The housing crisis is often seen from the perspective of younger homebuyers when the lack of affordable housing is a problem that affects all ages.
It’s why the government-backed Older People’s Shared Ownership Scheme (OPSO), specifically designed to help people aged 55 and over, can be such a lifeline for an age group often overlooked when it comes to housing needs. Yet, is OPSO everything it appears to be?
What is the Older People’s Shared Ownership Scheme?
Part of the government’s Help to Buy initiative, OPSO is a part-rent/part-buy scheme that allows homebuyers to purchase a percentage of a new home instead of paying the full property price. It’s aimed at those unable to buy a home suitable for their needs without having help of some kind.
After the initial percentage of a new home is purchased, between 25 per cent and 75 per cent, the buyer then pays a subsidised rent on the remaining share, which is usually owned by a housing association. The more the buyer owns of a property, the less rent there is to pay.
Unlike the main Shared Ownership scheme, where a buyer can eventually own 100 per cent of their property, 75 per cent is the maximum you can own under OPSO. If less than 75 per cent is initially bought, the buyer can purchase the remaining shares, stage by stage, in a process known as staircasing. Once the maximum 75 per cent is owned then the homeowner doesn’t have to pay any more rent.
Who is eligible to apply for the scheme?
You need to be a resident in the UK, over 55 and have a maximum income of £80,000 or less outside London, and £90,000 or less inside London. You need to be a first-time buyer, or a previous homeowner who can’t afford to buy now.
For the deposit, you have to pay 5 per cent of the initial percentage bought. You’re required to have a good credit history and can’t own another property. So, for example, if you owned your current property, you would have to sell it when buying the new home. There could also be specific criteria asked for by the housing association that you apply to.
The positives of the scheme
– Once a percentage is bought, you can live in the property for as long as you wish.
– You don’t have to buy the remaining share if you don’t want to.
– If you are buying as a couple, then only one of you has to be 55 or over.
– There are custom-built retirement homes available as part of the scheme.
The negatives of the scheme
– When staircasing, there will be extra legal costs involved.
– When the property is sold, the percentage that’s not owned by you is applied to the sale price and paid to the housing association.
– You have to pay the service charge and ground rent in full, no matter what percentage you own.
– Your tenure is leasehold only.
Other points to consider
– You are liable for any maintenance and repairs carried out on your home even if the housing association still owns the majority share.
– If significant rent arrears build up then you could lose the home even if you own a percentage of it.
– When it comes to selling, you’ll have to first go through the housing association to find a buyer so that it remains in the Shared Ownership market.
How do I apply for OPSO?
You need to apply either through the regional Help to Buy agent or through the local housing association that owns the new home.
So, what do we make of OPSO? Well, it certainly gives older homebuyers another option when, for example, they want to downsize and free up some cash from their present property. But it’s something that always should be seen as a long-term commitment and thought long and hard about before pursuing.
However, there’s no doubt that in a time of high house prices and big deposits, the part-buy/part-rent model is one of the most practical ways of buying a home. Older People’s Shared Ownership, in particular, is a way of buying a home that many older people may find appealing.
Keith Osborne is Editor of WhatHouse?
You can find Shared Ownership properties in your area here