What percentage of a home can I have?
The stake that you take will normally be between 60 and 80 per cent of the price of a property, according to the maximum mortgage that you can obtain and the personal contribution that you are able to make. In most circumstances you will have to take a stake of at least 60 per cent of the price of your property.
In exceptional circumstances you may be able to take a stake of less than 60 per cent but not less than 51 per cent. This is likely to apply, for example, where you have additional housing costs because of your particular housing needs which might be related to a disability, or in areas where house prices are exceptionally high.
The registered social landlord will tell you if you can take a stake of less than 60 per cent.
If you have been affected by a programme of demolition and are looking to buy a replacement house in the same area, there will be no fixed minimum percentage stake that must be taken. You will, however, be expected to invest the value of your existing house in the replacement house.
In all cases, the maximum initial stake that you can take will be 80 per cent of the price of a property.
You will have the option to increase your equity share by a minimum of at least 5% at any time and you may increase your share up to 100% if you choose to do so. Any increase is subject you paying all valuation and other legal costs and expenses. For example, if you purchased an initial equity stake of 75% and one year later you decide you wish to purchase an additional 15% share, you may do so.
However, in certain circumstances the Scottish Government will keep a 20 per cent stake in the property. This is known as a 'golden share' and is likely to happen in areas where there are only small amounts of affordable housing and few opportunities to build more affordable homes. For example, if you purchased an initial equity stake of 75% and you wish to increase your share, you may only increase up to a maximum of 80% as your property has a 'golden share' provision attached.
When New Supply Shared Equity properties are advertised, the registered social landlord will tell you whether a golden share will be retained.
You are strongly advised to consult with your financial advisor before you proceed with increasing your equity share.
Examples of a shared equity owner increasing their equity stake with and without a Golden Share provision
Example with No Golden Share Provision
An example of where a shared equity owner increases their equity stake and there is no golden share
Jim and Susan purchased 65 per cent of a house from a registered social landlord. After eighteen months they look again at their financial position. They have both received rises in their salary and they feel that they would now like to increase their equity stake in their property.
As there is no 'golden share', they must increase their stake by at least 5% and they may raise it to 100 per cent if they wish. The couple seek independent financial advice and decide that they will raise their stake in the house to 85 per cent.
After a further few years Jim receives another rise in his salary and the couple decide that they would like to have an even greater share in their home. Again, they must increase their stake by at least 5%. Again they receive advice from an independent financial adviser and decide to go ahead with increasing their stake to 100 per cent. As they now hold 100 per cent of the stake, they will receive the whole of any increase or depreciation on the sale price of the house.
Example with Golden Share Provision
An example of where a shared equity owner increases their equity stake and there is a golden share
Jane bought a flat from a registered social landlord and took a 60 per cent equity stake. The flat is in an area where house prices are high and there are few opportunities for building more affordable homes. Before she bought the property she was informed that the Scottish Government had the legal right to retain a 20 per cent 'golden share' in the property. Her financial situation has improved since she bought the flat and she would like to increase her stake in the property. After a period of around a year, she is able to increase the stake. She must increase her stake by at least 5 per cent but she cannot raise it above the maximum level of 80 per cent because of the operation of the golden share.. After taking independent financial advice she decides to raise the stake to 80 per cent.
You can increase your stake in your home regardless of whether the market value of the property has increased or decreased. (The market value is set by the District Valuer or another professionally qualified valuer).
You will not be asked about your financial circumstances again after you have bought your home. Before you increase your stake in your property, you are advised to take independent financial and legal advice. You are advised to contact the registered social landlord who you purchased your property from when you decide to increase your equity stake.