Shared Ownership/Keyworker Loans/Government Incentive Loans
With high prices of properties and larger deposits required by lenders, sometimes it is difficult to raise enough of a deposit to purchase a property. Therefore, there are various affordable housing schemes which have been set up by governments. This is to encourage people to purchase properties by buying a share of a property with the assistance of the government.
Shared Ownership Schemes
Shared ownership schemes are provided through housing associations where you buy a share of a property and pay rent on the remaining share. Therefore, you could own 25% of the property and the remaining 75% will be owned by the housing association. You may need to take out a mortgage to purchase your share. Over time, you can buy more shares which is called ‘staircasing’. The cost of your new share is dependent on how much the properyt is worth when you go to buy the share, therefore, the property may have decreased in value which will mean your new share will be cheaper or may cost more if property values have increased.
This type of scheme is part of the government’s latest incentive and lets you purchase a newly built home with 5% deposit of the purchase price. Those who are eligible to use this scheme includes all key workers, social housing tenants and people whose housing is of a priority. Therefore, if you are eligible you could get a mortgage of up to 95% of the purchase price if you meet the criteria set by the government.
Key Worker Living Scheme
The Key Worker Living Scheme was set up on the 1st April 2004, it replaced an initiative called the Starter Homes Initiative (SHI), which was introduced for key workers who are people who work in the public services, who would not be able to buy a home without the assistance from the SHI. The SHI assisted key workers to buy their first home. However, what is different about the new Key Worker Living Programme (KWL) is that it is aimed at public service workers in London and the South East where the cost of housing is causing recruitment and retention of staff problems. It is not limited to helping key workers to buy their first home but can also apply to rental schemes too.
For further informatio on eligibility of these schemes please visit https://www.gov.uk/affordable-home-ownership-schemes