Shared ownership is a popular scheme in the UK designed to help individuals get onto the property ladder. It allows people to buy a share of a property and pay rent on the remaining share, which is typically owned by a housing association. However, one common question that arises is whether you can rent out a shared ownership property. The answer is not straightforward and depends on several factors, including the terms of your lease and the policies of your housing association.
Understanding Shared Ownership
Before diving into the specifics of renting out a shared ownership property, it’s essential to understand what shared ownership entails. Under this scheme, you purchase a percentage of the property, usually between 25% and 75%, and pay rent on the remaining share. Over time, you can buy additional shares, a process known as “staircasing,” until you own the property outright.
The Legal Stance on Renting Out Shared Ownership Properties
The primary purpose of shared ownership is to provide affordable housing and help individuals move towards full home ownership. As such, the rules around subletting or renting out a shared ownership property are quite strict. Generally, you are not allowed to rent out your shared ownership property unless you meet specific criteria.
Renting Out a Room
One of the more flexible aspects of shared ownership is the ability to rent out a room in your home. This is usually permitted as long as you continue to live in the property. Renting out a room can be a great way to generate additional income while still adhering to the terms of your shared ownership lease.
Renting Out the Entire Property
Renting out the entire property is a different matter. In most cases, you cannot sublet your entire home unless you own 100% of the property or have obtained permission from your housing association. This permission is typically only granted in exceptional circumstances, such as if you are a member of the armed forces and are required to serve away from home for a fixed period.
Exceptional Circumstances
There are certain situations where your housing association might allow you to rent out your shared ownership property. These can include temporary job relocations, significant life events that necessitate a move, or medical needs. Each case is assessed individually, and you will need to provide evidence to support your request.
The Process of Obtaining Permission
If you believe you have a valid reason to rent out your shared ownership property, the first step is to review your lease agreement. This document will outline the specific rules related to subletting. If the language is unclear, seeking legal advice can provide clarity.
Next, you should contact your housing association to discuss your situation. They will inform you of your options and any specific requirements or limitations. You may need to provide details of who the property is being let to, any agents involved, and a copy of the proposed tenancy agreement.
Mortgage Considerations
If you have a mortgage on your shared ownership property, you will also need to obtain consent from your mortgage lender. Some lenders may require you to switch to a buy-to-let mortgage for the duration of the tenancy. This can involve additional costs and administrative work, so it’s essential to factor this into your decision – making process.
Full Ownership
Once you have staircased to 100% ownership of your property, the rules change. As the outright owner, you are generally free to rent out your property without needing permission from the housing ssociation. However, you should still review your mortgage terms and any other relevant agreements to ensure compliance.
Conclusion
Rent out a shared ownership property in the UK is not a straightforward process and is generally discouraged unless you own 100% of the property or are facing exceptional circumstances. The scheme is designed to help individuals move towards full home ownership, not for investment purposes. Therefore, the rules around subletting are strict to ensure the scheme’s integrity.
If you are considering renting out your shared ownership property, it’s crucial to understand the legalities and practicalities involved. Review your lease agreement, seek permission from your housing association, and consult with your mortgage lender. By taking these steps, you can navigate this complex area more effectively and make informed decisions about your property.
For more detailed information, you can refer to the [GOV.UK guide on shared ownership](https://www.gov.uk/shared-ownership-scheme/renting-out-your-home- subletting) and other resources like [Holmes & Hills](https://www.holmes- hills.co.uk/news/2023/february/can-you-rent-out-a-shared- ownership-property/) and [Contend Legal](https://contend.legal/housing/can-you-rent-out-shared-ownership- uk-legal-guide-tips/).
