Access to affordable homes now that Help to Buy has ended

Lesley Price FCILEx of CGM Solicitors provides advice on some of the new and existing schemes in place to assist buyers on to the property ladder in the wake of the closure of the Government’s Help to Buy scheme to new applications

Shared Ownership Scheme

Shared ownership offers you the chance to buy an initial share of a home worth between 10% and 75% of its market value. You will pay rent to the housing provider on the rest. You can buy more shares in your home in the future, as and when you can afford to do so. This is known as “staircasing”. If you buy more shares, you’ll pay less rent. The amount of rent you pay will be based on the size of the share of the home you have not bought. In April 2021, the Government launched a new model of shared ownership which:

9 Reduced the minimum share required for purchase from 25% of a property’s market value to 10%

9 Introduced a 10-year period during which your housing provider will be required to support you with the cost of essential maintenance and repairs to your home

9 Allows you to purchase an extra 1% of your home every year.

The property will be purchased on a Long Leasehold basis from the housing association on pre-set lease terms and usually for a term of 990 years. If the property is a house, then you will be able to acquire a freehold title in the property once you have completed final staircasing.

The shared ownership scheme is available on both new and existing housing association schemes. Applications are made through your local housing association, which will carry out an affordability assessment to confirm if you qualify.

Mortgage Guarantee Scheme

The mortgage guarantee scheme (launched in April 2021) is supporting lenders to offer products through a Government-backed guarantee on new 95% mortgages until 31

December 2023. This scheme is available to both first time buyers and existing homeowners up to a maximum property value of £600,000. Applications for this scheme are made direct via participating lenders or through a specialist broker. The Government underwrites part of the deposit, but the property is bought on standard freehold or leasehold terms.

Discounted Market Sales

When councils and housing associations build new homes for sale, some are sold at a 25% to 50% discount. This is known as a Discounted Sale.

Councils and housing associations who run this scheme set the criteria for the scheme locally. You must usually have a local connection to the area the home is in if you want to use the scheme.

Some housing associations also offer discounted schemes which take the form of a second charge secured against the property for the discount period which would prevent you from reselling the property at its full market value without paying back the discount offered. These are also sometimes referred to as “shared equity” schemes. Although both these schemes offer a discounted purchase price, the way in which the Council-backed, and private schemes work have very different legal implications, and you need to make sure that you are fully aware of the terms – particularly your obligations when reselling the property when deciding to opt for one of these schemes.

Right To Acquire

If you’re a housing association tenant in England, you could be eligible to buy the home you rent at a discount of between £9,000 and £16,000 on the price of your home. The amount of discount you will get depends on where you live, as the Local Authority must ensure it has a sufficient stock of affordable rentals in that locality before allowing homes to be purchased under this scheme.

If you sell your home within 10 years of buying it through Right to Acquire, you must first offer it to your old landlord, and they will carry out a valuation to decide its current market price. Because this calculates the value at sale, they may potentially profit from any increase in value due to market conditions or any improvements to the property you have carried out, so it is worth keeping this in mind.

If the landlord doesn’t agree to buy your home within eight weeks, you can sell it to anyone. But if you sell your home within one to five years of buying it, you’ll have to pay back some or all of the discount you received.

Rent To Buy

The scheme is operated by housing associations and offers working households the chance to rent a new build home at Intermediate Rent providing them with the opportunity to save for a deposit over time.

Tenants will pay an Intermediate Rent, which is rent that must not exceed 80% of the local market rate (including service charges). This discounted rent should be available to tenants for a minimum of five years.

At the end of this initial five-year period, the tenant will be offered the chance to buy the home either outright or on shared ownership terms.

Save To Buy Scheme

A similar non-Government scheme called Save to Buy is being piloted currently by new homes developer Fairview. The Save to Buy scheme enables first time buyers to save for their final deposit via fixed monthly payments while living in their new home.

Save to Buy monthly payments are based on the area’s average monthly rent and the buyer’s personal finances, of which 100% goes towards the buyer’s deposit and/or affordability deficit on a Fairview home.

There are also specific schemes available if you are an existing housing association tenant, disabled or a member of the Armed

Forces and ownyourhome.gov.uk/all-schemes has a useful comparison tool that sets out all these schemes in more detail.

TAKE ALL THE RIGHT ADVICE.

As with any home purchase it is important to get the best financial and legal advice to ensure an ownership model is the one that is affordable for you and best fits your individual circumstances and plans. The suitability of many of the schemes will depend on how long you are looking to remain in that home and your ability to build up a deposit or buy further shares.

Take time to do your research into which schemes are available in your local area and how the terms compare before settling on the scheme that suits you. And ask questions of your broker and solicitor throughout the process to ensure you understand the scheme fully.

We here at CGM Solicitors can provide a comprehensive advice service on all types of affordable homeownership as well as our conveyancing services.

For more information as to the services we can offer email newhomes@c-g-m.co.uk