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Shared Ownership How-To Guide:
- What can we do to help?
- What is Shared Ownership?
- Government's HomeBuy Basics
- Private shared ownership schemes
- Are you eligible for HomeBuy?
- HomeBuy Schemes
- Key Worker Living
- First Time Buyer Initiative
- Who are the experts?
- What are HomeBuy Agents?
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Find out if you are eligible for any of the schemes and initiatives, and what properties are available. We can provide you with a comprehensive list of HomeBuy Agents who are able to answer those questions for you for your region.
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How much can you spend? Shared Ownership and all affordable housing mortgages are a little more complex and specialised than ordinary mortgages. You'll need to speak to an expert in this field. SPF Sherwins are one of the UK's leading affordable housing mortgage specialists. They are available to answer any of your financially related question on affordable housing. Speak to the experts.
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The legal side of affordable housing scheme purchases is also quite specialised. We can put you in touch with one or more firms who can help you.
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You could always create a mini shared ownership arrangement through co-buying with a co-investor. A co-investor is someone who would like to buy a property with someone else, but has no intention of living in the property. They are simply looking to gain from any increase in value the property may gain over the years that you own it together and from a rent on the percentage of the property they own. The percentage ownership split of the property and a fair rent that you'll pay is totally up to your individual negotiation. To find a co-investor why not register FREE and search through our thousands of members to find someone looking to invest in your area.
Shared Ownership is buying a property that will be partly owned by someone else, but the difference between this and co-buying is that the other owner of your home in Shared Ownership is either the Government (or a subsection of) or a private organisation, as opposed to an individual in the case of co-buying. The other difference is that with shared ownership you do not share your home with your co-owner, but you will usually need to pay a premium or a rent on the percentage of the property that you do not own for this benefit.
Government's HomeBuy Basics
Early in 2006 the Government launched HomeBuy. It was a way of bringing all of their disparate schemes to help first time buyers and those struggling to afford to buy their own homes, under one roof. The old shared ownership scheme, key worker living, right to buy, right to acquire and the first time buyer initiative now all come under the heading of HomeBuy.
This does not mean that it is any more organised because each council still runs many of their old schemes and some new ones, HomeBuy Agents were introduced in February 2006 to be the one point of contact for anyone looking for information and assistance on these schemes, but many councils and housing association still double up on this role. I suppose it has made it easier to define the sector of 'affordable housing' but HomeBuy itself has not been adopted quite as widely as it could be and people still use the phrase 'shared ownership' to describe many of the schemes.
A recent survey showed that 57% of home hunters had never even heard of these Government schemes, but as HomeBuy is vastly over subscribed in most areas and getting on waiting lists is the closest most people will ever get to Government housing assistance maybe they do not actually need to promote it any further. When the Government announced in their 2006 budget that they were going to spend £970m to create 35,000 new homes for their HomeBuy initiative it sparked many experts to suggest that this was a drop in the ocean compared with the affordability problem faced by many in the UK today. With one in seven first time buyers finding it impossible to step onto the property ladder and shared ownership woefully over subscribed this ocean is just getting bigger and bigger.
If however you do manage to get to the front of the waiting list you are likely to be a Key Worker living in the South East, or a first time buyer, and the schemes offer a great way of obtaining your first step on the property ladder. Imagine only having to pay for 50% of your home up front, it makes easier for low income buyers to afford a mortgage.
Private Shared Ownership Schemes
There are surprisingly few of these, but they do exist. Private organisations that have decided that help was needed for the tens of thousands of people who could not get onto the Government's HomeBuy scheme. We are keeping an eye out for these as they offer an excellent opportunity for many people to benefit from home ownership.
Are You Eligible For HomeBuy?
This is a bit of a grey area I'm afraid as different regions have different priorities and interpret the rules their own way. The Government announced HomeBuy as bringing home ownership within the grasp of first time buyers, but as you can see from the basic eligibility criteria listed below, there are first time buyers and then there are first time buyers.
- You must not be able to afford to buy a property on your own (or as a family unit if you have a partner).
- Key Workers (nurses, police, teachers, etc.) have been targeted as those most in need of assistance, and therefore are sent straight to the head of the queue where possible.
- Existing housing association or council tenants, those on housing waiting lists and those prioritised for assistance by their Regional Housing Board.
- First time buyers
- Actually anyone can apply for HomeBuy, but the better off you are the lower down the list you'll go. However I'm sure there are some pockets of the UK where there are no waiting lists and simply being a first time buyer unable to afford to buy your own place will make you eligible for this scheme, but they will be few and far between.
- Many schemes also have a minimum and maximum income criteria. This is to ensure that only those in most need are considered, but also that they are earning enough to cover the costs of owning and running a home or you could get into financial problems some way down the line.
As I mentioned earlier different regions have different priority groups that they favour. Once every while Regional Housing Boards get together to create these lists, and below is the latest one to help you see if you're on the endangered species list:
- London: Employed people with a local connection i.e. working and living in the area and serving a community in the area or nearby. Maximum household income of £49,000.
- South East: People making a direct contribution to the local economy, including other workers essential to providing frontline public services (not already covered by Key Worker Living). Maximum household income of £60,000 allowing for families as well as smaller households to be helped.
- East: The following public sector workers; medical secretaries, medical receptionists, teaching assistants, learning assistants, care workers employed by local authorities. Maximum household income of £60,000.
- South West: Key public sector workers providing essential public services. Other first time buyers maximum household income of £60,000. Those on lower incomes will be prioritised for assistance.
- West Midlands: First time buyers will be targeted for assistance in: Areas of large scale clearance and re-provision to provide multi tenure 'pathways of choice'; areas suffering in-migration pressures (South Housing Market Area (HMA), commuter belt in Central HMA) where there is no accessible low cost housing and where new affordable housing is being provided to meet local needs; First time buyers will be targeted in order to extend tenure choice and geographical areas for the black and minority ethnic population; first time buyers will be targeted for Open Market HomeBuy in areas with restricted housing numbers/land supply for new build (South, West & commuter belt Central HMA's). Prioritisation will be given to people on low incomes.
- East Midlands: People who need help to access their local housing markets, whatever their occupation. The average household income level of those being helped is expected to be around £20,000.
- Yorkshire & Humberside: Under HomeBuy priority will be given to: Workers key to the local economy in areas where the housing price to earnings ratio is above 4:1; supporting sustainable tenure diversification in specific geographical areas where mix is crucial to sustainable communities; supporting "restructuring households" i.e. created after divorce or separation, and supporting home owners displaced by clearance schemes; under the First Time Buyers Initiative support will be given to: Workers key to the local economy who are unable to afford market housing, other workers in employment locally who are unable to afford market housing, restructuring households and households affected by clearance schemes as described above.
- North East: People with a local connection, including responsibilities for family care. Restructuring households (including assistance for partner who leaves the family home). Private sector tenants in areas targeted for demolition or re-structuring. New graduates from the region's universities and colleges. People needing to live in the deep rural areas for reasons of transport accessibility, shift working, etc. Maximum household income limit of £25,000. Existing owner occupiers from areas undergoing transformation who are often elderly or on limited incomes.
- North West: Existing owner occupiers affected by clearance; the elderly who require accommodation suitable for their needs but cannot afford to buy an alternative property without assistance; people with a local connection.
New Build HomeBuy
Previously known as shared ownership or part rent part buy, this is where a new home builder, Council or Housing Association (also known as your 'landlord' if you buy through them) offers you a percentage share in a property they already own (a new build or a recently refurbished property). The share you are able to purchase at the outset on this shared ownership scheme can be anything between 25% and 75%, a figure partly decided by the scheme you choose to buy through and partly by yourself. You are then required to pay a rent on the percentage that you do not own. Over time (although some shared ownership schemes will have a minimum period before this can happen) you are able to buy extra shares in your home (this is called 'staircasing') reducing the rent you pay as you go along. Eventually you can own all of your home.
When you decide to sell, if you do not own 100% of your shared ownership home your landlord will either buy your percentage share from you at market value, nominate someone who you are allowed to sell your percentage to, or allow you to sell your share on the open market with the provision that they would need to approve any interested parties. If you own your home outright you can sell it in the normal way.
One thing to know about. If you buy a share in a property on the New Build HomeBuy scheme as a Key Worker, but then you change your profession outside of the definition of Key Worker, you must do one of two things. Within five years of this change in your circumstances, either you have to buy all the shares in your shared ownership home to own it outright, or sell your percentage share back to the landlord or someone of their choosing. It sounds harsh, but as key workers are the highest priority group on most HomeBuy Agents lists, if you no longer are one your rights slip down the list, and someone theoretically more in need than you jumps to the top.
Open Market HomeBuy
Launched in October 2006 and specifically for people who are unable to afford to buy a home by themselves, the Open Market HomeBuy scheme is equity loan based assistance. You find a property that your local HomeBuy Agent deems to be suitable for your needs and you buy it with the help of two equity loans of 12.5% each. 12.5% from the mortgage lender that you are obtaining your mortgage from (there are currently four lenders that are part of this initiative; Bank of Scotland, Yorkshire Building Society, Advantage and Nationwide Building Society) and 12.5% from the Government via your local HomeBuy Agent. You will never need to pay monthly interest on the Government's 12.5%, and you have an interest free period of five years on your lender's equity loan. Unlike shared ownership or New Build HomeBuy you do not need to pay a rent.
When you sell your home the amount you will need to repay is the same percentage as you borrowed on the equity loans. If you bought the property at £100,000 the equity loan was 25% so the loan was £25,000. If when you sell the property is worth £120,000 the amount you would need to repay would be 25% of this new value which is £30,000. In effect the Government and the mortgage lenders in this scheme are gambling on the market going up, and you'll never loose out because all you'll pay back is the loan and a percentage of your profit on the property.
Social HomeBuy
This is a scheme for existing social tenants, those renting from housing associations or councils. Through the Social HomeBuy scheme you can buy a share in the property you are renting or buy it outright. Discounts are available and vary by location of the property of between £9,000 and £16,000 and will be proportioned based on the percentage of the property that is purchased. This discount or percentage of discount is only paid on the initial share bought.
When you sell your share of the property the landlord may decide to buy it back at market value to offer to other social tenants or provide you with a purchaser. If your sell your home within five years of the initial purchase on the Social HomeBuy scheme you will be required to pay the discount back.
Key Worker Living
This scheme was created to help certain public sector employees to buy their first home, move up to an appropriate family home or afford to rent in three regions that were finding it difficult to recruit and retain staff because of this problem. London, the South East and East of England have seen the highest property price rises in recent years and remain the most expensive areas for first time buyers to attempt to set foot on the property ladder.
Key workers are defined as: Nurses and other NHS staff; teachers in schools, further education and sixth form colleges; police officers and some civilian staff in some police forces; prison service and probation service staff; social workers, educational psychologists, planners (in London) and occupational therapists employed by local authorities; whole time junior fire officers and retained fire fighters in some fire and rescue services. If you are on this list, you are still dependent on regional variations of the list, so you should check with your local HomeBuy Agent to find out your eligibility status.
There are four ways the Key Worker Living scheme can help if you are found to be eligible:
- The equivalent of an Open Market HomeBuy scheme, where a loan of up to £50,000 can be provided to assist in the purchase of a home of your choice (which must meet the criteria of being suitable for your needs). The same rules on selling the property and how much you must repay as described in the Open Market HomeBuy scheme above.
- Higher value equity loans of up to £100,000 are available for an elite group of teachers who it is decided have the potential to be future leaders of London's education system.
- The equivalent of a New Build HomeBuy scheme where shared ownership of a minimum of 25% and a discounted rent payable on the percentage you do not own is offered.
- And if you must rent, a rental scheme is available to enable you to pay rent at a discounted rate (somewhere between what you would pay as a social tenant, and a tenant on the open market)
First Time Buyer Initiative (FTBI)
English Partnerships, the national regeneration agency, has been tasked with providing 15,000 new homes for first time buyers by the year 2010. 50% of these are ear marked for key workers and the rest will go to those on the priority lists of Regional Housing Boards (these lists are notes above).
The initiative will be very much like the New Build HomeBuy scheme (shared ownership), where eligible candidates will be invited to buy a shared ownership in a property, then to pay a rent on the percentage they do not own. The difference here is that buyers must purchase a 50% share in the property from the outset and they pay no rent for the first three years. You will be allowed to buy extra percentages (staircasing) until you own 100% of the property.
You can sell at any point but if a percentage of the property is still not owned by you the value of this must be paid back to English Partnerships.
To find out more about the First Time Buyer Initiative and other schemes already mentioned above, your first port of call should be your local HomeBuy Agent.
Who Are The Experts?
When you decide to find out more about Shared Ownership or the Government's HomeBuy scheme there are a few basic questions you'll need to ask, and to know where to go to get them answered.
- Q - Who decides whether you are eligible or not?
- A - Your local HomeBuy Agent.
- Q - Who can tell you more about any of the schemes?
- A - Your Local HomeBuy Agent.
- Q - Who has access to the properties you can select from?
- A - Your Local HomeBuy Agent.
- Q - Where do you go for Government Scheme mortgage advice?
- A - Any lender or broker, but there are specialists in this field.
- Q - Can you get a 100% mortgage to buy from these schemes?
- A - Yes, depending on the scheme and your situation.
- Q - Can you get advice for free?
- A - Some offer free affordability consultations.
You can go to any mortgage broker or mortgage lender to get your mortgage when buying through a Shared Ownership or Government HomeBuy scheme, but these mortgages tend to be a little more time consuming and complex than a standard mortgage so it may well be better for you to select a specialist in the area of affordable housing.
SPF Sherwins has been helping people find the best affordable housing mortgages since 1988, and offer:
- Specialist knowledge of affordable home ownership schemes.
- To guide you through the purchase, leaving you to fret about what colour you're going to paint the lounge rather than whether the deal will actually go through.
- 100% funding, subject to status.
- Access to exclusive products.
- FREE affordability consultations.
What Are HomeBuy Agents?
HomeBuy Agents (previously known as a Zone Agent) were created in 2006 to take on the responsibilities of determining eligibility for any of the HomeBuy schemes, providing information on the individual schemes themselves, and for gathering details on all properties in the region that are available on these schemes. Basically they are supposed to be the fount of all knowledge for the Government's HomeBuy schemes. So if you have a question, want to see whether you can take advantage of the massive discounts available to Key Workers and First Time Buyers through these schemes give your local HomeBuy Agent a call.
Previously (and to a certain extent 'still') the job now done by the HomeBuy Agent was done by the individual housing associations. But as there are hundreds of housing associations and only 23 HomeBuy Agents now covering all areas, your job of finding out information has got so much easier. Each HomeBuy Agent covers a region that may contain many housing associations, from which they will gather all the property details of what's available so you don't have to. The bad news is that if you are in Scotland, Wales or Northern Ireland you're still on the old system.
We thought you might want to have access to the full list of HomeBuy Agents so you can call them directly if you have any questions at all on HomeBuy, so here it is:
- London
Housing Options
www.housingoptions.co.uk
North London -
South London -
- Kent, Sussex and Essex
Moat
www.homebuy.co.uk
- Hampshire
The Swaythling Housing Society Ltd
www.homesinhants.co.uk
- Surrey
Thames Valley Housing Association
www.homebuy.co.uk
- Berkshire, Buckinghamshire and Oxfordshire
Catalyst Housing Group
www.homebuy.co.uk
- Hertfordshire
Lea Valley Homes
www.leavalleyhomes.co.uk
- Bedfordshire and Cambridgeshire (including Fenland and Peterborough, Forest Heath and St Edmundsbury)
Keyhomes East
www.keyhomes-east.org.uk
- Norfolk and Suffolk (except Forest Heath and St Edmundsbury)
Orbit
www.orbit.org.uk/ofs
- South West North Zone (Bath & NE Somerset, Bristol, Cheltenham, Cotswold, Forest of Dean, Gloucester, Kennet, Mendip, North Somerset, South Gloucestershire, Stroud, Swindon, Tewkesbury North Wiltshire and West Wiltshire)
New Futures
www.homebuy-southwest.co.uk
- South West South East Zone (Bournemouth, Dorset, Salisbury and South Somerset)
My Place
www.search4myplace.co.uk
- South West Peninsula Zone (Cornwall, Devon, Taunton & Sedgemoor and West Somerset)
Home 2 Own
www.home2own.org.uk
- Northamptonshire
Keyhomes East
www.keyhomes-east.org.uk
- Leicestershire, Nottinghamshire and Derbyshire
EMHomeBuy
www.emhomebuy.org.uk
- Lincolnshire
Home2You
www.home2you.co.uk
- Staffordshire, Shropshire, Wolverhampton, Walsall, Dudley, Birmingham, Sandwell, Solihull, Coventry and Warwickshire
Mercian
www.homebuyagents.org.uk
- Herefordshire and Worcestershire
Home2Own
www.home2own.uk.com
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