7.6.1. Shared ownership co-operatives
Shared ownership is traditionally used to enable people to enter the property market whose incomes would otherwise not enable them to buy homes.
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Shared ownership is commonly used by housing associations to enable individuals to part own and part rent homes with the potential for residents to staircase to full ownership. Individuals are granted leases on their properties under which they are responsible for their own repairing obligations. Individuals arrange their own mortgages, possibly with the assistance of the landlord, or bring in their own equity for the part of the property they are buying.
Shared ownership co-operatives are a community-led adaptation of the traditional shared ownership model that enables community control through a form of tenant management.
Parts of the shared ownership transaction that the co-op wants to have control over are established during the development process.
The partner (usually a housing association)
The housing association partner has 99 year leases with the shared home owners in the scheme in the same way as for traditional shared ownership. This enables them to take out mortgages if they need to. The leases refer to the co-operative and covenant the shared home owners, and any subsequent shared home owners, to be members of it.
The model enables a potential mix of tenures if necessary. It is a legal requirement that the association allows potential full enfranchisement in order to ensure that membership covenants survive through different shared home owners. The association can also enable standard renting in this model if a shared homeowner’s income was to reduce. However, all residents can be required to remain co-op members regardless of tenure.
The management agreement between the housing association and the shared ownership co-operative would enable the co-op to manage the following functions:
- Aspects of the shared ownership relationship between the association and the co-op, such as providing information.
- Shared ownership rent collection.
- Management of any communal areas including grounds maintenance and common facilities.
- Management of anti-social behaviour and neighbour nuisance.
- Management of gas servicing, planned maintenance or any other services that co-op members decide could be better provided collectively between them.
The shared owners’ rental payments cover the costs of loan finance for the scheme remaining following the shared owners’ initial equity payments, a small amount for management costs of the co-op, and any additional costs the shared owners choose to pay for any collectively provided services.
Examples of ‘Shared Ownership Co-Operatives’