The minimum stake has been reduced from 25 per cent.
The change is part of a host of reforms to the shared ownership housing model proposed in December.
Standard minimum staircasing, whereby homeowners gradually increase the ownership of their share up to 100 per cent, has been reduced from ten per cent to five per cent.
As well as being able to staircase in five per cent or greater amounts, shared owners will have the option to buy one per cent each year with heavily reduced fees.
The price of each one per cent share will be based on an estimated valuation linked to the original purchase price, adjusted each year upwards or downwards in line with local house price inflation.
When the home is first purchased, a RICS valuation will be used as the baseline valuation. After that in cases where the shared owner is staircasing by one per cent a year, the latest available land registry house price index is used.
Landlords will be banned from charging administration fees on shares bought as part of this gradual staircasing model.
A standard lease term of 990 years must be granted on new-build homes.
Repairs and maintenance
An obligation for the landlord to support the shared owner with the cost of repairs and maintenance during the first ten years of ownership has been introduced.
Following this 10-year period, or if the shared owner staircases to 100 per cent ownership before that time, the purchaser will take on full responsibility for all repairs and maintenance.
Shared owners will able to claim up to a maximum of £500 in repairs and maintenance costs each year. The sum can also be rolled over to the following year if it remains unused.
The shared owner, not landlord, chooses who carries out the repairs as long as the person is a Trustmark approved tradesperson. The £500 grant cannot be used for DIY or if an non-professional is carrying out the work.
The resale nominations period, which is the number of weeks the housing association has an exclusive right to market the property has been reduced from eight to four weeks.
The new model will apply to all new grant funded Shared Ownership homes delivered through the Affordable Homes Programme 2021-2026 and Shared Ownership homes delivered through Section 106.
Rupi Hunjan, managing director of Censeo Financial, said: “It’s great to see all these initiatives for first-time buyers and those struggling to get on to the housing ladder. There is help with stamp duty, the 95 per cent mortgage guarantee scheme and now the revamping of shared ownership.
“The sentiment regarding shared ownership is heading in the right direction. Now we have to make sure that the outcomes are positive and workable for shared owners, housing associations and lenders.”
