Shared Ownership schemes were in place up to 2011. Typically, the borrower purchased part (usually 50%) of the property with an annuity loan with the Local Authority purchasing the remaining share (rental equity stake). Until the rental equity balance was repaid, this share of the home remains under the ownership of the local authority.
In 2016 a Shared Ownership Restructuring option was put in place to address affordability issues that arose with some Shared Ownership borrowers. This option provided for the consolidation of the outstanding annuity mortgage, the rental equity balance and any arrears into a single annuity loan. The term of the annuity loan would be determined by the amount of the monthly repayment deemed to be affordable and sustainable for each borrower. This restructuring option allowed the borrower to have a regularised, restructured repayment solution. This arrangement is also offered to borrowers who are nearing the end of their annuity term but who have not made sufficient provision for the repayment of their rental equity balance.
The shared ownership scheme contractually requires borrowers to clear the rental equity balance at the end of the annuity loan term. Where a borrower has repaid their annuity loan they remain liable for the repayment of the remaining rental equity balance. Borrowers should engage with their local authority to discuss the options available to them to address the outstanding debt now due.
