Can you explain Co-Ownership to me?
Co-Ownership is a government backed scheme in Northern Ireland that helps you buy your first home when you cannot raise all the money you need. You buy a share, Co-Ownership buys a share and overtime you buy back Co-Ownership’s share…Simple!
About the Scheme
The maximum value of a property that can be purchased in Northern Ireland through Co-Ownership is £175,000.00. This figure is reviewed regularly. You and Co-Ownership share in the ownership of the property. You buy a percentage of the equity (minimum 50% – maximum 90%) and Co-Ownership buys a percentage of the equity (minimum 10% – maximum 50%).
You agree to purchase the property in the usual way, generally with an estate agent. You then make an application to Co-Ownership for assistance and at the same time make an application for a mortgage to a bank/building society who lend for Co-Ownership purchases. A local independent mortgage advisor can assist you with this. You work out how much of the property you want to buy and then apply to Co-Ownership for the balance. Lets say the house is £100,000.00 and you can raise £70,000.00 (mortgage of £66,000.00 and savings of £4,000.00) your equity percentage will be 70%. Co-Ownership’s will be 30%.
Co-Ownership signs a Contract with the seller to purchase the property outright and at the same time you sign an agreement to lease (Equity Sharing Lease) the property from Co-Ownership for a term of 99 years, paying an annual rent to Co-Ownership of approximately £960.00. You might this is strange – you paid for 70% of the property but now it is registered in Co-Ownerships name and you are paying them a rent?
The Equity Sharing Lease you enter into with Co-Ownership clearly sets out the relationship between you and Co-Ownership and provides you with the ability to buy back Co-Ownership’s share over time. This is known as “staircasing”. You will always own 70% of the property using the example above, or whatever percentage of the equity you initially acquired. There is an application procedure to buy back Co-Ownership’s share and this can b done at anytime but for a minimum of 5% at a time. When you apply to buy back a share of their equity or all of it Co-Ownership will arrange for a market valuation of the property to be carried out. If you have made improvements to the property that has increased its value Co-Ownership cannot share in those increases. The valuation is a straight forward market valuation of the property and does not take into consideration landscape gardening, decking, extensions, quality interior decoration etc. You will not penalised for having increased the value of your home.
For more information about the Northern Ireland Co-Ownership scheme please do not hesitate to call us on 028 2502 2126 or email us at firstname.lastname@example.org with any of your queries. You might also like to visit the Northern Ireland Co-Ownership Housing Associtaion Limited website http://www.co-ownership.org