Homebuy
What is Homebuy?
Social Homebuy
New Build Homebuy
Open Market Homebuy
First Time Buyers Initiative
Intermediate Rent Schemes
What is Homebuy?
Homebuy was introduced in April 2006 to enable Council and Housing Association tenants, key workers, and other first time buyers who would otherwise be unable to purchase a home outright, to get a foot on the ladder of home ownership.
There are 3 main Homebuy products, each based upon equity sharing, to offer applicants’ choice in the homes they purchase. These are:-
Social Homebuy
This scheme will enable tenants of Local Authorities and Housing Associations to buy a share in their current home at a discount.
New Build Homebuy
This scheme will allow people to buy a percentage or share of a newly built property.
Open Market Homebuy
This scheme will provide an equity loan to enable people to buy a property on the open market.
For further information, please contact Lesley Precilla in the Housing Association and Partnerships Team on 0208 356 2760
To apply for any of these schemes please contact our Homebuy Agent, Metropolitan Home Ownership, who can be contacted on 0845 230 8099 or online at www.housingoptions.co.uk.
Social Homebuy
This scheme enables tenants of Housing Associations and Councils to buy their existing social home, at a discount.
Eligible applicants are those tenants, who have lived in their property for a minimum of 5 years, provided their landlord offers the scheme. In low demand areas, social landlords would be able to extend to non-social tenants at their discretion.
The minimum share which can be purchased is 25%.
Applicants must be able to demonstrate that they can afford the ongoing costs. Buyers must repay the discount if they re-sell within five years. Applicants will receive a share of the sales proceeds, in proportion to their equity share when they sell the property.
Social HomeBuy fills a gap in the market for existing social tenants who can't afford or don't have the Right to Buy or Right to Acquire. The current Voluntary Purchase Grant scheme is merged into the new scheme.
New Build Homebuy
An applicant can purchase a share of the equity in a new home, built with public subsidy, or on public sector land, or through the First Time Buyers initiative.
Eligible applicants are, key workers, existing social tenants, those on the housing register, and other first time buyers.
The buyer pays for as much as they can afford through savings and/or a mortgage - in some circumstances it may be appropriate to purchase a share of less than 50% of the home's value. The remaining share is held by the developer.
Applicants must be able to demonstrate that they can afford the ongoing costs. Key workers that leave eligible employment must buy the developer's share within two years at the market value at the point of sale. Applicants must repay the equity loan as an equivalent proportion of the sales proceeds when they sell.
New Build HomeBuy merges principles of existing HomeBuy, Shared Ownership and Key Worker Living programmes, plus the First Time Buyers Initiative, and London Wide Initiative schemes.
Open Market Homebuy
Open Market HomeBuy – 17.5% Loan
- You are free to raise your mortgage with any high street bank or building society (we will not allow adverse credit lenders)
- On top of your mortgage you can receive a government equity loan of around 17.5% of the purchase price
- Any savings or contribution from family/friends above £10,000 can be used to "top up" your purchase price without affecting your government equity loan
Open Market HomeBuy – 25% Loan
- You raise an approved mortgage from Halifax, Nationwide or Advantage (a Morgan Stanley Company)
- You are awarded a 12.5% equity loan from your mortgage lender. This is free for 5 years
- You are awarded an additional 12.5% equity loan from your HomeBuy Agent. There are no monthly repayments on this
- The first £10,000 of any savings you have are ignored. Any savings above this are deducted from your HomeBuy Agent's equity loan. (unless you take your mortgage with Advantage)
Open Market HomeBuy – 32.5% Loan
- In December 2007, Yorkshire Building Society introduced a 15% equity loan, to be used in conjunction with the 17.5% product, offering a combined loan value of 32.5% of the value of the property
- The loan is used alongside a conventional mortgage from Yorkshire Building Society
- The equity loan is interest free for the first five years, which means your monthly payments are lower. In return, the lender takes a share in any increase in the value of the home when you sell
- Through a mortgage and savings, you will need to be able to raise 67.5% of the purchase price of a home, which has to be arranged with Yorkshire Building Society and is lent on conventional terms
Open Market HomeBuy merges principles of the existing HomeBuy, Shared Ownership and Key Worker Living schemes.
A further Low Cost Home Ownership product is the:
First Time Buyers Initiative
Half of the homes provided will be for key public service workers. The other half will be for individuals and families who could not own a home without extra help.
Homes built on land from a variety of sources will be offered to first time buyers at less than the market price.
The price the buyer pays will, at a minimum, meet the construction costs. The land will enable the gap between that price and the full market value price to be bridged. An equity share will be retained either by the landowner or by the housing provider.
Over time, in most instances, buyers will be able to increase/staircase their share of ownership in 10% tranches to 100%.
To help buyers adjust to the financial responsibilities of home ownership, the intention is that charges associated with the share of the property they do not own will be waived for the first three years. In year four, a charge of 1% of the unsold equity will be introduced, rising to 3% in year six. Income from these charges will be recycled into the scheme.
When buyers move on, the landowner will have first refusal to buy back the home so that it can be used to help another first time buyer.
Applicants wishing to join the scheme may be refused if there are in rent arrears or have a history of anti-social behaviour.
Intermediate Rent Schemes
The scheme offers brand new or refurbished apartments at a subsidised rent.
The rent charge will normally be 20 to 30% lower than normal open market prices.
If you are a key worker, the rent will cease to be subsidised if you leave your profession.
For further information, please contact Lesley Precilla in the Housing Association and Partnerships Team on 0208 356 2760.
To apply for any of these schemes please contact our Homebuy Agent, Metropolitan Home Ownership, who can be contacted on 0845 230 8099 or online at www.housingoptions.co.uk.
Page updated: 24 Jan 2008