Shared equity

The East Dunbartonshire Council Shared Equity for Sale Scheme (SESS) gives financial help to people who cannot afford the full purchase price of a home.

The SESS allows people to buy an equity share in a property, which will usually be between 60% and 80% of the total cost of the property. The whole of the legal title, however, is held by the individual purchaser who is also responsible for repairing and maintaining the property. 

The Council’s share will be secured by way of a standard security over the property granted by the purchaser in favour of the Council (this is the same way that debt is secured by a mortgage lender in Scotland). The purchaser will also be required to enter into a contract with the Council which regulates the sharing of equity as the property Title Deeds will be in the purchaser’s name only. All maintenance and insurance liabilities in relation to the property will rest with the purchaser.

If you pay 80% of the total cost of a shared equity property, the Council will hold the remaining 20% equity share. When you sell the property the Council may choose to purchase your equity share from you or allow you to sell the property on the open market. You will receive 80% of the purchase price and the Council will receive 20% of the purchase price. 

The level of equity stake held by the Council will depend on how much stake the purchaser takes or the fixed price value the Council places on the property. Generally applicants will be required to take an equity stake (the purchase price) of between approximately 60% and 80% of the market value. In some circumstances a lower stake may be offered depending on the difference between the purchase price and the market value.

The purchaser can increase their equity stake up to a maximum of 80% after 2 years. However, the Council will always hold at least a 20% (this is known as a “Golden Share”) to ensure that the property remains affordable in perpetuity.

The Council’s share will be secured by way of a standard security over the property granted by the purchaser in favour of the Council (this is the same way that debt is secured by a mortgage lender in Scotland). The purchaser will also be required to enter into a contract with the Council which regulates the sharing of equity as the property Title Deeds will be in the purchaser’s name only.

All maintenance and insurance liabilities in relation to the property will rest with the purchaser.

It is likely that any purchaser will require to obtain a loan from a mortgage lender for the purchase. The deposit required from a lender will normally be 5% of the Market Value (rather than the purchase price). This is generally between £5,000 and £10,000. Council tax banding is also based on the market value. You will also have legal fees associated with the sales transaction that could be in excess of £1,000.

Along with the “Golden Share” i.e. a minimum of a 20% share in the property, the Council will retain a right of pre-emption over the property. This means that, if the purchaser decides to sell the property, the property must first be offered to the Council or the Council’s nominee at a Market Value determined at that time by the Home Report instructed by the owner. The Council’s nominee could, of course, be another person who qualifies under SESS criteria. If the Council chooses not to purchase the property it can be sold to any third party purchaser on the open market and the Council will receive a share of the price paid by that purchaser. The Council will then no longer have any interest in the property.

The Shared Equity for Sale Scheme aims to help residents to access home ownership if they have a maximum gross annual income as detailed below. There are variations between Bearsden/ Milngavie and Strathkelvin due to variations in house prices across the market areas.

It should also be noted that the maximum mortgage to income ratio is x3.5 times gross annual income for a single person household, and 3 times gross annual income for a non single person household.

* To ensure affordability, the maximum mortgage can generally be no higher than the ratio detailed above.

Income levels may be higher for applicants purchasing a shared equity home in Bearsden or Milngavie, given that property prices tend to be significantly higher in these localities compared to other areas of East Dunbartonshire.

In those circumstances where a single income is being used to apply for multi-person household with non-earning dependents (in particular for children), the upper maximum threshold of £36,834/£49,834 will also be considered.

The scheme is predominantly aimed at first time buyers living in East Dunbartonshire, particularly those in social rented accommodation. In those circumstances where a single income is being used to apply for a multi-person household with non-earning dependents (in particular for children), the upper maximum threshold will also be considered.

However, preference will also be given to the following groups subject to verification checks being carried out:

• People who are homeless or threatened with homelessness and have had a homelessness assessment carried out by the Council
• People with a disability whose current home doesn't suit their needs
• Residents living in housing that is below tolerable standard
• People leaving the armed forces, or veterans
• People who have experienced a significant change in their circumstances, such as separating households or are subject to mortgage stress.

Thereafter, applicants will be ranked in order of date of application and those on the Council’s housing list will be considered first. Preference is given to residents of East Dunbartonshire in the first instance.

For further information on shared equity, which is a discounted form of home ownership please see:

• New supply shared equity scheme
• Open market shared equity.

SESS – East Dunbartonshire Council’s own Shared Equity Supply Scheme.

Market Value – The current value of the property.

Equity Stake – The percentage share of the property that the applicant would be eligible for purchasing.

Golden Share – The 20% equity stake in the property which will always belong to East Dunbartonshire Council.

The Deposit – This is the amount required by a lending organisation (such as a bank or building society) in order to secure a mortgage. It is generally based on 5% of the Market Value.