As a shared owner your payments will include the following:
Mortgage
Mortgage repayments to your lender (bank or building society). This will be the value of the share of the property that you have purchased.
Rent
Your rent is set out in your lease, but will normally be around 3 - 4% of the value of the share of the property that you have not yet purchased. Therefore, if the rent were charged at 4% of the unsold value, an example of the rent would be as follows:
- Value of property = £100,000
- Your share (50%) = £50,000
- Equity owned by Home = £50,000
- Annual rent = £2,000
- Monthly rent = £166.67
The rent is reviewed each year, and any increases will generally be in line with the RPI (retail price index).
We will ask you to set up a monthly direct debit to pay your rent, and will provide you with a form to do this.
Service charge
The service charge will be specific to the development where you live. A breakdown of this will be provided each year, and you will be notified of the monthly amount for you to pay with your rent.
This will cover some or all of the following items:
- cleaning of communal areas.
- shared garden maintenance.
- maintenance of door entry systems, fire alarms, and other common parts.
- estate management fees.
- communal utility bills.
- buildings insurance.
- Home’s management fee (this covers the administrative costs for Home to manage your property).
- a contribution to a reserve fund to pay for future external redecorations and other refurbishments to communal areas.
In addition, you will also be responsible for arranging your own payments to the local council for your council tax, and to the various utility companies to pay for electric, gas and water rates. You will also need to pay for your own contents insurance policy.