H o u s i n g
Affordable Housing
The Key Worker Living Scheme is now available to Service Personnel throughout the English Regions I
nclusion in the Keyworker Living Scheme (KWL) programme has given Service personnel a method of gaining access to affordable housing
across all English regions. Here the Joint Service Housing Advice Office gives an overview of the scheme and outlines the main eligibility criteria.
Background The KWL scheme was launched in 2004 to help certain public sector employees buy a home, upgrade to a family home or rent a home at an affordable price. By helping key workers to buy or rent a home the Government hopes to keep them in the jobs they have trained for, retaining the essential skills needed in our public services. The scheme is targeted at key worker groups in London, the South East and East of England where there are particular problems with recruitment and retention.
KWL status was expanded on 20 Sep 06 to include MOD personnel ie. Armed Forces and MOD civilians.
On 28 Dec 07, the scheme was expanded to cover all English Regions Service personnel now have access to the following products under the scheme:
Open Market Homebuy This scheme enables key workers to buy a property on the open market with the help of an equity loan. There are 3 different Open Market Homebuy products:
i Product in partnership with a lender. Under this scheme purchasers are required to raise 75% of the purchase of a home on the open market. One of the participating lenders will provide a regular mortgage combined with an equity loan of 12.5% of the property’s value alongside a Government equity loan of 12.5% of the property’s value, provided through a Homebuy agent. No charge is levied on either of the equity loans for the first 5 years. After 5 years the purchaser can be charged a maximum of 3% interest on the lender ’s equity loan,
28 Spring 2008
rising up to but not exceeding the lender ’s standard variable rate after 10 years. The purchaser will never be charged for the Government provided equity loan. The lenders equity loan is required to be repaid upon payment of the final instalment of the mortgage and both equity loans are required to be repaid upon the sale of the property. When purchasers repay the equity loans they will have to share any increase in the property’s value with the lender and the Homebuy agent.
ii Government only product. The purchaser will be offered an average of a 17.5% Government equity loan through a Homebuy agent. This product can be used in conjunction with any deposit the purchaser might have and with a conventional mortgage from any qualified lender regulated by the FSA. There is no ongoing charge or interest on the government loan and it can be repaid when the purchaser can afford to do so but must be repaid when the property is sold. The amount that is repaid is calculated as 17.5% of the property’s market value at the time of repayment. The maximum loan that can be given is usually £50k, although this cap can be exceeded in exceptional circumstances.
iii Product in partnership with Yorkshire Building Society. Yorkshire BS are offering a 15% equity loan alongside the government loan of 17.5%, providing the purchaser with a loan of up to 32.5% of the purchase price with remaining value of the property covered by a conventional mortgage from Yorkshire BS. Both equity loans are free from charges for the first 5 years, after which a charge of 3% is applied to the Yorkshire BS equity loan for the remaining term of the loan. If the purchaser has a deposit, this will be used to reduce the Government equity loan. Purchasers are required to repay the Yorkshire BS equity loan no later than upon payment of the final instalment of their mortgage and will have to repay both the Yorkshire BS and the Government equity loans upon sale of the property. When the loans are repaid, purchasers will also repay a share of any increase in the property’s value to both the Yorkshire BS and the Government.
New Build Homebuy Under this scheme purchasers can buy between 25% and 75% of a new build property 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 (initially less than 3%) 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.
Intermediate Rent Scheme. This is where the 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 shorthold tenancy whilst they remain a key worker.
First Time Buyers Initiative. Individuals who are eligible for home ownership options under KWL can also get priority access to a new scheme called the First Time Buyers Initiative (FTBI). FTBI aims to give more people the opportunity to own their own homes by increasing the supply of affordable housing for sale.
Most service personnel who are first-time buyers with their duty station in England are likely to be eligible. For further details contact The Joint Service Housing Advice Office (JSHAO) for information & advice on housing matters tel: 01722 436575 or at
www.army.mod.uk/jshao.;
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