Shared ownership buyers guide

Transcription

1 Shared ownership buyers guide No. 1 Centro Place Pride Park Derby DE24 8RF Tel: Fax: info@derwentliving.com

2 What is shared ownership? Shared ownership allows you to purchase a share in a home and then pay a subsidised rent on the remaining share owned by Derwent Living. You will enter into a lease with Derwent Living. You may purchase an initial share of between 25% and 80% by cash or mortgage. You have the option to buy more shares three months after the initial purchase and in most circumstances you can eventually own the property outright. If you staircase to 100%, there is no rent to pay although you may continue to pay a service charge. You must meet the following criteria: zyou are 18 or over zyour household income is below 60,000 zyou do not currently own a home or have your name on another mortgage zyou are able to obtain a mortgage or have cash available zyou have not been in mortgage or rent arrears or in breach of your current tenancy agreement zyou have a good credit history zyou have at least 2,500 to cover the costs associated with purchasing a home z Priority is given to serving members of the armed forces, current local authority or housing association tenants Purchase costs: Reservation costs Once you have been approved by Derwent Living there is a 300 non-refundable fee to pay to reserve your home. If you pay the reservation fee but then change your mind before completion you will not get the 300 back. On completion of the purchase of your initial share this fee will be deducted from the sale price. You will have to pay for your own legal costs associated with the purchase of your initial share. Costs vary and you need to ask your solicitor for a fee quote prior to instructing them. Fees will normally include; zconveyance (solicitor) costs zsearches (for example a coal mining search will tell you if there has been any mining under or very close to your home. A local authority search will tell you if there are any local matters that affect you home such as a new road or a ban on advertising boards or similar) zland Registry fee for recording the change of legal ownership of your home (from us to you) za bankruptcy search so the mortgage lender will know if you have ever been bankrupt zthere may be other costs to pay if you want more information about your home. For example you can have an environmental search done which will tell you if there is a risk of flooding or of any known pollution in the area. Stamp Duty Land Tax (SDLT) Depending on the value of the property you may have to pay SDLT. This is a tax paid to the government when you buy a home. Your solicitor will be able to tell you if SDLT applies on your purchase and how much it will be. Ongoing costs On completion these costs are payable monthly to Derwent Living and more information can be provided before you make your decision to purchase. Rent Rent is payable monthly and is set at around 3% of the share owned by Derwent Living. For example: If you wanted to buy a 50% share in a property worth 100,000 the monthly rent you would pay on the share owned by Derwent Living is; 50,000 x 3% / 12 = 125 per calendar month. Service charge A monthly service charge may be applicable to your property, dependent on the amount of common areas on the scheme. This charge typically covers the cost of landscaping, communal cleaning and the upkeep of communal paths and car parks. These may not be located directly next to your property but the charge is divided by all properties within the scheme. Management fees Management fees are paid monthly on every shared ownership purchase but the amount will vary depending on where you live. These fees are for the administration of your account such as staff dealing with service charges, sending out annual statements and dealing with any estate management issues you may have. Audit fee This fee allows Derwent Living to instruct an annual independent financial audit of the accounts to ensure they are correct. This cost is divided by all shared owners that pay a service charge across all of our schemes. Buildings insurance Buildings insurance is charged monthly. If you purchase a house, once you own 100% you will be responsible for taking out your own buildings insurance and will not need to pay Derwent Living. If you own an apartment then, even when you own 100%, you will always pay buildings insurance to Derwent Living.

3 Once you are a shared owner Can I let my property out? Subletting is not allowed, this is covered in the lease that you will sign. Your responsibilities Your lease will detail your responsibilities and we advise you to review these with your solicitor before you purchase your initial share. If you purchase a house you will be responsible for all internal and external repairs, servicing and decoration. You will be required to make your own arrangements for contents insurance. If you purchase an apartment you will be responsible for all internal repairs, servicing and decoration to your property. Derwent Living will be responsible for external repairs, maintenance and decoration. The cost will be recovered through a service charge. You will be required to make your own arrangements for contents insurance. Buying extra shares (Staircasing) After purchasing your initial share you will have the option to purchase more shares and in most circumstances you can eventually own the property outright*. If you do want to purchase additional shares, known as staircasing, you will need to contact Derwent Living. You will incur costs when you staircase including the cost of a revaluation and solicitor costs. *Certain restrictions may be in place on specific schemes, check with Derwent Living and your solicitor. Increases All charges and fees are reviewed annually and we will write to you by the end of February each year informing you of the reviewed amounts. All new charges and fees are implemented on 1 April each year. Leasehold schemes for the elderly differ and are reviewed annually and the charges are implemented on 1 January each year. What if I want to sell my home? Derwent Living will have first refusal Derwent Living will have first refusal to purchase the property from you but we have no obligation to do so. If we do not wish to buy your share back then you would sell your share of the property on the open market. At the time you decide to sell your home please contact Derwent Living. If you want to sell your share on, then please advise your buyer that they will need to complete an application form for approval by Derwent Living before solicitors are instructed. Selling 100% of your home Being a shared owner means that you and Derwent Living each own a share of the property. Therefore the proceeds of the sale are split depending on your percentage share. An independent valuation completed by an accredited Royal Institution of Chartered Surveyors (RICS) valuer will be instructed by Derwent Living. The valuation amount will set the minimum price that Derwent Living s share must be sold for. Opposite are examples to illustrate how much would be due to Derwent Living for a property valued at 100,000 with Derwent Living and the shared owner both having a 50% share. If you choose to market the property for 100% sale then; zyou will be responsible for instructing an estate agent. zderwent Living does not need to approve your buyer if they purchase 100%. zonce you have notified us that you have found a buyer, Derwent Living will instruct an independent valuation of the property. You will have to pay for this valuation*. zonce the valuation has been obtained it will be binding on both parties. This valuation amount will set the minimum price that Derwent Living s share must be sold for. *Please note that Derwent Living cannot accept your estate agent s valuation. Example 1 If the property has been valued at 100,000 and you accept an offer of 100,000 then you will owe Derwent Living 50,000 for the 50% share we own. Example 2 If the property is valued at 100,000 and you accept an offer of 110,000 then you will owe Derwent Living 55,000 for the 50% share we own. Example 3 If the property is valued at 100,000 and you accept an offer of 90,000 then you will owe Derwent Living 50,000 for the 50% share we own. On occasions shared ownership purchasers, in agreement with Derwent Living, have sold the full 100% (their share and the share owned by Derwent Living).

4 Costs involved You will incur costs when you sell and these will include the cost of: zan independent valuation instructed by Derwent Living zadministration fee to Derwent Living zestate agent fees zlegal fees Your buyer may need to pay: za Notice of Assignment Fee zdeed of Covenant Fee Third party management companies Some schemes are managed by a third party company (not managed by Derwent Living). When the buyer s solicitors raises leasehold enquiries the management company has the right to charge a fee before responding. This fee is to be paid by the purchaser. Financial and legal advice Buying a home is the largest financial investment most people will ever make. You need to be sure that you will be able to afford your new home now and in the future. Your earnings and any other outgoings will dictate how much you can borrow from a mortgage lender and therefore what you can afford to buy. Mortgage rates can vary and your monthly cost could rise and fall depending on interest rates. Finding a solicitor After reserving your property you will need to instruct a solicitor to deal with the sale. When instructing your solicitor check that they understand what shared ownership is. Your solicitor should be able to guide you through all of the different stages of the purchase and explain your rights and responsibilities as detailed in the lease. If you are purchasing your share with a mortgage please be aware that some lenders will require you to use a solicitor from an approved panel. Please check with your lender prior to instructing your solicitor. Below is a list of solicitors who are experienced in shared ownership purchases. You do not have to use one of these solicitors. Cleggs Solicitors Apex Court, Ruddington Lane, Wilford, Nottingham Tel: mail@cleggssolicitors.com Franklins Solicitors LLP New Homes and Affordable 8 Castilian Street, Northampton, Northants, NN1 1JX & Silbury Court, Silbury Boulevard, Central Milton Keynes, Bucks, MK9 2LY Tel: newhomes@franklins-sols.co.uk Timms Solicitors 4 Babington Lane, Derby, DE1 1SU Tel: legal@timms-law.com Getting financial advice Every month you will need to pay your mortgage, ongoing costs (rent, service charge, management fee) and other bills such as water, gas, electricity, contents insurance and council tax. Remember that your home could be repossessed if you do not keep up the repayments on your mortgage and Derwent Living may take legal action should you fall into arrears with your rent. Below is a list of independent financial advisors that may be able to help you choose the right mortgage for you. You are not obliged to use any of these independent financial advisors. Marble Mortgages Kevin Clavin The Millhouse, Station Road, Castle Donington, DE74 2NJ Telephone: Fax: kevinc@marblemortgage.co.uk John Bartley, Oracle Property Finance Ltd Tel: john@oraclepropertyfinance.co.uk Emma Cooper, Leeds Building Society 23 Lister Gate, Nottingham NG1 7DE Tel: ecooper@leedsbuildingsociety.co.uk Kelly McCabe, That Mortgage Place Cedar Barn, White Lodge, Walgrave, Northampton NN6 9PY Tel: Kelly.mccabe@thatmortgageplace.co.uk Web: Nicola Bentman, Choicemortgages UK Limited 10 Red Lion Street, Stamford PE9 1PA Tel: nicola@choicemortgagesuk.com Web: Richard Lester, Acquire Properties Sandleford House, Rowallen Way, Derby, DE73 5WX Tel: derby@acquireproperties.co.uk Web: You can also contact the government backed Money Advice Service at

5 Thinking of becoming a shared owner? Shared ownership allows you to purchase a share in a home and then pay a subsidised rent on the remaining share owned by Derwent Living. You have the option to buy more shares three months after the initial purchase and in most circumstances you can eventually own the property outright. This leaflet explains the process and answers some commonly asked questions. Printed on recycled paper Shared ownership buyers guide