Guide to Shared Ownership brochure

A Guide to Shared Ownership

A Guide to Shared Ownership

Introduction This guide has been designed to assist you with understanding the process of buying a shared ownership property with bpha and answer any questions you may have. Should you have any further queries, please contact our sales team. Who is bpha? – We are a registered housing association with over 18,000 affordable homes in the south east of England. Why buy with bpha? – We have over 2,000 shared ownership homes and have been helping people to find a home of their own for over 25 years. What is Shared Ownership? Shared ownership is offered under the Government’s Help to Buy scheme and provides an affordable route into home ownership offering an alternative to renting. The initial share purchased will normally be between 25% and 75%. This should be a share that is affordable now but also sustainable for the future ensuring that your costs remain manageable. In the future you can purchase more shares – a process known as ‘staircasing’ – or you can sell the property. You buy a share of your home and pay a rent to bpha on the part that you do not own.

Example Cost: £300,000 Property Value 45%

Share Being Purchased £135,000 Cost of Share (deposit and mortgage) £378.13 Monthly Rent

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A Guide to Shared Ownership

What are the benefits of Shared Ownership?

Am I Eligible for Shared Ownership?

Your monthly costs will often be lower than if you were to rent You own part of your home rather than paying rent with no return You will need a lower deposit than if you were buying a home outright You buy a share that is affordable to you meaning that you do not stretch yourself financially You may be able to purchase up to 100% after your initial purchase. Please check at the time of reservation The rent you pay to bpha is a subsidised rent Shared Ownership is a Government scheme that has helped thousands of people find a place to call home

If the following statements apply to you then it is very likely that you will be eligible for shared ownership:

You are 18 or over Your household income is less than £80,000 a year

You do not currently own a home (unless you have a housing need. Please speak to our Sales Advisors) You have no outstanding credit problems Your eligibility will be confirmed by completing an application form with the relevant Help to Buy agent

To find which Help to Buy agent you should register with, visit helptobuy.gov.uk

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A Guide to Shared Ownership

The Sales process

The Process Find a home or a new development you like Contact our Sales Team on 0330 053 5131 or via our website at bphaoptions.org.uk Discuss your eligibility with our sales team Have your affordability assessed by one of the Independent Financial Advisors on our panel Provide your documentation (see page 8) Place your reservation Once you have placed your reservation, the sales process will start. This means you will have to appoint a solicitor

Instruct your solicitor - they will start their works including raising enquiries and requesting searches from the Local Authority Apply for your mortgage, your lender will undertake a valuation survey on the property

Receive your mortgage offer Sign your lease and contract Exchange of Contracts Legal completion

Reserving a home before it is built – ‘Reserving from plan’ Most of the homes we build are released for sale before the build is complete. If you reserve your home from a plan, you as the purchaser is expected to proceed and may not be able to see the property until after an exchange of contracts and when the home is finished. You will be given an estimate as to when the property will be completed and handed over to us from the builder. However, this may be subject to change due to unforeseen circumstances. We will keep you up-to-date throughout the process.

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A Guide to Shared Ownership

What are the costs?

What do I need to know? Defects - After you receive the keys to your new home, you may come across some things that may not be quite right. It is not uncommon for there to be teething problems in a new property. All our new homes have a ‘defect period’ which is a period of time where any defects that arise will be rectified by the builder. You should report these to bpha’s contact centre (0330 0272 1000) who in turn will report to the builder. The builder will contact you for access to rectify any defects. Please be aware that the defect period commences from when the property is passed to bpha from the builder and not the date you complete your purchase. You will be notified of the amount of time that you have left to report any problems. The length of the defect period will vary but it is usually between 12-24 months. At the end of the defect period, bpha will undertake a final inspection with you to check everything is still in order. When the defect period ends the repairs and maintenance of your home becomes your responsibility. It is important to remember that for something to be classed as a defect it cannot be caused by misuse by the occupier or general wear and tear. If you think you have a defect in your property you can contact our Customer Contact Centre on 0330 0272 1000 or email info@bpha.org.uk and they will be happy to advise you if the issue is covered. If it is, they will arrange a repair within an appropriate timescale.

The following are what you should allow for when considering buying a home: Legal fees – to your solicitor or conveyancer. Survey and valuation fees – to the mortgage lender. Reservation fee – this may be paid to bpha upon reserving your home and will be deducted from the purchase price on the day of completion. Processing Fees – bpha charge a fee upon reservation to cover costs such as credit checking.

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A Guide to Shared Ownership

What do I need to know? Warranty – As well as a defect period, your new home will have an NHBC structural warranty (or equivalent from an alternative provider). This is provided by an independent body and normally lasts for 10 – 12 years (from the date the build is signed off by the warranty provider). If you make a claim on the warranty you will be liable for any excess payment and we ask that you let bpha know first. The Lease – All shared ownership properties are leasehold. The lease issued is a ‘self-repairing’ lease, this means that as the shared owners you are responsible for the general upkeep and maintenance of the property. If you purchase the rest of the property in the future it may be that you obtain the freehold. However, you should check at the time of reservation and/or via your solicitor. Buildings Insurance – bpha insures most of its shared ownership homes, the charge for this is included in your service charge. The buildings insurance cover is arranged by bpha and whilst bpha still have an interest in the property the cover will continue until you own your home outright. Once this is the case it will be your responsibility to obtain your own buildings insurance policy. You are required to obtain your own contents insurance policy. Service charges – All our homes will have a monthly service charge which you will need to pay. You will receive a breakdown of all elements of the service charge for your home upon reservation. We review

the service charge each year and will notify you of any changes.

Service charges cover many things such as cutting communal grass, upkeep of communal areas such as hallways in apartment blocks and annual lift or fire inspections. The monthly rent – You will pay a monthly rent to bpha. The higher your share of the property, the lower this rent will be. The rent is reviewed annually and you will be notified in writing of any change. The rent review is detailed in your lease so you are aware of how this will be worked out. Your property’s value - All our new homes are valued independently by a valuer who is a member of the Royal Institute of Chartered Surveyors (RICs). We review the values at least once every three months. Once you have placed a reservation you have three months to exchange contracts at the price stated. Repairs – You are responsible for the general upkeep of your home whilst you own it. Things such as annual boiler servicing and checking of smoke alarms are your responsibility. Making improvements –We hope you enjoy your new home and putting your own stamp on it. As a rule, minor alterations such as putting up shelves or decorating do not require permission but you need to ask us if you would like to make major changes such as knocking down an internal wall or adding a conservatory. The defect period does not cover the provision of additional or extended features. You will need to arrange and pay for repairs and maintenance to these yourself.

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A Guide to Shared Ownership

Please check before carrying out any improvements in the first 12-24months as this could affect any warranties or guarantees that are held on the property. Buying more shares – This process is referred to as ‘staircasing’. The price you pay for any additional shares is based on the value at the time and will be determined by an independent RICs surveyor at the time. You are responsible for the cost of this and your solicitor fees and mortgage fees. Selling your home - We have an in-house team to assist with all aspects of owning your home. If you would like to buy further shares, remortgage, extend or sell they will guide you through the process. Your lease will detail a nomination period that gives bpha the right to market your home and try and find a buyer. If we are unable to find a buyer you can list your home with an estate agent in the normal way.

As with any home the value of your property will rise and fall with general market conditions.

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A Guide to Shared Ownership

Supporting documents

Before a reservation is placed we will require:

Proof of income – by way of your latest three months (or twelve weekly) wage slips. If you are self-employed – your three most recent self-assessments (SA302) or three years’ worth of certified accounts. Proof of savings – a copy of a bank or building society statement. A mortgage agreement in principle – most lenders will provide this free of charge. Your financial advisor (FA) will be able to assist with this. Proof of identity – such as a valid passport or driving license. Proof of address – a recent utility bill. We may at times ask for further documentation to support your application. Your Financial Advisor, bank or building society may also request further documents to support your mortgage application.

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A Guide to Shared Ownership

What if I have trouble paying once I move in? You should contact bpha and your mortgage provider as soon as possible. bpha has an in-house team to provide advice with regards to debt, this is a free service to our shared owners.

Applying for a Shared Ownership mortgage

bpha cannot offer mortgage or financial advice. We will signpost you to a firm that can and we do ask that you are assessed by one of these firms to determine if the home is affordable to you and if so what share you are able to buy. You are not required to apply for your mortgage through this firm, you can seek your mortgage from whomever you choose.

For more information visit bpha.org.uk/support/money-benefits-advice.

0203 930 8477 bpha@metrofinance.co.uk

01480 718 719 bpha@expert-financial.co.uk

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A Guide to Shared Ownership

Jargon Buster Buildings Insurance – A policy that insures the structure of the building. CML (Council of Mortgage Lenders) Form – A form that is sent to your solicitor to detail the financial side of the sale and details any incentives included. Completion – This is the day the sale goes through and you legally become the shared owner. This date is agreed at the point of exchange of contracts between you and bpha via both solicitors. If the home you are purchasing is not yet built by this time, completion will be ‘on notice’. This means that once the home is finished we will agree a date. Contents Insurance – Insurance to cover any loss or damage to your possessions within the property. Contract – A legal agreement between the seller and the buyer of a property or land which binds both parties to complete the transaction.

Conveyancer – The term used for either a solicitor or licensed professional who deals with the legal aspects of buying a property on your behalf. Conveyancing – The legal process where land or property is transferred from one person or organisation to another. Covenants – Rules and regulations governing the property or land contained in its title deeds or lease. Deposit – The down payment on a property, usually a percentage of the value of the share being purchased. Draft Contract – A preliminary unconfirmed version of the contract. Equity – The difference between the value of a property and the amount of mortgage owed.

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A Guide to Shared Ownership

Exchange of Contracts – The point in which you are legally bound to buy your property, although you cannot take possession until you reach completion. Freehold – Technical word for the ownership of a property, meaning it belongs to the owner without limitation of time. Help to Buy Agent – An agent appointed by the Government to administer their home ownership schemes. Homes England – This is the Government Agency that oversees the scheme. (I)FA – (Independent) Financial Advisor – A specialist who is trained to provide advice on mortgage products. Lease – The formal written agreement between you and bpha that details the ongoing relationship and each party’s responsibilities. Leasehold – Technical word for the right of use of a property for an amount of time. Memorandum of Sale – A document sent by us to you, your solicitor and our solicitor providing details of the sale. Mortgage Lender – The bank, building society or organisation that lends the money for you to purchase. Mortgage offer – Once the bank or building society have decided they are happy to lend to you, they will issue a formal mortgage offer detailing all the terms and conditions around your mortgage.

Mortgage (agreement) in Principle – This is a document provided by the IFA, bank or building society to inform you that they will lend you an amount subject to a full mortgage application. Mortgage Term – The period of time over which (repayment mortgage) or at the end of which the loan is to be repaid. RICs – The Registered Institute of Chartered Surveyors. An external body of which property valuers are qualified members. Searches – your solicitor will carry out some searches during the conveyancing process. This is information requested from the Local Authority and other organisation detailing any relevant information around the property you are purchasing. Staircasing - Buying further shares in your home. Sometimes this is capped, please ask at the time of reservation. Stamp Duty – A tax paid by purchasers of property with a value in excess of £150,000. Seek advice from a solicitor when purchasing a shared ownership home with regards to stamp duty tax. Valuation – The process in which the sales prices is determined. Valuation Survey – When you apply to a bank or building society for a mortgage, they will often contact the seller for access to look at the property and check they are happy with the value you are due to purchase it for before lending.

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Useful Contacts New Homes Sales 0330 053 5131 | info@bphaoptions.org.uk Asset Sales – remortgaging; selling; staircasing 0330 053 5132 | assetsales@bpha.org.uk Account Managers – Accounts and Improvements 0330 100 0272 | commercialaccountmanagers@bpha.org.uk Customer Contact – defects; rent and service charge enquiries 0330 100 0272 | info@bpha.org.uk (for general enquiries) ocrepairs@bpha.org.uk (for defects)