SHARED OWNERSHIP BUYERS GUIDE

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1 SHARED OWNERSHIP BUYERS GUIDE

2 CONTENTS Why buy Shared Ownership? 3 More about Shared Ownership eligibility, terms and applying 4 Am I eligible? 4 Viewing and reserving a home 5 What are the costs of buying? 6 Making you an offer 7 It s time to move in! 8 Buying a further share in your home 10 Your future responsibilities 10 Shared Ownership key facts SHARED OWNERSHIP GUIDE

3 WHY BUY SHARED OWNERSHIP? How Shared Ownership (SO) can make a difference? Shared Ownership is a government backed scheme designed to help you to buy your first home more affordably. You buy a home on a part buy, part rent basis which means you buy a share in the value of your home of between 25% and 75% (depending on what you can afford), and pay Metropolitan a subsidised rent on the share owned by Metropolitan. The smaller mortgage and subsidised rent mean that your monthly housing costs are affordable and, because you only pay a deposit on the share that you buy, the cost of entering home ownership is kept low too. It s affordable The cost of Shared Ownership is usually a lot lower than buying a similar home outright or renting privately. Monthly costs are kept low through a bitesize mortgage and subsidised rent and deposit costs are reduced too (by as much as 65% if you put down a 10% deposit on a 35% share rather than on the full market value) meaning you can buy a home sooner rather than later. Peace of mind You new home comes with a 12 year NHBC warranty* so you don t have to worry about unexpected repairs or faults. In addition we will provide you with a one year defects warranty from the date the property was built, so any minor issues can be easily fixed. It s chain-free As you will be buying a brand new home, you will not be part of a property chain. This helps to make your buying experience more straightforward and stress free! Energy efficient homes Because your new home will be built to the latest standards, you should save on your heating and utility bills. You can just move in Your home is new, so no need to tear down wallpaper, rip out the bathroom or repaint the walls! Our new homes are fitted with carpets, floor coverings and quality fixtures and fittings in the kitchens and bathrooms. Our Support We are with you every step of the way! We will support you through the process of buying your first home and won t just walk away when we hand you your keys on completion day. Our Customer Service Centre is there to offer you ongoing support and advice if you need it. * Warranties may vary by development please check with our sales team for further details. NHBC -National House Building Council Warranty SHARED OWNERSHIP GUIDE 03

4 MORE ABOUT ELIGIBILITY AND TERMS Shared Ownership is a way to enter home ownership and can be a stepping stone to outright ownership. You start by buying a share that you can afford in the value of the home and can then go on to buy further shares (known as Staircasing) if you can afford to do so. You pay a subsidised rent on the share you don t own and pay a monthly service charge towards the cost of shared ammenities (depending on the type of property). We will grant you a long lease (between 99 and 125 years). The Lease explains conditions including: Your rights and responsibilities as the Leaseholder Metropolitan s rights and responsibilities as the Landlord How often rent and service charges will be reviewed The processes for buying additional shares and selling your home. AM I ELIGIBLE? Please talk to our sales team or your local Help to Buy Agent for more information. Eligibility can vary depending on which development and which home you are interested in. Factors which can affect your eligibility will include affordability, the property size and whether there are any specific terms about who gets priority to buy through Shared Ownership in the property s location. In general terms, you should be a first time buyer. However we will also consider buyers who have started again, following a relationship break up for example. If you are not a first time buyer, you must not currently own a home (either in the U.K. or overseas) - talk to us about your circumstances if you re not sure whether you d qualify for Shared Ownership. To qualify for Shared Ownership, your total household income must be less than 71,000 per annum for one and two bedroom homes or 85,000 per annum for homes with three or more bedrooms in the London region. Outside of London, your total household income must be less than 60,000 per annum. We give priority to buyers who are: Council or Housing Association tenants Working in an eligible service role for the Ministry of Defence Considered by their Local Authority to be in priority housing need for example on the housing waiting list Other first time buyers with local connections for example those living or working in the area who may be renting a home privately or living with family or friends. SO HOW DO I APPLY? Apply to your local Help to Buy Agent or, if you are looking to buy in London, complete a registration and application form with You can contact Homematch directly on if you need any assistance. If you are buying outside of London visit org.uk to find out who your local Homebuy agent, or simply call us whichever is easiest for you. 04 SHARED OWNERSHIP GUIDE

5 VIEWING AND RESERVING A HOME The sales team at Metropolitan look forward to welcoming you at one of our new developments. We will provide you with a clear indication of your eligibility for the home that you are interested in, and update you on the minimum and maximum household incomes needed to buy it. If you meet our eligibility criteria, you will be invited to attend a financial assessment with an Independent Financial Advisor (IFA) from our approved Panel within approximately five days from your viewing. We will also provide you with a list of Solicitors experienced in Shared Ownership. At the financial assessment the IFA will work out what share you can afford to buy and provide you with all the information you will need about future financial costs and obligations. You need to provide the following original documents: Your passport, or other form of photo identification Payslips from the last three months (or, if you are paid weekly, payslips from the last 12 weeks) or if you are self employed, your audited accounts for at least the last two years Proof of residency for all addresses you have lived in for the past three years, for example Council tax documentation, utility bills or bank statements Proof of savings Evidence of any children or adult dependents who will be living with you Evidence of any credit card, hire purchase or personal loans that you currently have Evidence of any benefits you receive (including child benefit) Evidence of your rent payment history, if you have previously rented. The IFA will give you advice on mortgages. They search for the best mortgage offers to meet your needs, help you to submit the mortgage application and manage the processing of obtaining the mortgage for you. SHARED OWNERSHIP GUIDE 05

6 WHAT ARE THE COSTS OF BUYING? You will need savings to cover any mortgage deposits, reservation and Solicitor fees. This will depend upon the type of mortgage you request. You will be required to pay a deposit of 10% of the share you are purchasing if you proceed to exchange of contracts. You will need to cover the following costs: Reservation fee If your financial assessment is successful we will ask you to pay a deposit of 500 to reserve your new home. This deposit is collected when we formally offer you a property and will be deducted from the purchase price at completion. Solicitors fees We will give you access to a list of Solicitors who have Shared Ownership experience. They will quote for their work and may require some advance payment to cover initial costs such as local search fees. Stamp duty Stamp Duty is a tax that you have to pay when you purchase a property with values above 125,000. Seek advice on this - your chosen Solicitor can provide guidance on your options (you can choose to pay this duty once or in stages) and on how much may be payable. Mortgage fees Your IFA will be able to give you more details on fees that apply to the mortgage recommended for you. Please also ask the IFA assisting whether any fees are charged for their advice. Other costs When you move in, we will ask you to pay your first months rent and service charges in advance. Your Solicitor would collect this as part of the completion process. You will also need to ensure you have savings to cover your removal costs. 06 SHARED OWNERSHIP GUIDE

7 MAKING YOU AN OFFER Metropolitan will be in touch after your financial assessment to talk to you about the next steps to buying your first home. If you meet the eligibility criteria and can afford to buy a share, you will be invited to reserve a property with a reservation deposit of 500*. We will only request a deposit following your financial assessment so please note this deposit becomes nonrefundable if: You decide not to proceed, for any reason including if you change your mind, after we have issued you with an offer letter. We withdraw the offer of a property because you have provided false or misleading information to us, the IFA or the Mortgage Provider. We will then send you an offer letter and will ask you to complete an acceptance form and return this to us within five days to confirm that you wish to proceed. The acceptance form provides us with important information about you and your purchase and enables us to issue a Memorandum of Sale (MOS) to your chosen Solicitor. Once we have issued the MOS we will set a deadline of 28 days to exchange contracts. During this time your Solicitor will raise enquiries and your mortgage lender will value the property to ensure they are satisfied that the property is sufficient security for the loan you are applying for. You should receive your mortgage offer within three weeks of application. Once you have received your mortgage offer, your Solicitor will invite you to sign the relevant paperwork. At this point they will ask for a deposit equivalent to 10% of your share purchase price so that you can exchange contracts. If your new home is built when you exchange contracts, you should be able to move in pretty quickly, or at least no later than 10 working days. If you are buying a home off-plan you will still exchange contracts but completion will take place on notice this means we ll keep in touch with you regularly to give you the latest build progress on your home and give you plenty of notice to move in. If you do not exchange contracts and complete the sale within the terms of the offer letter, we reserve the right to offer the home to another buyer and retain your deposit. We understand that buying your home can seem complicated sometimes so your Sales Officer will keep in touch throughout the buying process to support you and to ensure everything is going smoothly. The 500* deposit will be deducted from the share of the property you buy at completion and will be shown on a completion statement. SHARED OWNERSHIP GUIDE 07

8 IT S TIME TO MOVE IN! Once your move-in day has been confirmed, Solicitors will collect the monies required to complete your purchase and also collect advance rent and service charges for the month of completion plus an additional month s payment. You will receive a statement which confirms all monies needed to complete. We will then have the pleasure of meeting you at your new home to give you your keys, take meter readings for all utilities and provide a home demonstration and welcome pack. Within your pack will be a: New home handbook NHBC handbook and warranty information Instructions for your central heating and appliances. We will make sure we have received your bank details so we can set up an account for your future rent and service charge payments. We will be in touch with you approximately seven days after you have moved in to confirm that your account has been set up and to provide you with a reference number. You should contact your utility companies to let them know that you are the new home owner. You need to also contact your local Council to ensure that you are set up for your future Council tax payments. You new home will be covered by Metropolitan s Building Insurance Policy, but this policy does not cover your personal possessions against theft, fire, vandalism and burst pipes. You need to take out your own household insurance. Metropolitan offer a contents insurance scheme for our Leaseholders and you can find more information on this on our website. In addition to the Contents Insurance offer, we also have some useful guides on our website which will help you settle into your home and community. Please visit our website for more information. 08 SHARED OWNERSHIP GUIDE

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10 BUYING A FURTHER SHARE IN YOUR HOME Staircasing is the term we use for buying an additional share in your home. You can staircase as soon as you can afford to. You can do this in steps from a minimum of 10% of the value of your home up to outright ownership. Each time you staircase you will have your home valued by a RICS Surveyor and you will pay the associated costs (administration, legal and mortgage valuation costs). The costs of buying the extra share will be based on the current market valuation of your home. As you increase the equity share that you own, the rent you pay to us will reduce proportionally. HOW DO I SELL MY HOME? Just like any other home owner, you are free to sell your home whenever it suits you. All you need to do is to call our After Sales team on or them at leaseholdaftersales@metropolitan.org.uk and they will send you an information pack with a step by step guide to the resale process and confirm the charges for this service. To make sure that your home can be offered to buyers who are priced-out of outright ownership, we will have the right to find a buyer for your home for an agreed period of time (a nomination period ) this is usually eight weeks but the terms will be set out in your Lease. Your home will be valued by a RICS Surveyor and will be offered to buyers who are registered with the local Help to Buy Agent. In the event that we are not able to find a buyer within the nomination period, you will be free to sell your home to buyers on the open market. YOUR FUTURE RESPONSIBILITIES You are responsible for paying your rent, service charges, other related charges and living costs each month. The rent you pay is calculated on the percentage of the property that you don t own. Your rent is reviewed annually and increases in line with the Retail Price Index (RPI) + 0.5%. The service charge covers the cost of providing all the services to your home and the development you live in and will vary from scheme to scheme. This will include the costs of repairs, maintenance of common parts, lifts and communal areas, buildings insurance, ground rents and management costs. Information on all charges will be given to you as part of your buying process and detailed within your Lease. If you have purchased a house, you will be responsible for all repairs and maintenance to your home. If you have purchased an apartment, you are responsible for maintaining the inside areas only. Metropolitan will take care of day to day repairs and maintenance of the outside areas and shared areas. Where you have purchased an apartment in a block not owned by Metropolitan, the management company responsible for the development will be responsible for repairs and maintenance - the costs are paid for through your service charge. If you want to carry out any improvements or alterations to your home, you will need our permission first. Depending on the alterations you have in mind, you might also need your mortgage lender s permission. You don t need our permission for simple redecorations and repairs. If you think that you may be getting into difficulty meeting your mortgage repayments or monthly rent charges, please contact us as soon as possible. There are a number of ways that we may be able to help you. Please remember your home is at risk if you do not keep up the repayments on a mortgage or any other loans secured against it. 10 SHARED OWNERSHIP GUIDE

11 SHARED OWNERSHIP KEY FACTS Shared Ownership New Build is a part-buy / part-rent scheme that enables you to buy a share of a newly built property from us or another registered housing provider. 1. The average age of our first time Shared Ownership buyer is 32 years in London and 34 in the rest of the UK. 2. The average age of a first time buyer on the open market is 37 years. 3. The average first time buyer on the open market today needs a 30,000 deposit, almost ten times the deposit required in the early 1980s. 4. In the 10 years to 2014, almost 30,000 shared owners staircased to full ownership. 5. Shared Ownership considerably lowers the deposit required - a typical first-time buyer of a 250,000 home would need about 30,000 in deposit, stamp duty and fees. A buyer of a 35 per cent share in a 250,000 Shared- Ownership home would need roughly 12, Every 1 spent on affordable housing is worth 2.41 in the wider economy. It also helps boost employment every affordable home built creates 2.3 jobs.10 Source: NHF Broken Market Broken Dreams; CORE; NHF Shared Ownership - Meeting Aspiration SHARED OWNERSHIP GUIDE 11

12 CONTACT US To find out more about Shared Ownership, contact our Sales Team today Metropolitan The Grange, 100 High Street Southgate London N14 6PW Metropolitan is a leading provider of integrated housing services, care and support and community regeneration. Metropolitan is the brand name for Metropolitan Housing Trust Limited (MHT Ltd), registered office, The Grange, 100 High Street, Southgate N14 6PW. MHT Ltd is charitable, registered under the Co-operative and Community Benefit Societies Act 2014, registered No 16337R and registered with the Homes and Communities Agency, the regulator of social housing, under No L0726. MHT has a Consumer Credit Licence under No Metropolitan November SHARED OWNERSHIP GUIDE