Social Homebuy 01

1 INTRODUCTION

1.1 The Social Homebuy section of the guide applies to all schemes that receive Purchase Grant (PG) confirmation on or after 1 April 2006. This section sets out the characteristics of Social Homebuy schemes and provides guidance on the procedures to be followed by RSLs.

1.2 The Social Homebuy Scheme (SHB) was introduced in April 2006 (with four early pilots from October 2005) and allows Registered Social Landlords (RSLs) and Local Authorities to dispose of their rented housing at a discount on shared ownership terms i.e. part buy/part rent and outright, to its secure and assured tenants who occupy properties eligible for the scheme. The programme for 2006-08 is a two year pilot and there are some specific monitoring arrangements for the pilot programme. See Social Homebuy 05 . Proceeds from the sale of properties, including grant previously received and grant claimed, must be paid into a Disposal Proceeds Fund. See DPF 01 paragraphs 1 and 2

1.3 This guide is intended to be used by RSLs operating the scheme and the Corporation when approving payment of the purchase grant (PG), to cover the discount to the eligible purchaser. SHB grant is not Social Housing Grant (SHG) but is a purchase grant paid under section 21 of the Housing Act 1996. SHB discounts, which are purchase grants, can only be paid by the Corporation and so an RSL SHB scheme cannot be funded by local authorities in respect of RSL properties.

1.4 It is a condition for the payment of grant that the RSL complies with these procedures and any subsequent guidance.

Purpose of Social Homebuy Scheme

1.5 The SHB Scheme gives the RSL the opportunity to:

sell its permanent rented housing stock to secure or assured tenants at a discount;
offer home ownership to tenants who do not have or cannot afford the Right to Buy/Acquire;
provide replacement affordable housing by using the recycled receipts from sales together with private finance;
develop mixed, balanced and sustainable communities.

For tenants it gives the opportunity to:

purchase their current home which may have previously been excluded from the RTB or RTA
purchase their current home on shared ownership terms that makes the purchase affordable and sustainable
benefit from a pro-rata purchase discount regardless of whether they buy outright or on shared ownership terms.

1.6 From April 2006 all RSL applications for Confirmation of grant and claims for payment of PG must be submitted via the Internet using the Corporation’s Investment Management System (IMS). IMS guidance documents are on the Corporation’s IMS web site - www.housingcorp-online.org

Individual and Programme

1.7 Scheme submissions must comply with the Funding Conditions as accepted by the RSL and confirmed on line by the RSL’s System Administrator at the beginning of the financial year, plus any further conditions issued by the Housing Corporation in year. See General 01

1.8 On receipt of a submission for Confirmation of grant by an RSL, the local office of the Corporation will assess the proposal to confirm that the scheme is the one for which the allocation was given The arrangements for SHB purchase grant recovery differ from those for the recovery of SHG. See the DPF 01 chapter of this Guide

Changes to the programme

1.9 The RSL must notify the Corporation of any change to their programme from the original bid and provide reasons for the change. The Corporation will decide whether to accept the changes on the basis of whether the strategic need for which the allocation of PG was given is still being met and whether the programme still offers value for money, particularly in light of other bids for similar schemes see Social Homebuy 03 .

1.10 The Corporation may reject the programme and withdraw allocation commitment where changes are not acceptable, regardless of how far the programme has progressed. For this reason it is in the RSL’s interest that it seeks the Corporation’s acceptance of the change as soon as possible.

2 FIXING THE GRANT

2.1 The allocation of PG for the RSL’s Social Homebuy programme is agreed as part of the bid round. The individual scheme PG is confirmed and fixed at legal completion. The grant is the discount payable in relation to the share that the buyer is purchasing based on the RTA discount payable in that area, pro rata to the share that is purchased. Grant is claimed after the initial sale is completed.

3 FUNDING ARRANGEMENTS

3.1 RSLs wishing to operate the scheme are able to bid for funds from the Corporation each bid round. Allocations for the SHB programme are subject to cash limits and where demand for the scheme exceeds the RSL's allocation, the RSL should operate a waiting list as long as it continues to operate the scheme and approach the regional office to see if further funding is available

4 DISPOSAL PROCEEDS FUND

4.1 RSLs operating the scheme are required to pay the sales proceeds into a Disposal Proceeds Fund (subject to the statutory provisions of S.24 of the Housing Act 1996). Proceeds can only be applied to the provision of homes in accordance with the direction of the Housing Corporation as laid down within the special determination approved in November 2005. The Corporation is responsible for monitoring SHB and ensuring the proper use of the Disposal Proceeds Fund. RSLs are required to complete an annual return providing details of income and expenditure. Where the agreed use is not facilitated within the prescribed timescale, the Corporation may recover the receipts credited to the Disposals Proceed Fund, (See Social Homebuy 05 ).

5 CONSENT TO DISPOSE

5.1 Disposals under SHB are currently covered by General Consent No. C29452 issued in March 1996. In complying with the general consent, RSLs must complete form HACON 5 and retain it together with accompanying information, on its register of disposals. RSLs should ensure they are able to comply with the certifications A to F in part 2 of the HACON 5 as failure to comply will render the consent void.

6 PROPERTY CHARGED TO A PRIVATE LENDER

6.1 The RSL should consult its private lenders prior to bidding for an allocation to ensure properties can be released from the lender’s security.

7 ELIGIBILITY CRITERIA FOR PROPERTIES

7.1 The RSL may only include self-contained property for rent. Properties which do not qualify for Right to Buy or Right to Acquire may be included in a Social HomeBuy programme. However, properties which are exempt from the Right to Acquire scheme are also exempt from Social Homebuy unless they have been included by the Landlord in the SHB programme. In some cases, where tenants are in agreement, the RSL may offer an alternative property for sale to the tenant's existing home. See Social Homebuy 06 and Social Homebuy 07 for details of tenant /property eligibility

8 PUBLICITY

8.1 RSLs operating the scheme are responsible for distributing publicity material, to their tenants and publishing their policy. The Corporation has produced publicity information which is available from the Corporation’s website. RSL’s can download this information to provide to tenants in its entirety as a supplement to its own publicity/promotional material. General information about the scheme should be available from HomeBuy Agents.

9 STANDARD LETTERS, FORMS AND LEAFLETS

9.1 The Housing Corporation has produced some sample letters (Social Homebuy 13 ) that RSLs may wish to use. It is important that all contact between the RSL and the applicants is documented and letters retained on file for audit purposes.

9.2    The Housing Corporation does not propose to produce sample application forms. RSLs should ensure that sufficient information is captured on their own application form to determine eligibility and initial financial suitability to be able to afford and sustain home ownership. The completion of CORE Sales Logs is required in respect of all successful purchases so processing the application should capture all of the required information.

9.3 The Housing Corporation will produce information about the scheme in a    leaflet format that will be published on our website www.housingcorp.gov.uk .   RSLs can download these and provide them to tenants as appropriate,    however they must be reproduced in their entirety and unaltered.

10 DISCOUNT LEVELS

10.1 Right to Acquire Discounts and Areas as at April 2006 are set out in the Housing (Right to Acquire)(Discount) Order 2002 (SI 2002 No 1091).

11 SUMMARY OF THE SOCIAL HOMEBUY PROGRAMME

11.1 Social Homebuy purchasers are allowed to buy an equity share based on a percentage of the full market value of the social rented property they occupy where their landlord has decided to participate. The range of initial equity shares can be any amount between 25% (minimum purchase) and 100%. All Social Homebuy leases must allow the purchaser to buy further shares and staircase to 100%. The purchaser can buy the property outright at the outset. The purchaser is entitled to a discount on initial share purchase which is linked to the percentage of the equity that they are purchasing in the property. The discount limits are the same as those applying to properties that could be bought on Right to Acquire terms in that locality, pro- rata to the size of the share purchased. For example if a 50% share of a property is purchased then 50% of the applicable RTA discount will be payable to assist the purchase. Subsequent staircasing will not benefit from any discount not maximised on initial purchase. Landlords may offer an alternative property in certain circumstances - see Social Homebuy 01 .