Affordable Home Ownership YOUR GUIDE

Transcription

1 Areas We Cover as a HomeBuy Agent Affordable Home Ownership YOUR GUIDE Registered Head Office Jubilee House, Stenson Road, Coalville, Leicestershire LE67 4NA Tel: Fax: For general enquiries: emhomebuy@emha.org Opening Times: Monday - Friday 9.00am pm 24 hour answering service available EMHA is a member of the East Midlands Housing Group

2 Who we are and what we do what is new build HomeBuy? (formerly known as Shared Ownership) EMHomeBuy is part of East Midlands Housing Association. We have been awarded HomeBuy status by the Homes and Communities Agency (HCA) to help people in Leicestershire, Derbyshire, Nottinghamshire, Lincolnshire, Rutland and Northamptonshire access low cost home ownership / HomeBuy schemes within those areas. As a HomeBuy agent we will act as a one stop shop service to provide information, advice and access to affordable home ownership and will: Market all types of Low Cost Home Ownership schemes including New Build HomeBuy, HomeBuy Direct and the First Time Buyer Initiative (FTBI) Offer information and advice to anybody looking to purchase a property who needs and is eligible, for one of these products Issue application forms and maintain a database of all eligible applicants Signpost eligible applicants to suitable schemes within an area Maintain up to date information about low cost home ownership developments available Keep close links with all relevant local authorities / Housing Associations, Developers and others to ensure applicants are aware of the service Yes, you do get a whole property and no, you don t share it with anyone else! New Build Homebuy is one type of Home Ownership Initiative which is designed to help people who cannot otherwise afford to purchase a home outright. A New Build Homebuy scheme allows you to buy a share that you can afford in your home, usually 25%, 50% or 75%, by way of a mortgage or cash payment. You simply pay rent to the Association for the remainder. Although you don t own the home outright, you will have all the rights and responsibilities of full home ownership. Your home, but with the support of an established Association. page three

3 who qualifies? The scheme is designed to help people who wouldn t otherwise be able to buy a home of their own. Prospective purchasers are likely to be first time buyers who may be registered on a Local Authority or Housing Association housing waiting list or, existing Local Authority or Housing Association tenants in rented accommodation. Therefore, priority will be given to the following groups: > First time buyers who are on a housing waiting list (as being in housing need) > Current Local Authority or Housing Association tenants > Other person(s) who are registered on a housing waiting list (as being in housing need) > Key workers If you are not one of the priority groups above, it does not necessarily mean that we will not find you eligible to proceed. Please also be aware that you will undergo a financial assessment as part of the application process. This will also determine whether you are eligible to proceed or not. If you would like to discuss your eligibility, please ask. how does it work? You buy a share of a property at a price which is based on a valuation supplied to the Association by a RICS qualified independent valuer. You and your Building Society / financial advisor then decide how much mortgage you can afford and accordingly what share you can afford to buy. We will then be able to tell you how much rent you will have to pay on the house you have chosen. The first share you buy will usually be in the form of a 99 year lease (some leases are longer). The lease specifies the method of calculating the rent which you have to pay on a calendar monthly basis and it lays down the responsibilities and duties for you and the Association. staircasing What the scheme is designed to do is to enable you to progress to outright ownership after the first 12 months of occupation. (on some schemes you may be able to progress earlier) As your financial circumstances improve you can buy more shares up to a maximum of 100%. This is known as staircasing. (on some schemes there may be a restriction on maximum purchase). It is up to you whether or not to take the staircasing option - you won t be forced to buy any further shares if you don t want to. If you do decide to take up this option you must apply to your Association in writing and they will send you an application form. Once they receive your application they will instruct an independent valuer to value your property but at today s market value and they will disregard any improvements you have made. Please note that this does not however mean that the value of your property will be reduced by the amount of money you have spent on improvements. COST DOES NOT EQUATE TO VALUE but the improvements will be taken into account and will be assessed when the valuer visits your property. Please note a fee is charged to you for this valuation. You will then be informed in writing how much the further share will cost and upon completion your rent payment will reduce accordingly. page four page five

4 what will it cost? As with any home purchase you will be responsible for paying your own legal fees, including Local Search and Land Registry Fees. The Association s solicitor will also charge a Documentation Fee. Your solicitors costs could be in the region of 2,500 but your solicitor should provide you with a quote for his/her services. If the home you choose is valued at over a certain amount, you will be liable for Stamp Duty. Your solicitor will be able to advise you of how much this is likely to be. It is usually within the region of 1% of the full property price. Your Bank or Building Society may charge a survey/valuation fee, (if appropriate) and a deposit if required. You will need to check the cost of these services with your Bank or Building Society. You may also have removal fees to pay. Once you have moved into your new home, the running costs will be your mortgage payment, the rent, service charge (if applicable) house contents insurance, council tax and normal bills associated with living in your own home (e.g. electricity and water). The rent you pay will be reviewed every year. maintenance repairs As with any other homeowner, you will be responsible for all the repairs and maintenance which may be required to the property regardless of the share that you actually own. The cost of these works will be your responsibility. are there any extras? No, there are no hidden extras to appear later. The lease states what you and the Association are each responsible for. Your solicitor will explain any details you are not sure of. can I make improvements or alterations? Yes, you can improve or make internal improvements to your home. All you must do is request, in writing, the Associations agreement to your proposals. This agreement will not be unreasonably withheld. can I sell? YES. Just because you own part of the property there is nothing to stop you from selling that share and moving on at any time. This is known as Lease Assignment. If you do decide to move, contact the Association either by telephone, letter or straight away. You will be advised of our resale procedure and any costs to be incurred, and we may be able to nominate someone to purchase your property. can I lose out? Unfortunately, like any home owner, you could lose out if house prices fall dramatically. However, you only lose out on the value of your own share - the Association loses on the remainder! On the other hand, if prices rise, the increase in the value of your share is yours. the mortgage It is your responsibility to arrange the mortgage for the share you wish to buy. Most high street Banks and Building Societies will be able to give you help and advice with this. Alternatively, you may decide to use an Independent Financial Adviser (IFA) to help you arrange the best type of mortgage for your particular circumstances. We hold a list of approved IFA s and a copy can be provided upon request. We will also consider applications from people who are able to buy their share either partly or wholly with cash, provided that they meet the other criteria for the scheme. page six page seven

5 HomeBuy Direct (HBD) After five years, you will pay a fee to the Agency (through the National HomeBuy Agent) of 1.75% per annum on the outstanding amount of the equity loans from the Agency and the housebuilder. This fee will increase each year by the RPI plus 1%. When you sell your HomeBuy Direct home, you will repay the HomeBuy Direct assistance with a share from the sale proceeds. So, if the Agency and the housebuilder initially assisted the purchase with a 30% contribution, the repayment will be 30% of the total value when it is sold. how does it work HomeBuy Direct enables buyers to purchase a new property, with an affordable mortgage and with help from the Homes and Communities Agency ( the Agency ) and the housebuilder, on a designated HomeBuy Direct Development. This enables you to take out an affordable mortgage (minimum 70% of the total purchase price) on which you make repayments in the normal way. The rest of the purchase price will be paid for with equity loans from the Agency and the housebuilder. The Agency and housebuilder then have an entitlement to a share of the future sale proceeds equal to the percentage contribution required to assist your purchase. For the first five years HomeBuy Direct home ownership there is nothing to pay on the amount that the Agency and housebuilder contributed to your purchase. After 12 months of ownership you can also choose to take part repayment ( staircasing ) of the HomeBuy Direct assistance at the prevailing market value. The minimum additional repayment is 10% of the market value. The Agency s and housebuilder s entitlement to a share of the future sale proceeds is secured through second charges on your home. This is done in the same way that your mortgage lender will secure its lending through a first charge on your home. If you buy a property through HomeBuy Direct, you will have a mortgage for less than the full purchase price of the property and you will be the legal owner with 100% title to your home. page eight page nine

6 what is a Resale Property? who can take part in the scheme? HomeBuy Direct homes are available to First Time Buyers ideally who cannot afford to buy a home on the open market and earn less than 60,000 per annum. Priority will be given to social tenants and key workers whose household income is less than 60,000. (This is the national figure and therefore regional income levels may apply). Applicants should be buyers looking to own a home for the first time, although if you are looking to buy a new home after a relationship breakdown you will also be considered. qualifying criteria for all applicants Must be a qualifying buyer unable to afford a home in their local market. Applicants must not be able to buy a home suitable for their housing needs within a reasonable travelling distance of their workplace, without assistance. Must be able to demonstrate access to savings or sufficient funds to pay, if required, a deposit (which may be 5% or more of the purchase price), legal fees, stamp duty and other costs of moving. Must be able to sustain home ownership in the longer term. Typically, applicants will be employed on a permanent contract of employment (there may be exceptions for key workers). If self-employed, the applicant must be able to provide accounts for the last three years. Must not already be home owners or named on a home mortgage. If an applicant has had their name on a mortgage they will have to provide evidence that it has been (or is in process of being) removed. Must have a good credit history - if applicants have rent arrears during the last 12 months, are in breach of their current tenancy agreement or have an adverse credit history which means they are unlikely to be able to sustain ownership, they will not be eligible for HomeBiy Direct. Must take out a first mortgage for a minimum of 25 years with a qualifying lender. A loan is to be repaid with a 25 year term. non-qualifying criteria for all applicants as FIBI A full information booklet with regard to the HomeBuy Direct scheme can be found on our website or alternatively, please request a copy on the contact numbers provided. Details of the designated HomeBuy Direct Developments via links to the developer website, can also be found on Yes, just like New Build Homebuy, you do get a whole property and no, you don t share it with anyone else! The Resale scheme allows you to buy a home from the current shared owner. You purchase the share they currently own in their home, this is usually 25%, 50% or 75%, by way of a mortgage or cash payment. You simply pay rent to the Association for the remainder. Although you don t own the home outright, you will have all the rights and responsibilities of full home ownership. page ten page eleven

7 who qualifies? The scheme is aimed at the same groups of people as New Build HomeBuy (PLEASE REFER TO PAGE 4) how does it work? You buy a share of a property from the current owner at a price which is based on a valuation supplied by a qualified independent valuer. The share you buy will be in the form of a lease which will have originally been granted on a 99 year term. The rent which you have to pay on a calendar monthly basis will be exactly the same as the current occupier is paying. staircasing What the scheme is designed to do is to enable you to progress to outright ownership after the first 3 months of occupation. As your financial circumstances improve you can buy more shares up to a maximum of 100%. In some rural areas this is restricted to a maximum of 70% or 80%. If you are unsure, please check before you proceed. It is up to you whether or not to take the staircasing option - you won t be forced to buy any further shares if you don t want to. If you do decide to take up this option you must apply to your Association in writing and they will send you an application form. Once they receive your application they will instruct an independent RICS valuer to value your property at the current market valuation and they will disregard any improvements you have made. Please note that this does not however mean that the value will be reduced by the amount of money you have spent on improvements. COST DOES NOT EQUATE TO VALUE but the improvements will be taken into account and will be assessed when the valuer visits your property. Please note a fee is charged to you for this valuation. You will then be informed in writing how much the further share will cost and upon completion your rent payment will reduce accordingly. maintenance repairs As with any other homeowner, you will be responsible for all the repairs and maintenance which may be required to the property regardless of the share that you actually own. The cost of these works will be your responsibility. are there any extras? No, there are no hidden extras to appear later. The lease states what you and the Association are each responsible for. Your solicitor will explain any details you are not sure of. can I make improvements or alterations? Yes, you can improve or make internal improvements to your home. All you must do is request, in writing, the Associations agreement to your proposals. This agreement will not be unreasonably withheld. can I sell? YES. Just because you own part of the property there is nothing to stop you from selling that share and moving on at any time. This is known as Lease Assignment. If you do decide to move, contact the Association either by telephone, letter or straight away. You will be advised of our resale procedure and any costs to be incurred and what to do next, and we may be able to nominate someone to purchase your property. can I lose out? Unfortunately, like any home owner, you could lose out if house prices fall dramatically. However, you only lose out on the value of your own share - the Association loses on the remainder! On the other hand, if prices rise, the increase in the value of your share is yours. page twelve page thirteen

8 what is the First Time Buyers Initiative? (FTBI) how does it work? It enables first-time buyers, who cannot otherwise afford to buy a home, to purchase a new property with an affordable mortgage and with government assistance on a designated FTBI development. Assistance is paid to the participating housebuilder, not the first-time buyer. The government then has the entitlement to its share of the future sale proceeds which will be equal to the initial percentage contribution required to assist the buyer. This enables a FTBI buyer to take out an affordable mortgage (minimum 50% of the total purchase price) on which they make repayments. For the first three years of FTBI home ownership, there is nothing to pay on the amount that the government has contributed. After three years, buyers will pay a fee to the government (the national HomeBuy Agent) of 1% per annum on the amount of the government funding. This fee will increase each year by a fixed percentage reaching a maximum of 3% after five years in the property. Because it is made affordable, FTBI is a stepping-stone to assist buyers into full home ownership. When owners sell their FTBI home, they will repay the government s contribution by way of its share of the sale proceeds. So, if the government initially assisted the purchase with a 25% contribution, the repayment will be 25% of the total value when it is sold. The government s entitlement to a share of the future sale proceeds is enforced through a second charge on the property. This is done in the same way that a buyer s mortgage lender will secure its lending through a first charge on the property. Although FTBI buyers will have a mortgage less than the full purchase price of the property, they will be the legal owner with 100% title to the home. who can take part in the scheme? Homes are available for qualifying key workers, social tenants, those on housing waiting lists and other first-time buyers who cannot afford to buy in their local market. Applicants must be buyers looking to own a home for the first time, although those applying to the scheme after a relationship breakdown may be considered. Qualifying Criteria for All Applicants Must be a qualifying first-time buyer unable to afford a new home. Applicants must not be able to buy a home suitable for their housing needs within a reasonable travelling distance of their work place, without assistance. Must be able to demonstrate access to savings or sufficient funds to pay a deposit (usually 5% of the purchase price), legal fees, stamp duty and other costs of moving. Must be employed on a permanent contract of employment (there are exceptions for key workers). If self-employed, the applicant must be able to provide accounts for the last three years. Cannot already be a home owner or named on a home mortgage. If an applicant has had their name on a mortgage they will have to provide evidence that it has been (or is in process of being) removed. Applicants must have a good credit history. Applicants must take out a first mortgage with a qualifying lender. Non-Qualifying Criteria for All Applicants If applicants have rent arrears during the last 12 months or are in breach of their current tenancy agreement. If applicants cease to be in permanent employment before they can commit to a purchase (exchange of contracts). If applicants have an adverse credit history. If an applicant already owns a home or is named on a home mortgage (unless the name is in the process of being removed, for example, following a relationship breakdown). If a FTBI owner qualifies for the scheme because of their key worker status and they leave their qualifying profession, the government loan/contribution must be repaid. A full information booklet with regard to the FTBI scheme can be found on our website or alternatively please request a copy on the contact numbers provided. Details of the designated FTBI development and links to the developer s website can also be found on. Should you wish to register for this First Time Buyers Initiative scheme, please complete and return the enclosed application form. For further details on any of these schemes, please contact EMHomeBuy at telephone: emhomebuy@emha.org page fourteen