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To Buy or Not to Buy?

By Carole McEntee-Taylor

Smashwords Edition

Low Cost Home Ownership in England.

The following are a few HomeBuy schemes that may be of interest if you are unable to afford a mortgage on the open market but are still looking for a way to get onto the housing ladder. They are managed by Housing Associations and you can gain access to these schemes through Housing Associations called Homebuy Agents. They manage the waiting lists and will assess your application and advise you of all the HomeBuy options for which you may be eligible. If you are interested and wish to apply you should contact the Local HomeBuy Agent in the area where you wish to live. Each area has a different agent. See Appendix 1 for the Homebuy Agent in your area. HomeBuy also helps those people who wish to rent but cannot afford to pay market rents.

All first time buyers may apply. The Government has announced that those leaving the Forces are to be priority on all schemes for the first year after they leave. (2011) Social tenants who wish to buy a property through HomeBuy are also given priority.

Key Workers are also given priority and some properties are only available to Key Workers. There are several categories of people who are considered to be ‘key workers’ including:

Regular service personnel, including Military Provost Guard Service in the Navy, Army and Air Force

Clinical staff (with the exception of doctors and dentists)

MoD Police Officers

Uniformed staff in the Defence Fire Service

In addition, the following group will qualify for discounted rent schemes only:

Full Time Reserve Service (Full Commitment)

HomeBuy can also help people who have previously owned properties but are now unable to buy without assistance, for example, in the case of relationship breakdowns, or families who are over-crowded in their existing homes.

The maximum income allowed is £60,000 per annum (single or joint). You will need to have access to (or savings) an amount of money to cover the initial costs of buying a home. This amount varies by Local HomeBuy Agent but is likely to be around £3,500/£4,000.

Renting a home

Eligibility for renting a home through HomeBuy can vary between different schemes. For example, under Rent to HomeBuy you will be assessed in the same way as if you were buying a share in the property (but with no requirement for savings). For discounted rent, you will need to demonstrate that you can afford to pay the monthly rent and any possible service charges. Service charges are extra costs that normally apply to flats but can be for selected housing developments. These charges are to cover general maintenance and upkeep of the building(s), decorating, communal gardening etc.

Some homes can only be allocated to people with a local connection (live, work or family connection) to the local authority area in which the property is located.

Armed Forces Home Ownership Scheme (AFHOS)

AFHOS is a HomeBuy option designed specifically for members of the Armed Forces (subject to qualifying criteria). The scheme provides eligible applicants with assistance to buy a home.

How does it work?

If you have between four and six years of continuous service in the Armed Forces, this scheme is a way for you to buy a home suited to your needs, with some extra help to top up your mortgage.

AFHOS could provide you with a loan of between 15-50% of the value of the home that you choose on the open market, usually through an estate agent like any other buyer. For example if you qualify for a mortgage of £70,000, you could potentially purchase a property worth up to £140,000.

For more details and to find out if you qualify for the scheme visit: www.afhos.co.uk or contact the scheme agent, Swaythling Housing Society on 0800 028 1980, or email enquiries@afhos.co.uk.

Long Service Advance of Pay Scheme (LSAP)

The Idea of LSAP is to help Service personnel purchase a property that will be used as their main home. You can apply via Self Service Employee on JPA. For more information contact JPAC on Mil: 94560 3600 or Civ: 0141 2243600 (Option 4)

Homebuy Direct

This is a £300 million scheme which is intended to help up to 10,000 first time buyers into affordable home ownership. It gives eligible first time buyers the chance to buy some newly built properties by offering an equity loan of up to 30% of the value, free of charge for five years. Any householder whose income is below £60K will be eligible to apply.

How does it work?

You buy a minimum of 70% of the market value of a property. An equity loan of up to 30% is provided to assist your purchase. There are no payments on the loan for the first five years. After five years there is a fee of 1.75% of the loan amount, which increases annually in line with inflation. You will need to raise a mortgage to purchase through this scheme. You can also use any savings you may have to contribute as a deposit towards your share.

What are my options after buying through HomeBuy Direct?

You can buy additional shares at a later date until you own 100%. This is calculated on the current market value at the time that you purchase the additional shares.

If you wish to sell your property, the equity loan is repaid as a percentage of the market value at the time of sale

Shared Ownership/New Build Homebuy

What is Shared Ownership/New Build HomeBuy?

This shared ownership option offers brand new homes for sale on a part buy / part rent basis.

How does it work?

Homes are available through different housing associations. You can buy shares worth between 25% and 75% of the property's market value and you pay a subsidised rent on the remaining share. You may need to raise a mortgage to purchase your share. If you have a large deposit or equity from the sale of a property, this can also be used towards purchasing your share.

Second-hand shared ownership properties are also available from existing owners. These are called re-sales.

What are shared ownership resales?

When any existing part buy / part rent home becomes available for resale, you can buy the share from its current owner. The homes vary greatly in terms of age, size and type.

How does it work?

Just like New Build HomeBuy, homes are available through different housing associations. You can buy shares worth between 25% and 75% of the property's market value and you pay a subsidised rent on the remaining share. You may need to raise a mortgage to purchase your share. If you have a large deposit or equity from the sale of a property, this can also be used towards purchasing your share.

What are my options after buying through New Build HomeBuy?

You can buy additional shares at a later date until you own 100%, if you wish to. This is called staircasing and the cost of the additional shares is based on the market value of the property at the time that you purchase the shares. If you increase your share in the property, your rent is re-calculated and reduced proportionately.

If you wish to sell your property, your share is marketed for sale by your housing association to allow other people in housing need to benefit from low cost home ownership. The property is resold at the market value of the property at the time of re-sale.

HOLD - Home Ownership for people with Long-term Disabilities

What is HOLD?

HOLD is a specially tailored option to assist people with long-term disabilities to purchase a share in a property. It is offered by a small number of housing associations, with very limited availability. Please contact your local HomeBuy Agent and, if there is a provider of HOLD properties in the area where you wish to live, you will be given information about the provider.

Mortgage advice for HOLD

MySafeHome specialises in providing support and arranging mortgages for people with a disability who want to buy their own home. Established in 1997 they have helped hundreds of individuals from across England and Wales. To find out more please visit www.mysafehome.info or call 08000 121333.

Rent to buy Homebuy scheme

This scheme is being piloted to help people who are unable to buy a share of a property through Homebuy schemes at the present time, perhaps because they are unable to get a mortgage, but may be able to in the future when the mortgage market improves. Those who are eligible will be able to rent a new build property at less than market rent for a set time, this time to be agreed at the start. At the end of that time or sooner if they are able, they will have the option of buying a share of the property through the New Build Homebuy Scheme. Because the rent is less than market rent they will be more likely to be able to save for a deposit and it will also give potential purchasers time for their financial circumstances to improve.

How does it work?

Homes are available through a range of housing associations on assured shorthold tenancies with an affordable rent of 80% (or less) of market rents. The rent is payable for a pre-defined and limited period, after which time there is an expectation that you will purchase the property on the same terms as the Shared Ownership/New Build Homebuy.

The rental period provides you with the opportunity to save for a deposit towards buying a share in the home, enabling you to access mortgage availability.

Some housing associations offer variations of Rent to HomeBuy. Some of these schemes are marketed with different names, for example "Try Before You Buy" or "Rent Save Buy", etc. Please enquire with the relevant housing association to clarify the terms under which the scheme you are interested in is being offered.

What are my options after renting through Rent to HomeBuy?

You will have the opportunity to purchase a share in the property throughout your tenancy. At the end of the rental period, you will be assessed to determine your affordability and eligibility to purchase a share in the property.

If your circumstances have changed and you are no longer able to afford to buy, your landlord may review your tenancy. Please note that there is no guarantee that your tenancy will be renewed after each of the agreed period.

Intermediate Rent Scheme

What is Intermediate Market Rent?

This option offers new build homes to rent at 80% (or less) of typical market rents.

How does it work?

Homes are available through a range of housing associations on an assured shorthold tenancy, usually for an initial period of six months. This is reviewed regularly.

What are my options after renting through Intermediate Market Rent?

Many housing associations that let properties through this scheme also offer an option to buy a share in the property on the same basis as the Shared Ownership/New Build Homebuy (Option 2) at a later date. Some housing associations may ask you to agree to purchase the property after a pre-defined rental period as in Rent to Homebuy (Option 3). Please see your local HomeBuy Agent's website for more information.

Social HomeBuy

What is Social HomeBuy?

This option offers some housing associations or local authority tenants the opportunity to buy a share in their rented home.

How does it work?

Tenants can purchase a minimum initial share of 25% of the home. The remaining un-owned equity is retained by your landlord. Your landlord then charges you an affordable rent on the un-owned equity. It is possible for you to purchase 100% of the property.

What are my options after buying through Social HomeBuy?

You can buy additional shares at a later date until you own 100%. This is called staircasing and is based on the current market value at the time that you purchase the additional shares. If you increase your share in the property, your rent is re-calculated and reduced proportionately.

If you wish to sell your property, your share is marketed for sale through your housing association, to allow further people in housing need to benefit from low cost home ownership. The property is resold at market value at the point of resale.

If you have purchased 100%, any service charges you previously paid may still be applicable. Please ask your landlord for details.

Mortgages

To buy a property you will need to have a mortgage. There are several different types of mortgages and repayment methods available and the choice can sometimes seem bewildering.

Mortgage types:

Variable rate

Fixed rate

Capped rate

Discounted rate

Tracker

Cash back

Flexible

There are also different repayment options

Repayment mortgage

Interest only mortgage

Investment backed mortgage

It is advisable to take independent financial advice to ensure you are choosing the mortgage type and repayment methods that are best suited to your needs.

For more information have a look at www.mortgagesorter.co.uk which explains these in more detail or speak to Joint Service Housing Advice Office on Civ: 01980 615808 or Mil: 943445808.

Low Cost Ownership in Wales

Homebuy

In Wales the scheme is operated by Registered Social Landlords (Housing Associations) but is only available where the local authority decides that it is a priority for the use of the Social Housing Grant. It is intended to help those who would otherwise need social housing (council/housing association housing).

Where available the RSL can provide an equity loan of up to 50% of the purchase price. The buyer funds the balance through conventional mortgage and/or savings. For more information visit http://wales.gov.uk

Low Cost Initiative for First Time Buyers (LIFT)

Scottish Government’s Shared Equity Schemes

Both the New Supply Equity Scheme and the Open Market Shared Equity Pilot Scheme aim to help people on low incomes who can’t afford to pay the full price for a house. These schemes mainly help first time buyers, and people in the Armed Forces or Veterans although they do occasionally help others.

For more information visit:

www.sfha.co.uk

www.scottishhousingregulator.gov.uk

www.scotland.gov.uk (Select ‘Housing’, buying)

Co-Ownership in Northern Ireland

This scheme works in the same way as New Build Homebuy (page 6) but is for properties on the open market. The applicant buys at least 50% of the property and pays rent on the rest. The scheme is run by the Co-Ownership team in Belfast for Northern Ireland. For more information visit www.co-ownership.org

Appendix 1 HomeBuy Agents

Aldwyck

www.leavalleyhomes.co.uk

Region: East of England Zone: Hertfordshire

Catalyst

www.catalysthomebuy.co.uk

Region: South East Zones: Berkshire, Oxfordshire, Buckinghamshire & Milton Keynes, Surrey

East MidlandS

www.emhomebuy.org.uk

Region: East Midlands Zones: Derbyshire, Leicestershire, Lincolnshire & Rutland, Northamptonshire, Nottinghamshire

Fabrick

www.time2buy.org.uk

Region: North East Zones: Tees Valley and County Durham

London and Quadrant

www.firststepslondon.org

Region: London Zone: South West London, South East London

Metropolitan Housing Partnership

www.firststepslondon.org

Region: London Zones: North London, West London, East London

Moat

www.homebuyoptions.co.uk

Regions: East of England, South East Zones: Essex, Kent, Sussex

NomadE5 Housing Association Ltd

http://www.isoshousing.co.uk/default.htm

Region: North East Zones: Tyne and Wear and Northumberland

Orbit

www.orbithomebuyagents.co.uk

Region: West Midlands, East of England Zones: Bedfordshire & Cambridgeshire (including Fenland and Peterborough, Forest Heath and St Edmundsbury), Birmingham, Dudley, Walsall, Wolverhampton, Sandwell and Solihull, Coventry and Warwickshire, Staffordshire (including Stoke) and Shropshire (including Telford), Hereford and Worcestershire

Norfolk & Suffolk (excluding Forest Heath and St Edmundsbury)

Plumlife

www.plumlife.co.uk

Regions: North West, Yorkshire and the Humber Zones: Greater Manchester, Lancashire, South Yorkshire

Plus Housing Group

www.homeshub.co.uk

Region: North West Zones: Cheshire, Merseyside

Riverside

www.homesinhants.co.uk

Region: South East Zones: Hampshire

South West Homes

www.southwesthomes.org.uk

Region: South West Zones: South East: Bournemouth, Pool, HMA, Weyland and Dorchester HMA, Salisbury HMA, South Somerset and West Dorset HMA

North: West of England HMA, Swindon HMA, Gloucestershire and Cheltenham HMA Peninsula: West Cornwall HMA, Plymouth HMA, Polycentric Devon and Cornwall, Torbay HMA, Exeter HMA and Taunton HMA

Yorkshire Housing Group

www.my4walls.co.uk

Region: Yorkshire and the Humber Zones: North Yorkshire and Humberside, West Yorkshire

Appendix 2

A2 Dominion

http://www.a2dominion.co.uk

Advance Housing and Support

http://www.advanceuk.org

Affinity Sutton

http://www.affinitysutton.com

Bedfordshire Pilgrims HA

http://www.keyhomes-east.org.uk