New
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Shared owners information pack
Important information regarding your shared ownership property.
Scheme:
Property:
This is a guide intended to make you aware of the commitment,
responsibilities and costs involved with purchasing a Shared
Ownership home. We strongly recommend you seek independent
financial and legal advice and ensure you fully understand the
lease you will be entering into.
Sales Consultant:
Date:
Whilst you are proceeding with your purchase, there will be times
when you need help and advice. Our sales team will be only too
pleased to assist with any query.
TVHA sales team:
0208 607 0550
[email protected]
Sales Manager:
Julie James
020 8607 0671
[email protected]
Please ensure that you read these notes and keep
them for future reference. The information provided
is a general guide of average terms and conditions
of shared ownership.
Page 2
Contents
1
Allocation procedures............................................................................................
4
2
Development Tenure, Property Plans & Parking........................................
5
3
Monthly Costs..............................................................................................................
6
4
Service Charges.........................................................................................................
7
5
Financial Advice & Legal Advice.....................................................................
8
6
Timescales, Access & Reservation fee..........................................................
9
7
The Lease.......................................................................................................................
10
8
Lease Restrictions......................................................................................................
11
9
Questions & Answers................................................................................................
14
Please remember we are here to help and answer
any questions that you may have. We hope that we
provide the best possible customer service throughout
your purchase.
Page 3
1 Allocation Procedures
We are required by the Government’s Homes and Communities
Agency (HCA) or the GLA (if purchasing in London) to adhere to
the following allocation procedure for shared ownership purchases.
Employment
You must be employed on a permanent contract of employment or be able
to demonstrate that you can afford to sustain the costs of home ownership.
Priority will be given in the following order to:
• Social tenants (Housing Association and Local Authority tenants) and serving
military personnel (Key worker priority no longer applies).
• Those with local priorities – Nominations agreements through Local Authorities
stipulate that affordable homes must be offered to residents of the borough
where the development is. Initially, agreements differ between councils and
will be confirmed by the sales consultant for each development.
• Other first time buyers that are eligible under the current HomeBuy scheme.
Size of property
Homes are offered only on the basis of a maximum of one bedroom more than
is needed and is assessed on application.
Current home owners
You may be an existing home owner who needs a larger home to meet your household
needs, or you are going through a relationship breakdown. Existing home owners need
to be assessed initially by their Local Authority for approval in order to proceed.
Income
Your maximum household income must be no more than £60,000 per annum. In London
the threshold for properties is slightly higher. Ask the sales consultant for further information.
Outgoings
You will be asked to provide further information with regard to your income, savings and
any debts you may have as you must have a good credit history to obtain a mortgage.
Applying to the scheme
The application process is via your HomeBuy agent. HomeBuy agents are registered
social landlords appointed by the Government as a point of contact for people
looking for an affordable home to buy in their area. You must be registered and
approved by your HomeBuy agent. Details of your local agent can be found on
www.homebuy.co.uk.
You will also be required to fill in the TVH application form on www.homebuy4u.co.uk.
In some cases, the council also request that you complete their application form
and be added to their housing waiting list.
Page 4
2 Development Tenure
Your homeowner interview form will confirm the current tenure of the
site and will include:• Number of private units:
• Number of shared ownership units:
• Number of social rented homes, including previous phases: With new build properties, changes are often necessary. Alterations in the future
may well take place and naturally, no guarantees can be given that tenure
changes will not be made at this stage.
Property Details, Plans and Parking
It is an offence to give a false or misleading statement about a property. As we sell
properties off plan, we endeavour to follow a strict due diligence procedure and
do everything that we reasonably can to provide information that is available.
Naturally, you will need to ensure that you and your solicitor are aware of changes
and are kept up to date. We suggest that you also clarify any concerns that you
have through your solicitor.
Also explained at interview:
Brochures and information on our website and other marketing collateral includes
details of the location and usually include a site plan, tenure mix and floor plans.
The sales consultant is responsible for supporting the brochure with the technical
specification of the development. You must ensure that you have seen these
documents when you attend an interview and that any known site issues which
may cause you issue are covered before you accept an offer.
• Site plan – technical specification
• Surrounding features, location and access to public transport
• Internal specifications and dimensions
• Scheme parking allocation, visitors & off street parking
• Floor plans – technical specification
• EPC – the Energy Performance Certificate (will also be sent with your offer letter)
Page 5
3 Monthly Costs (Illustration Only)
Your income and deposit will determine the share that you will need
to buy. A worked example of typical (but not necessarily exact)
monthly outgoings is set out below.
Property % Equity Price
Value
£200,000 40%
Mortgage Mortgage Rent
Deposit
£80,000 £8,000
£463.45
£275
Service TOTAL
Charge
£120
£858.45
In this example, a 40% share of a property with a full market value of £200,000 is being
purchased, so a mortgage of £72,000 would be required. The monthly mortgage
repayment in this example is based on a 10% deposit, a 25 year mortgage term with
an interest rate of 5.99%. The monthly rent is calculated at 2.75% of the share that
Thames Valley still own. £120,000 x 2.75% = £3,300 per annum, £275 monthly.
Rent is reviewed annually and usually increases by 0.5% plus Retail Price Index (RPI)
but can vary depending on the lease. An example of a rent increase is set out in
appendix 2 of your lease which you will receive from your solicitor, but we also give
an illustration below based on the worked example above.
Your service charge has also been estimated for the first year. In the following years
we will have a better view of the actual running costs. In the example below we
have assumed an increase. You should ensure that you adequately budget for
yearly increases in service charge costs.
This is only an example. Actual increases can be higher or lower.
Property % Equity Price
Value
£200,000 30%
Mortgage Mortgage Rent
Deposit
£60,000 £6,000
£463.45
Service TOTAL
Charge
£291.78 £135
£890.23
The Retail Prices Index (RPI) is the most familiar general purpose domestic measure
of inflation in the United Kingdom. Annual RPI increase is taken from September or
November of the previous year. In the worked example we have used RPI indexed for
September 2011 which was 5.6%. The total annual increase is therefore 6.1% (RPI + 0.5%).
Please note that in addition to this you need to budget for insuring the contents of
your home and paying all household and service bills, including council tax. This is
covered in your budget planner.
Page 6
4 Service Charges
Thames Valley Housing is responsible for arranging the delivery of
property services. The payment of these services is recovered via
your service charge. If the property you have purchased is a flat, the
service charge also includes a contribution towards a sinking fund*.
*Leaseholders in all apartment properties pay into
the sinking fund. The money is saved in case there is
a large amount needed all at once to pay for a repair
within a communal area.
You will receive an annual statement which gives you a breakdown of what has
been spent and if this is not the same as what is collected (the estimate) then there
will be a balancing charge at the end of the year.
It is important to note that service charge costs are likely to vary each year.
You should plan your budget to allow for variations to these costs.
Where there is a management company, they are responsible for billing us and we
pass on this charge to you.
In some cases your site is managed by a management company and not Thames
Valley, this means that the management company will:
• Buildings Insurance
• Management Fee
• Internal Cleaning & Maintenance
• Sinking Fund*
• External Cleaning & Maintenance
• FIRE/SMOKE - Emergency lighting
maintenance
• Communal lighting
• Water charges for communal areas
• Day to Day repairs for communal areas
• Audit Fees
• Employ contactors to deliver various
services like cleaning, gardening,
communal repairs and so on
• Set the standards and monitor the
quality of the services provided
• Bill Thames Valley for these services
and we pass on the full cost to you
• Thames Valley will co-ordinate any
issues you have with the management
company for them to resolve
• Tree Surgery
• Pest Control
• Entry phone Maintenance
Please note contents insurance needs to be taken out by yourself.
You are responsible for repairs to you property.
Page 7
5 Financial Advice
As part of your application, you will be asked to undertake a
free of charge affordability assessment, without obligation, by an
‘Independent Mortgage Adviser’ recommended (not employed)
by Thames Valley Housing Association. However, you are free to
seek advice from other sources when purchasing your mortgage.
Under the second method, should you decide to exercise your staircasing rights,
you may have further stamp duty to pay (depending on the values).
Our recommended IFA’s are familiar with the shared ownership product and which
lender’s are currently offering the best mortgages.
Mortgage
Please be aware that part of your savings may need to cover arrangement fees,
a valuation survey, as well as the mortgage deposit for your new home.
To be eligible to purchase a shared ownership property through Thames Valley
Housing, you must be able to obtain a mortgage with a reputable lender on a
repayment basis. You will also need to satisfy Thames Valley Housing’s and the
HCA’s/GLA’s affordability criteria.
Savings
You must have savings to cover the costs of buying a home and for a deposit if you
take out a mortgage. To cover costs, you’ll need access to at least £3000 without
the need to borrow extra money on your mortgage or to take out a personal loan.
This amount is a guideline figure and will vary. For your mortgage, you’ll need savings
for a deposit. For example a 10% deposit on a 40% share of a property valued at
£160,000 equates to £6,400.
Stamp Duty Land Tax & Disbursements
Stamp Duty is currently not payable if the full market value of the property value is
£125,000 or less. When you are taking a new shared ownership lease, buyers have
two options. Firstly, you can either pay duty on the initial 100% market value, and if
you decide to staircase up at a later date under current regulations you would have
no further stamp duty to pay. Alternatively, you can pay duty on the premium or
share (at the appropriate rate) and then stamp duty on the annual specified rent.
Disbursements are charges via your solicitor and can include searches and
registration fees. These may amount to approximately £600. Detailed advice and
breakdowns of all these costs can be obtained from your representative solicitor.
Legal Advice
You are free to use a solicitor of your own choice and we have a panel of solicitors
who are experienced in shared ownership and charge a competitive fixed rate.
By using our recommended panel solicitors, you could save both time and money.
Please be aware that part of your savings will be
needed to cover solicitor’s fees which include stamp
duty, land registry and legal searches.
Page 8
6 Timescales
Reservation fee
Thames Valley operates deadlines at each stage of the purchase
to avoid unnecessary delays.
In order to reserve a property we collect an administration fee of
£250.00. On completion, the £250.00 will be deducted from the price
of the property.
All deadlines are notified by letter to you or your solicitor and must be adhered to in
order to continue with your purchase. For example, once you have accepted the
offer on a property, you should exchange contracts within six weeks of that date. At
the same time you will be asked to set a completion date if the property has not been
moved into. Otherwise completion will be on notice. If deadlines are not met, an offer
can be withdrawn unless there is good reason for the delay.
Completion dates are estimated to the best of our ability but are subject to
variation. Purchasers will, if appropriate, be expected to exchange contracts with
completion on notice before properties have handed over. In this event TVHA would
keep you informed on a regular basis with progress towards hand over.
Whilst we will be sympathetic to requests for a specific completion date we cannot
guarantee these dates until the builders have finished the properties and Thames
Valley Housing has accepted these as finished.
In the event that you decide to withdraw from the transaction the administration fee is
non refundable.
Please note: these guidance notes do not form part of the lease and should
not be used when interpreting any provision in the lease. It is very important
that you rely on the advice of your solicitor on these matters.
You will receive a step by step reservation to completion
guide to help you through the buying process.
Access
Prior to completion, access to the property is via Thames Valley
Housing only. You must not arrive on site without prior authorisation.
On completion, keys must be collected from a member of the sales team. They are
only released once our solicitors have confirmed that the completion monies have
been received. You should ring your sales consultant on the day of completion to
check we have received your monies before arriving on site to collect the keys.
Page 9
7 The Lease
The lease is an agreement between you, the purchaser, and
Thames Valley Housing, the vendor. The length of the lease
is generally a standard term of 99 years from a set date.
Our, (the landlord's) main responsibilities are:
• Managing the estate (if applicable).
• Repairing and maintaining the structure and common parts, if the property is a flat.
Rights & Responsibilities
Your relationship with us is defined by the terms of your lease. When we grant you
a lease, you accept those terms, so it is important that you understand them. The
lease will say exactly what we will do for you and exactly what you promise to do.
Please make sure that your solicitor explains the lease to you fully and gives you
a copy of it.
• M
aintenance of any communal areas including insuring the structure of the
building
• Setting and collecting the rent on the share that Thames Valley Housing owns
• Setting and collecting the service charge
Any breach of the lease can result in court action
by the leaseholder or the landlord.
Your (the tenant's) main responsibilities are:
• Paying your monthly mortgage costs
• Maintaining and decorating the interior of your home if a flat or house
• Maintaining and decorating the exterior of your home and garden if a house
• Insuring the contents of your home
• Paying all household and service bills, including council tax
• Paying your rent and service charge on time each month
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8 Lease Restrictions
Please be aware that the lease includes mutual covenants to protect
you, our tenant and Thames Valley, your landlord. Your solicitor
will go through these in detail and will explain what they mean.
The most common queries relate to:
Improvements / alterations
You are free to decorate your home as you wish but will need our written permission
before carrying out any structural changes or alterations. The lease prohibits any
external decoration or changes to the building.
Repairs
As a shared owner, you are an owner occupier, not a tenant. If you buy a house,
you are responsible for maintenance and repairs to your home. In an apartment,
you are responsible for all maintenance and repairs inside your home and we are
responsible for the external maintenance of the building (you will pay for this
through the service charge).
Some repairs are the responsibility of the developer if they occur in the first 12
months after the property was built (this will be before the date you moved in).
Thames Valley will co-ordinate the repair with the developer in this instance. You are
responsible for all the repairs inside your home including the boiler, which you should
get serviced annually.
Where Thames Valley manages the site:
• We will carry out routine maintenance and decorating to the external areas of
your apartment on a regular basis (in most cases every five years). You will be recharged the full cost of these works either directly or through a sinking fund
• Any major repairs required, for example; drains, lighting etc. will be the
responsibility of Thames Valley. You will be re-charged the full cost of these works
either directly or through a sinking fund.
Repairs where a management company manages the site:
• The management company will carry out routine maintenance and decorating
to the external areas of your home. We will pass on the full cost of these works to
you when we are billed by the management company, either directly or through
a sinking fund
• Any major repairs required e.g. drains, lighting etc. will be the responsibility of
Thames Valley. We pass on the full cost of these works to you when we are billed
by the management company, either directly or through a sinking fund.
Installing a Satellite Dish
Your lease normally prohibits the installation of an individual dish. We don’t grant
permission for this kind of installation. In most of our new build properties, there will
be a communal dish and individual properties are usually Sky or Cable enabled.
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Pets
Resales
Your lease prohibits the keeping of pets other than with our written permission. We
consider each application on an individual basis and if permission is granted, it will
be conditional, in that should we receive complaints from residents, we have the
right to revoke that permission.
If you wish to sell your interest in the property the
procedure is called a resale.
Sub-letting
Your lease does not allow sub-letting. However, we may consider granting permission
on a temporary basis in rare cases. We consider each application on an individual
basis and if permission is granted, it will be for a specified time period.
Parking
The parking bay area, if applicable, marked on the lease plan is the area that you
are buying. Residents should only use the parking bays marked on their plan. Parking
marked ‘V’ is for visitors only and cannot be used if you have more than one car.
Commercial vehicles exceeding 15 cwl (unladen weight) are prohibited except for
temporary use for removals or deliveries. Not all shared ownership properties are sold
with parking.
Staircasing
Your property is marketed for sale by Thames Valley Housing, to allow other people
in housing need to benefit from Shared Ownership. There are many people that are
eligible for the Homebuy Scheme wishing to get on the housing ladder. We aim to
sell your home to one of these people.The property is resold at the market value of
the property at the time of resale.
It is important to note that your lease gives Thames Valley Housing the right to
nominate a buyer to you for your share for 3 months and our fee for the sale is 1% of
the full market price. Other standard costs include a valuation report, an Energy
Performance Certificate and solicitor’s fees. If we are unable to find a buyer for your
share after a set period of time, you will not be required to pay our 1% sales fee. It may
be possible to sell your home on the open market using an Estate Agent, if you wish.
The Mortgage Protection clause
Another important clause in the lease is the “mortgagee protection clause”. This
enables the mortgage lender to recoup all its monies from Thames Valley in the
event that you were to default on the mortgage payments and they were forced
to repossess and sell your property. Lenders insist on this clause being present in a
shared ownership lease.
If you buy a shared ownership property, you can buy additional shares, termed
staircasing. The minimum you can staircase by is a 10% share and you can staircase
as many times as you wish until you own 100%, depending on your lease. If you increase
your share in the property, your rent is re-calculated and reduced proportionately.
Page 12
The Defects period
Something is a defect if it is missing, doesn’t work or is broken. An issue such as minor
cracking to plaster work or a broken light bulb is generally not considered a defect.
You will be provided with more detailed information on what is and is not a defect
upon completion of your purchase.
After we receive handover of our new properties from the builder, there is normally
a ‘defects liability period’ which lasts 12 months. Please note that it starts from the
date the building was handed over by the developer to TVH and not from the date
you buy your home.
All guarantees on appliances included in your purchase will be available on
completion in your handover pack. Guarantees are usually valid for 12 months from
the date of purchase by the builder. If an appliance is faulty this is not a defect and
will be dealt with by the manufacturer under the guarantee. It is important that you
register your guarantees with the manufacturer once you have completed.
All of our newly built homes have a warranty for major structural faults. This warranty
normally lasts for either 10 or 12 years. Warranty booklets and certificates are sent by
us to your solicitor. Please ensure that you receive these documents as they are
important.
In the second year of the warranty you will continue to have defects cover.
All claims in this period should be made directly to your warranty provider.
Warranty booklets and certificates are passed onto
you once complete. Please ensure that you receive
these documents as they are important.
Page 13
9 Questions and answers
Who do I share my home with?
Does the rent go up?
Nobody. We don’t share the property with you, we just own an equity stake in it.
Yes the rent goes up every year on 1 April. However if you decide to buy further
shares, your rent will go down as the rent is an interest payment calculated on
the share that you have not yet purchased.
What if I want to sell my home?
If we still own a share in the property, it is our responsibility to find you a buyer.
We have three months to do this and our charge is 1% of the full market value
of your property. You will also be responsible for all legal costs relating to the sale.
Can I have pets?
When do I stop paying rent?
Even if you pay off your mortgage, you only stop paying rent when you own 100%
of the shares in your home, or when you sell it. Please note ground rent and service
charge is still applicable even after final staircasing.
You need to ask our permission.
How do I pay my rent?
Can I sublet or rent out my home?
Your rent is due on the first of every month. You can pay by direct debit. You will
normally pay your first rent payment through your solicitor in time for when you
complete (the completion date). If you complete towards the end of the month,
you would normally pay until the end of the month and for the following month.
Only in very rare cases. You must ask us first.
Does my rent pay off the share I don't own?
No, the rent is an interest payment calculated on the share that you have not
yet purchased. Your rent payments help Thames Valley pay towards the costs
of building your home.
Do you share the cost of council tax and water rates?
No, you will be responsible for the full amount.
Page 14
Do I have to take out contents insurance?
We recommend you do because buildings insurance won’t cover your belongings.
What is the sinking fund?
The sinking fund is a saving fund for the building you live in. These funds pay towards
large items such as, decorating shared areas, lift replacements and roof
replacement.
Why do I pay 100% of the service charge costs when
I only own part of the building?
• The part of the building you don’t own belongs to Thames Valley, however
Thames Valley don’t benefit from the services you receive as a resident.
• Where the property is maintained and improved, Thames Valley would only benefit
if you decided to sell the property, however this is within your direct control.
What other charges do I pay 100% for?
Does the property I'm buying have a builder's guarantee?
• All charges which are associated with owning a home, for example; council tax,
utility bills, repairs and maintenance
Most new homes we offer do have a 12-year guarantee. This guarantee covers
certain repairs, and most of our new homes are sold with a NHBC guarantee.
• Extending the length of your lease
Do I have to pay for repairs and maintenance?
You will pay for all repairs to your home. If your home is in an apartment block,
you pay the service charge where we set aside funds to pay for maintenance
and repairs in the shared areas.
What does the rent cover?
The rent does not pay for any services. This money goes to Thames Valley to pay
for the costs of building your home.
Can I have wooden floors?
We do not usually allow wooden floors under your lease. Sometimes we can
allow wooden flooring if there is no noise risk for your neighbours. You must seek
our permission first.
Page 15
Contact details
Thames Valley Housing Association Ltd
Premier House
52 London Road
Twickenham TW1 3RP
Sales and Marketing
Tel: 0208 607 0550
[email protected]
www.tvha.co.uk