Shared ownership properties have become increasingly popular in the UK, especially for first-time buyers who cannot afford to buy a home outright. Shared ownership allows buyers to purchase a share of a property and pay rent on the remaining share. However, many shared ownership owners may want to let out their property for various reasons. In this article, we will discuss whether or not it is possible to let out a shared ownership property and what steps need to be taken.

What is Shared Ownership?

Shared ownership is a government-backed scheme that enables people to get onto the property ladder by purchasing a share of a property (usually between 25% and 75%) and paying rent on the remaining share. The buyer will need to take out a mortgage on the share they are purchasing, and the rent paid on the remaining share is usually set at a lower rate than the market rent.

Shared ownership properties are typically owned by housing associations or developers, and the scheme is available for both new-build and existing properties. Shared ownership buyers will have the option to buy additional shares in the property (known as staircasing) if they wish to increase their ownership percentage.

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Why Would You Want to Let Out Your Shared Ownership Property?

There are various reasons why shared ownership owners may want to let out their property. Perhaps they have had a change in circumstances, such as a new job in a different area, or they need to move in with a partner who already owns a property. Alternatively, they may want to rent out their property to generate additional income, or they may need to move overseas temporarily.

Is it Possible to Let Out a Shared Ownership Property?

In short, yes, it is possible to let out a shared ownership property. However, there are certain steps that need to be taken, and the process may differ slightly depending on the terms of your shared ownership agreement.

Steps to Let Out a Shared Ownership Property

Check the Terms of Your Shared Ownership Agreement

The first step is to check the terms of your shared ownership agreement. This should outline the conditions for letting out your property, including any restrictions or requirements. For example, some shared ownership agreements may require you to seek permission from the housing association or developer before letting out your property.

Contact Your Housing Association or Developer

If your shared ownership agreement requires you to seek permission, the next step is to contact your housing association or developer. They will be able to provide you with the necessary forms and information and guide you through the process.

Get Your Property Valued

You will need to get your property valued before letting it out. This will help you determine an appropriate rental price and ensure that you are not charging too much or too little. You can use a professional valuer or do it yourself using online tools such as Zoopla or Rightmove.

Inform Your Mortgage Lender

If you have a mortgage on your shared ownership property, you will need to inform your lender that you are planning to let it out. They may require you to switch to a buy-to-let mortgage or impose certain conditions or restrictions on the tenancy agreement.

Find a Tenant

Once you have permission to let out your property, the next step is to find a tenant. You can advertise your property through various channels, such as online property portals or local letting agents. Make sure to screen your tenants carefully and conduct thorough background checks to ensure that they are reliable and trustworthy.

What Happens if You Let Out Your Shared Ownership Property Without Permission?

Letting out your shared ownership property without permission is a breach of your shared ownership agreement and can lead to serious consequences. The housing association or developer may take legal action against you, and you could be forced to sell your property or pay hefty fines.

What are the Alternatives to Letting Out a Shared Ownership Property?

If you cannot let out your shared ownership property, there are alternative options available. For example, you could consider selling your property or purchasing additional shares in the property to increase your ownership percentage. Alternatively, you could sublet a room in your property to a lodger, provided that your shared ownership agreement allows it.

Pros and Cons of Letting Out a Shared Ownership Property

Letting out a shared ownership property can have both advantages and disadvantages. Some of the benefits include generating additional income, having more flexibility and control over your property, and being able to maintain your ownership percentage. However, there are also risks and drawbacks, such as the potential for damage to your property, difficulties in finding reliable tenants, and the possibility of breaching your shared ownership agreement.

Conclusion

In conclusion, letting out a shared ownership property is possible, but it requires careful consideration and planning. Before proceeding, make sure to check the terms of your shared ownership agreement and seek permission from your housing association or developer. Once you have permission, ensure that you follow the necessary steps and find reliable tenants to avoid any legal or financial consequences.

FAQs

Can I let out my shared ownership property without permission?

1. No, you must seek permission from your housing association or developer before letting out your shared ownership property.

Do I need to inform my mortgage lender if I let out my shared ownership property?

1. Yes, you must inform your mortgage lender if you plan to let out your shared ownership property.

What happens if I breach my shared ownership agreement by letting out my property without permission?

1. You could face legal action from your housing association or developer and may be forced to sell your property or pay fines.

Can I sublet a room in my shared ownership property?

1. It depends on the terms of your shared ownership agreement. Some agreements allow subletting, while others do not.

What are the alternatives to letting out a shared ownership property?

1. Alternatives include selling your property, purchasing additional shares in the property, or subletting a room to a lodger.

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