This article was originally published by The Yorkshire Post.
The “Shared Ownership” model of affordable housing is well-established as a way for people to get on the housing ladder where they are otherwise unable to buy a suitable home on the open market.
Here, solicitor and head of Switalskis Solicitors’ new build conveyancing department, Richard Wisnia, explains what shared ownership is and what the introduction of a model for older people will mean for those buying in later life.
If you haven’t come across it before, a house bought through a shared ownership scheme involves buying (leasing) a share of the property, and paying rent on the share retained by the landlord, either a Housing Association or other Registered Provider. Typically, the scheme allows you to buy further shares over time – in turn reducing the rent you pay – a process known as “staircasing”. In most cases there will be an option to purchase all of the remaining shares to give you full ownership.
Looking to the older end of the market, the UK Government has introduced a varied form of the scheme called “Older Persons Shared Ownership” (OPSO). Under OPSO, a share of between 25% and 75% of the open market value of the property can be bought.
In contrast to the standard scheme, the maximum share you can purchase under OPSO is 75%. There is no opportunity for full ownership. However, if you do purchase at, or staircase to, 75% ownership, there will be no rent to pay on the remaining 25%.
In order to be eligible for the scheme, you:-
- Must be aged over 55.
- Must have an annual household income of £80,000 or less.
- Should be unable to purchase a home suitable for your needs without assistance.
- Must sell any existing property owned before buying through OPSO (though no Local Authority nomination will be needed).
- Cannot have any outstanding credit issues.
Given the higher level of living costs for many retirement living properties and, in some developments, home care provision, the guidelines suggest that there is no cap on the amount of savings/investments you can hold to cover these continuing living costs, though each case will be considered on its own merits.
The scheme is administered through government-appointed regional Help to Buy Agents. The Agent will advise on eligibility and should hold a record of suitable properties in the relevant area, including those specifically designed for OPSO that have additional care and support services. The Yorkshire region is served by Help to Buy Agent for the North (https://www.helptobuyagent1.org.uk/).
There are some different considerations which will apply if you are using OPSO (or any other form of shared-ownership scheme) for a purchase in the later stages of life.
The process for selling the property is not likely to be as swift as selling through an estate agent on the open market. OPSO properties are likely to have a selling process involving the Registered Provider or the Help to Buy agent having the opportunity to nominate a purchaser, and that person being given a period of time to exchange contracts. If this avenue is unsuccessful, you will be able to market the property yourself but a number of weeks will have passed.
Don’t forget that, although you will own a share of the property, you will nevertheless still assume full responsibility for the outgoings at the property which may include not only your usual utilities but in retirement living developments will include the ongoing periodic maintenance and insurance charges.
So if you are purchasing in later life, these considerations take on greater meaning because in the event of death, or the need to move into nursing care, you (or on death, your estate), will retain responsibility for the outgoings of the property until the property is sold. This may not only therefore be a consideration for the buyer, but also the buyer’s next of kin who may be handling the sale.
This is of course a worst-case scenario, and it is likely that the procedures for sale will be handled sensitively and pragmatically by the Housing Association or Registered Provider.
As we continue to live longer, and the demand for suitable housing for retirees continues to grow, OPSO is a welcome addition to the range of affordable housing options.