What is the New Shared Ownership Model?

When the Government announced the new Affordable Homes Programme (AHP) in 2021, it brought with it a £12 billion investment into the housing sector with the aim of creating up to 180,000 new homes across the UK.

As part of this new programme, changes to the Shared Ownership scheme have been introduced, most of which are designed to help people get onto the property ladder. While these changes won’t apply to all of Platform’s schemes, they may impact some homebuyers that buy with us.

Below we explore the changes to Shared Ownership, what New Model Shared Ownership looks like and how it may affect you.

What is the New Shared Ownership Model?

The government's changes have been consolidated under the new scheme, New Model Shared Ownership (NMSO). This information is for buyers who purchase via the new scheme or those on a Rent to Buy or Right to Shared Ownership scheme that convert to Shared Ownership.

Changes to the scheme include the following:

• The minimum initial share for purchase has been reduced from 25% to 10%.
• A 10-year repair warranty has been introduced, during which the shared owner receives support from the housing provider or landlord to pay for essential repairs.
• Shared owners can take control of the resales process from the landlord at an earlier point, which gives them more control over the sale of the property.
• Any new leases on a new-build Shared Ownership property will have a minimum length of 990 years.
• Staircasing has been made more accessible, with a new 1% gradual model that enables buyers to buy more shares in smaller instalments, with heavily reduced fees.
• Buyers can now staircase in tranches of 5% rather than 10% if they wish.

In general, these changes have not only made Shared Ownership more accessible but also improved the flexibility buyers have when it comes to staircasing.

Which properties will be impacted by changes to Shared Ownership?

The new rules apply to all new-build Shared Ownership properties that are delivered through the Affordable Homes Programme (AHP) between 2021 and 2026.

It’s important to remember that the Government is also continuing to fund the original Shared Ownership scheme through the AHP until 2023. This means there’s currently a transitional period in which both the old and the new Shared Ownership models are available.

While the NMSO doesn’t apply to all of Platform’s developments, you can always get in touch with us to see what your options are.

Who is eligible for New Model Shared Ownership?

Since Shared Ownership is designed for people that can’t buy on the open market, there are still eligibility rules in place for buyers. These rules state that:

• Buyers must have a gross household income of less than £80,000 or less than £90,000 in London.
• Buyers must be otherwise unable to purchase a property on the open market.
• Buyers must be a first-time buyer, an existing shared owner looking to move or used to own a property but can’t afford to buy one now.

How has staircasing changed under the New Shared Ownership Model?

When you enter a Shared Ownership scheme, you have the option to increase the share of the property you own through a process called ‘staircasing’. Under the new Shared Ownership model, staircasing has changed slightly.

If you entered a Shared Ownership scheme for a property provided through the AHP between 2016 and 2021, the minimum share you can buy in an instance of staircasing is 10%.

Under the New Model Shared Ownership scheme, which is for homes funded through the AHP between 2021 and 2026, the minimum share you can buy has been reduced from 10% to 5%. At the same time, buyers also have the option of purchasing shares in 1% increments for the first 15 years with heavily reduced fees.

Who is eligible for Shared Ownership?

The Shared Ownership scheme is available if both of the following apply to you:

• Your household income is below £80,000 a year. The threshold increases to £90,000 if you’re buying in London.
• You cannot afford the deposit and mortgage payments for your property of choice.

One of the following statements must also be true:

• You’re a first-time buyer
• You used to own a home but can’t afford to buy now
• You’re forming a new household - typically after a relationship breakdown
• You’re already part of the Shared Ownership scheme but want to move
• You own a home and want to move but can’t afford the new home that meets your needs

If you meet all of these requirements, Shared Ownership may be the ideal route for you to start your home ownership journey.