H o u s i n g Buying a Share in a Home of Your Own S
hared equity products are available to the Regular Armed Forces but have yet to be taken full advantage of. Add to this the new pilot for
a government home ownership scheme and it is just possible that the subject has become too confusing. Here, the team at the Joint Service Housing Office offer a guide to what is out there and advice on who can apply.
The first thing to perhaps note is that when any property purchased with one of these products is sold, the equity loan provider will be entitled to a percentage share of any increase in the value of the property.
England New Build HomeBuy
Under this scheme purchasers can buy between 25% and 75% of a new build property (depending on what they can afford) on a leasehold basis. They will pay a mortgage on their percentage of the property and a subsidised rent on the remainder.
The rental payments will be calculated as a small percentage (3% or less) of the provider’s share of the property. The purchaser can, if they wish, increase their share of the property as and when they can afford it, all the way up to 100% – this is known as staircasing.
When the purchaser wishes to sell, they can sell their share to another household nominated by their landlord (normally a housing association) or they can staircase to 100% and sell it in the normal fashion. However, the landlord may want to buy the property back to offer to other households who want to enjoy low-cost home ownership. The property is sold at market value and the shared owner will benefit from any equity which has built up on the share they own.
HomeBuy Direct Is a scheme which has helped 18,000 first time buyers into affordable home ownership over the last two years. HomeBuy Direct will give eligible first time buyers keen to own a place of their own the chance to buy some newly built properties. Buyers will be offered an equity loan of up to 30% of the property value, co-funded by the Government and the developer, free of charge for five years.
30 Autumn 2010
Eligibility: New Build HomeBuy and HomeBuy Direct Service personnel wishing to be considered for Priority status under these schemes must fulfil the following eligibility criteria:
• Be a member of: Regular Service; MPGS; MoD Clinical Staff (excluding doctors and dentists); MoD Police; Uniformed staff in Defence Fire Service.
• Have completed Phase 1 training. • Household income below £60k per annum. • Applicant’s permanent duty station must be located in England.
• The prospective property must be within ‘reasonable travelling distance’ of their permanent place of duty (normally 50 miles or 90 minutes travelling time).
• Be a first time buyer or have a requirement to move home to meet their household needs (the existing property would have to be sold).
Intermediate Rent Scheme This is where accommodation is provided by a registered social landlord and the rent for a property is set at a level between that charged by social and private landlords. The tenant is likely to pay between 75% to 80% of the local market rent for the type of property that they live in. They would have an assured short-hold tenancy whilst they have Priority Status. The properties available under this option are predominantly flats and bedsits aimed at singles or couples with no children.
Eligibility: Intermediate Rent Scheme The above criteria applies with the following variations: • In addition to the listed roles FTRS (FC) also have access to the Intermediate Rent Scheme.
• Individuals need not have completed their Phase 1 Training.
Rent to HomeBuy Scheme This scheme aims to help prospective first time buyers who find that they are unable to buy a share of a property through HomeBuy at the present time (for example because they have been unable to find a suitable mortgage) but could do so in the future, for example when mortgage availability has improved. Eligible households will be able to rent a new build property through the Intermediate Rent Scheme for a pre-specified period.
At the end of that time (or sooner if they are able) they will have the option to buy a share of the property through the New Build HomeBuy scheme. The affordable rent will enable household’s time to save for a deposit or for their financial circumstances to improve sufficiently for them to enter home ownership.
Further Information The Affordable Homes programme is run on behalf of the Government by ‘HomeBuy Agents’. These are housing associations, otherwise known as Registered Social Landlords. Agents can register your interest, assess your eligibility and provide details of schemes in your area. Interested personnel should contact the agent covering the location of their permanent duty unit and can be found at:
www.homebuy.co.uk
NOTE: Priority Status has also been extended for Service personnel up to12 months after their exit date as long as they have 6 years completed service.
Wales Homebuy
Operated by Registered Social Landlords (RSLs) but is only available where the local authority decides that it is a priority for the use of Social Housing Grant. It is intended to assist people who would otherwise require social housing. It is not intended for people who can afford to buy a suitable home without assistance or those who are adequately housed but who wish to move to a more expensive location.
Where the scheme is available an RSL can provide an equity loan for an agreed percentage (usually 30% but up to 50% in some areas) of the purchase price. The purchaser funds the balance through a conventional mortgage and savings. No interest is paid on the loan, but when the loan is repaid the amount repayable will be the same agreed percentage of the value of the property at that time. The loan can be repaid at any time but must be repaid when the property is sold.
Northern Ireland Co-Ownership
This scheme works in similar way to New Build HomeBuy but is for properties on the
www.raf-ff.org.uk
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