1  Overview

1.1 Purpose

1.1.1  New Build HomeBuy is one of three products under the HomeBuy branding. The others are Open Market HomeBuy and Social HomeBuy.  This Chapter of the Guide sets out the Agency's Requirements that apply to New Build HomeBuy schemes. 

1.1.2  Sales through Open Market HomeBuy, Social HomeBuy and the Right to Acquire, together with their associated funding criteria, are covered in other Chapters of the Capital Funding Guide. Click on the above links for access.

1.1.3  Although termed ‘New Build’ the properties developed within the programme can be conversions and rehabilitated homes.

1.2 Context

1.2.1 New Build HomeBuy is a product that was introduced in the NAHP 2006/08.   It covers  all schemes that received funding from April 2006 for the development of SHG funded housing for sale on shared ownership terms and includes schemes for:

• Key Workers; 
• Rural locations;  
• Elderly People;
• People with Long Term Disabilities;
• Self Builders 

1.2.2 Schemes given Grant Confirmation before 1 April 2006 must follow the previous procedures as set out in previous versions of this guide which will remain relevant throughout the development of the scheme. See Introduction, section 1.

1.2.3 Classifications of Sale schemes

New Build HomeBuy may be provided using the following scheme types  

• New build including Acquisition & Works, Off the Shelf (does not include the purchase of a single property) and Works Only schemes;
• Rehabilitation including Acquisition & Works, Existing Satisfactory*, Purchase and Repair and Works Only schemes.

*only applies where a property is to be provided for a disabled person.

1.3 Main Features of the Schemes

1.3.1 New Build HomeBuy (NBHB)

New Build HomeBuy is very similar in nature to those products previously marketed as Shared Ownership i.e. the dwellings are part-rent/part buy or shared equity and is predicated on a shared ownership lease. The term ‘shared ownership’  has a legal meaning and is used in this context.

For a brief explanation of how shared ownership works follow the asterisk.   

 

1.3.2  New Build HomeBuy is aimed at helping people in housing need who are unable to purchase a property in the open market. See Section 1.4 below.

1.3.3 The following programmes are covered by New Build HomeBuy and may also be provided using SHG:

• Housing for key workers;
• Home Ownership for people with Long-term Disabilities (HOLD);
• Rural schemes;
• Shared Ownership for the Elderly (SOE);
• Self Build;
• Rehabilitation of Properties for Outright Sale.

1.3.4 The minimum initial equity share that can be purchased is 25%.

1.3.5  RSLs must encourage purchasers to buy the maximum share they can afford AND sustain. For Guidance see para  6.2.1

1.3.6  RSLs must ensure a rigorous affordability check is carried out which includes looking at savings and outgoings, to assess the sustainability of the purchase. For further Guidance, see section 6.2.

1.3.7 A self-build option can allow some of the equity to be based on the self builder’s notional labour cost during the construction period.
 
1.3.8  All sales (with the exception of specific rural programmes and shared ownership for the elderly schemes) must allow the shared owner to buy further shares and buy the property outright
 
1.3.9 Housing for Key Workers

From April 2006 there are no key worker-only funded New Build HomeBuy schemes. Some key worker specific schemes that were funded through the Key Worker Living (KWL) programme are still under development; for the eligibility requirements in respect of these schemes please refer to the KWL sec 2. 

1.3.10 All Key workers (as defined in KWL - section 2.2.5 by Communities and Local Government) get priority access to New Build HomeBuy properties. This is in addition to any key worker groups already defined as priority first time buyers by the Regional Housing Board. However, priority is not over and above existing social housing tenants and those on the housing register deemed by Local Authorities to be in priority housing need. Please see 1.4.2 below.

For further information on KW applicant eligibility follow the asterisk  

 

1.3.11 HomeBuy Agents or developing RSLs must inform the key worker's employer that the key worker is receiving assistance under this scheme. The employer will monitor the employment status of the key worker and notify the HomeBuy Agent/ RSL of any change in the eligibility status of the individual.

1.3.12 Home Ownership for People with a long-term disability (HOLD)

This programme is the same as shared ownership / NBHB, except it is designed to assist people with a long term disability to purchase a home suitable for their needs on the open market on a shared ownership basis.

1.3.13  It is expected that RSLs providing HOLD opportunities will have had experience of working with and/or providing on-going support for the client groups they are proposing to assist.

1.3.14  The product to be provided will comply with all the requirements of the standard programme (i.e. fundamental clauses, initial rent, staircasing opportunities) however, there is the opportunity to offer, and include in the lease, an optional repairs and maintenance service paid for by the leaseholder. See section 5.6.5. 

1.3.15  Rural Schemes:  Repurchase Option, see section 8.

This product is the same as shared ownership / NBHB, except that its provisions extend beyond then time when the leaseholder staircases to full ownership, and wishes to sell on. It enables RSLs to repurchase the property from the outright owner (at full market value) in order to resell it on a shared ownership basis to another local person in housing need. 

1.3.16  This scheme only applies in settlements with a population of up to 3,000

1.3.17  This ensures that SHG funded low cost housing in rural areas, where the provision of replacement housing would be difficult, can be retained for the benefit of local people

1.3.18  The Housing Corporation will endeavour to make SHG funding available to fund rural repurchases, where the homes are required to remain affordable in perpetuity, only when all other funding options have been explored and exhausted by RSLs.

1.3.19 Rural Restricted staircasing

Applicable to rural exception sites only, this allows the RSL to restrict the limit on staircasing on SHG funded shared ownership property to a maximum of 80% of the value of the property (where it meets the low rent test and there is no risk of enfranchisement). The shared owner will continue to pay rent on the remaining 20% of the property.

1.3.20  Rural Restricted Staircasing may be used in conjunction with Rural Repurchase.

1.3.21  RSLs will need to take their own legal advice as to the appropriateness of this option but must be aware of the limited range of financial products that may be available to prospective purchasers as a result of its use.- [see also 3.4.1].

1.3.22  Shared Ownership for the Elderly

This scheme is the same as shared ownership ./ NBHB, except:

1. it is only available for people aged 55 or over. 
2. the maximum level of equity that can be purchased is 75%
3. At 75% ownership the leaseholder does NOT have to pay rent on the remaining 25% share of the property. 

1.3.23  RSLs must give priority to people who are unable to afford the full costs of purchasing sheltered accommodation. 

1.3.24  RSLs must not consider any sale to a person younger than 55.  The Housing Ombudsman Service has ruled that sales to someone not meeting the age restriction could be a breach of the terms of the lease.

1.3.25 Self Build

This scheme is the same as shared ownership ./ NBHB, except that some of the work of constructing the dwellings.  For more details, follow the asterisk.   

 

1.3.26 Self build shared ownership schemes must comply with the scheme criteria for shared ownership and with the criteria detailed in the Self Build Housing Procedure Guide & Mortgage Procedure Guide.

1.3.27  Self build schemes developed for shared ownership must be financially viable and must look to demonstrate a maximum scheme cost/value relationship of 80% i.e. the costs of the scheme must be at least 20% less than the value of the completed properties.  Any schemes that fall short of this criterion will be subject to technical assessment by the Corporation.

1.3.28  The RSL must also ensure that:

•  the self build group is registered with the Registrar of Friendly Societies on NHF model rules;
•  the self build group works with a registered RSL which can claim Grant;
•  the RSL signs a Development Agreement with the self build group which follows the recommendations made in the Self Build Housing Procedure Guide
• the rules and working regulations of the self build group provide adequate management structures and procedures for the RSL.

1.3.29 Reference must be made to and self build schemes comply with the appropriate requirements and guidance published in the Self Build Housing Procedure Guide which is available on the Housing Corporation website. 
 
1.3.30  Rehabilitation of Properties for Outright Sale

RSLs may purchase properties on the open market to improve and/or convert for outright sale as agreed by the Homes and Communities Agency in consultation with the local authority and in accordance with the Regional Housing Strategy.

1.3.31   There may be some support available in these areas for funding to assist with the re-improvement of existing public sector housing for sale where this accords with the Regional Housing Board’s priorities.
 
1.3.32  Properties renovated with SHG and to be sold outright must be affordable to first time buyers in housing need.

1.3.33  Priority for sales must be given to:

1. existing tenants of local authorities and registered social landlords or
2. people on waiting lists for social housing.

Other groups eligible for the scheme are the same as  for shared ownership. [see sub-section 1.4 below] 

1.4 Applicant Eligibility

1.4.1  New Build HomeBuy is aimed at helping people in housing need who are unable to purchase a property in the open market. Applicants are able to jointly purchase their home with up to 3 other people. Please see NBHB section 6.3. The RSL will need to check that this is the case for each applicant.

1.4.2  Priority must go to the following groups, set in priority order.

1. existing social tenants,
2. and then those who can avoid the need for social tenancies, for example those on housing waiting lists and considered by Local Authorities to be in priority housing need
3. and then those that will address housing problems in local and regional housing markets, for example key workers or first time buyers.

For all government funded programmes, £60K is the maximum income threshold.

1.4.3  Owner occupiers, including existing shared owners and key workers, can have access to the scheme on condition that they:

1. are in priority housing need, nominated by a local authority and 
2. cannot afford to buy a property that is suitable for their needs. Click on the asterisk for Guidance on this point.   

 

1.4.4  The applicants must be able to afford their purchase, and sustain their housing costs.  For more details  refer to section 6.2.

1.4.5  Existing owners/shared owners are required to sell their property at the same time as buying through NBHB. In exceptional cases where an applicant is prevented from accessing or selling their existing home an application may be considered, but only with the prior written agreement of the Agency. For an example, click on the asterisk.  

 

1.4.6  Tenants who have benefited from a mortgage loan rescue scheme, (where the home they now rent from an RSL or Local Authority was previously in their ownership) must have been a tenant for two complete years before becoming eligible for Open Market HomeBuy.

1.4.7  The RSL must undertake appropriate checks on the applicant to ensure that they can afford the initial purchase and sustain their ownership long-term.  For more details see  6.2.1.

1.4.8  As part of this process, the RSL will need to check the applicant's immigration status.  See section 6.4.

1.4.9  It is the applicant’s responsibility to notify the RSL / HomeBuy Agent of any changes to their circumstances after the application details have been checked by the HomeBuy Agent. 

1.4.10  Product-Specific Eligibility Criteria:

There are specific eligibility criteria for products such as HOLD, Shared Ownership for the Elderly, Key Workers etc.  These are described in the descriptions of the products in Section 1.3 above.