1 INTRODUCTION

1.1 Social Homebuy sales must be based on a full open market valuation of the property carried out by a qualified independent valuer.  Sales on shared ownership terms are based on a percentage of the full market value of the property. Valuations are required at the initial Social Homebuy stage and on staircasing. The cost of the valuation for an initial sale is met by the RSL and can be met from the proceeds of sale. The cost of valuation for staircasing sales is met by the purchaser under the terms of the staircasing provisions in the lease.  
 
1.2 RSL’s cannot set Social Homebuy prices above the valuation.

1.3 If the RSL wishes to reduce prices below the valuation it must have the prior agreement of the Corporation.  Agreement will not be given where the reduced price is below the cost of providing the homes.  The RSL would also need to demonstrate how these reductions would benefit subsequent purchasers.
 
1.4 The value of the property must be based on its open market value at the time of the initial application, and subsequent staircasing requests, based on the following assumptions:

• disregarding the tenant's improvements and failure of the tenant to keep the property in good repair;
• any service charges or improvement contributions payable will not be less than the estimates contained in the landlord's offer ;
• for freehold property, the landlord is selling  a freehold interest with vacant possession;
• for leasehold property, the landlord is selling with vacant possession for the appropriate term, i.e. not less than 125 years (where applicable) or a term expiring 5 days before the term of the landlord's lease is to expire.
   

1.5 Where SHB discount represents more than 50% of the value of the property the maximum amount of discount available shall be 50% of the value of the property. This will apply to situations where the purchaser is looking to purchase the property outright.
 
1.6 The valuation on initial sale, carried out by an independent valuer on behalf of the landlord, is final and the applicant has no right of appeal. The landlord has discretion to re-value the property where the tenant has made written representations.
 

 
2 VALIDITY PERIOD FOR A VALUATION - INITIAL SALE

2.1 Where no validity period is given for the valuation it will be assumed that the valuation is valid for 3 months. When an offer is made on a property, the valuation current at the time of the offer will be assumed valid for three months from the date of the offer.
 

3 PURCHASE OF FURTHER SHARES - STAIRCASING

3.1 The price paid for further shares is based on the full open market value of the property. No discount is provided on the purchase of further shares. 
 
3.2 Under the terms of the Corporation’s sample lease, the leaseholder is responsible for the cost of the valuation and has three months to complete the purchase from the date the RSL receives the valuation from the valuer. RSLs have discretion to extend the 3 month period to 6 months where there has been a delay, which is outside the control of the leaseholder and RSL, for example if documents were lost in the post or there were legal delays. Where the RSL applies its discretion, it must retain on file documentary evidence explaining the reasons for waiving the 3-month validity period. The lease makes provision for the resolution of disagreement or dispute that may arise, between the landlord and the leaseholder, in respect of the valuation. 
 
3.3 Details of the staircasing requirements are set out in the shared owner’s lease.
 
3.4 For details on the requirements of what proceeds should be credited to the Disposal Proceed Fund please refer to the Disposal Proceeds Fund chapter which will be revised in due course.