take a look at more blogs about Shared Ownership below:
What Shared Ownership Costs Should I Be Aware Of?
Is Shared Ownership a Good Idea for First-Time Buyers?
Is Shared Ownership Better Than Renting?
