In this brief guide, we are going to discuss co ownership. Co ownership is essentially a form of shared ownership operating in Northern Ireland. Since Co-Ownership was founded in 1978, The Co own scheme by Co ownership has helped over 29,000 people buy their first home, and they currently have over 9,000 Co-Owners. 

What is Co ownership?

Co ownership is a scheme for first-time buyers and home movers which help you buy a home if you cannot afford to buy without some help. Co ownership offers two main schemes which allow people to get on the property ladder.

They are:

Co own

Rent to own

Co own by Co ownership

With co ownership you buy a minimum 50% share of the property and rent the rest from co ownership. Co ownership is a registered housing association. Co ownership is funded by the department for communities.

The rest of this guide will talk about the Co own scheme from Co ownership.

Eligibility for the co-ownership scheme

To be eligible for the Co ownership scheme you will need to meet the below criteria:

you can afford to make the payments involved in buying a property

you don’t have any other way of becoming a homeowner without needing assistance

You must also be a first time buyer and not own any property or land anywhere in the world.

You can be a home mover or previously owned a home as long as you do not currently own any property or land anywhere in the world, at the time of your application.

You must be over 18 years of age

You must currently live in the UK

The property must be your main residence and not a buy to let property

You must have the right to reside in Northern Ireland

You must have had no home credit or pay day loans within the last 12 months.

Any Debt Relief Orders, bankruptcies or Individual Voluntary Arrangements that you may have had must be satisfied completely for at least 6 years.

You must not have any bankruptcies, miss payments, home repossession,defaults, individual voluntary agreement, county court judgements or any adverse credit at the time of your application.

Properties which are eligible for co ownership

The below criteria are the criteria for Co ownership properties:

The property must be no more than £165,000. This price limit is reviewed each year.

have a ten-year build warranty for a new property

have the balance of the original build warranty for a property less than ten years old

The property must be in Northern Ireland

You can buy a new or existing property

What you need to know about co ownership

You will pay rent on the share of the property which Co ownership owns. E.g if you own 60%v of the property you will pay rent on the remaining 40%.

The rent you pay is set by the department of communities and any annual rent increase is also set by the department of communities (DFC).

You can only use co ownership on properties with a maximum of £165,000.

The minimum share of the property you can buy with co ownership is 50%.

The maximum share of the property you can buy with co ownership is 90%.

The Co ownership share you can buy will be the maximum percentage you can afford and this will be set by Co ownership. 

You can increase the share of your Co ownership property by 5% increments at any time. This is known as “buying out” in Northern ireland but as staircasing in England.

You may need a co ownership offer before you can go on and make a mortgage application with most mortgage lenders.

Buying a Co ownership property

When you buy a Co ownership property you may need to use a mortgage and hence you may need a mortgage deposit so you should check that your mortgage lender is willing to offer you a mortgage with your Co ownership property. You can use a co ownership calculator to see what your mortgage options may look like.

As of right now the Ulster bank currently offers a Co ownership mortgage. In some cases you may not need to put own a mortgage deposit. At the time of writing the Ulster bank will require a mortgage deposit if the mortgage is for more than 80% of the property value. If the mortgage is for less than 80% of the property value then you won’t need a mortgage deposit.

Once you have bought a co ownership property you will then be responsible for the property costs such as:

The home insurance

The rates on the property

The ground rent

The service charges

The maintenance costs on the property

The home repairs

Applying to Co ownership

You can apply to Co ownership if you feel it is right for you. There is an application fee of £100 which must be paid and is not refundable.

The Co ownership team will also check your financial circumstances to ensure you can afford to own a Co ownership home. 

They will also check to ensure you meet the Co ownership eligibility criteria.

If your Co ownership application is successful then you will be asked to upload more information about the property you want to co-own.

These documents would include:

The last 3 months payslips for all employment (where employed)

The last 3 months bank statements

The last 3 years tax calculation summaries (SA302s) & corresponding tax year overviews (where self-employed). For company directors we will also require your last 3 months payslips.

You may also be required to provide the below documents:

Photographic ID

Proof of current address 

Residency documentation

Proof of savings e.g. savings statements

Proof of any other income e.g. benefit award letters

You will then have to pay a £430 fee for a property survey and some of your legal fees.

You can start the application process here.

Buying out

You can buy as much of the property as you want till you own 100% of it. There is no restriction on how many shares you can buy at any time but you can only buy more shares in 5% increments.

Selling your Co ownership home

If you want to sell your co ownership home you should inform Co ownership who will value your home and let you know what the value of your ownership will be. Any home improvements you have made to your home will be taken into consideration and you will be given the value of your home improvements in full.

To read about the rent to own scheme by Co ownership, see here.

You can find further information about the co own Co ownership scheme here.

Using a mortgage broker for your co-ownership home

You may want to consider using an independent mortgage broker to get a mortgage and by default find the best mortgage lender for you.

Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full mortgage application. Once you have found a home you want to buy or are satisfied with the mortgage offer for your remortgage then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer. 

Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.

In this brief guide, we discussed co ownership. If you have any questions or comments please let us know.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.