1 INTRODUCTION
1.1 This section contains three sample letters that RSLs can use for Stage 1 and Stage 2, together with a sample response form for tenants. It is RSLs’ responsibility to come up with a procedure that works best for them – the sample letters do not set out a prescribed process but have been included to give helpful pointers.
1.2 The Stage 1 letter is a response to the tenant who has registered an interest in Social Homebuy. It is anticipated that it would be included in an information pack which contains an application form.
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Sample Letter 1 – Stage 1
Following tenant registering interest
Dear
Thank you for registering your interest in Social Homebuy. Enclosed is a table showing the estimated costs of buying a share in your current home. The house valuation we have used is based on information from the internet website, www . . . ….. There are other websites you may wish to look at together with estate agents and property papers that should give you comparative figures. .
These are guide figures for your property based on limited information. It is not a formal offer. The on-going costs of buying your home are likely to be different and will depend on the formal valuation of your home. However, we hope we have supplied sufficient information in this pack to enable you to decide whether social Homebuy is an option for you. The formal market valuation will be obtained when you advise us that you want to go ahead
If you want to proceed with buying your home, then please complete the enclosed application form and send it back to us. We will contact you to arrange a mutually convenient time for you to discuss the scheme in more details with one of our advisers. Until you receive a formal offer from us you should avoid incurring any legal costs or mortgage fees.
I hope the enclosed information is self explanatory but please do get back to us, if you require further explanation or clarification.
Yours sincerely
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Sample letter 2 letter advises the tenants as to their eligibility.
SAMPLE LETTER 2 - TENANT ELIGIBILITY FOR SCHEME
Dear
Social Homebuy Scheme
Further to your application to purchase your property received by us on .......
Option 1
I can confirm that it would appear that you and the property you occupy would be eligible under the terms of the Social Homebuy Scheme.
The next stage is for you to meet with one of our advisers to discuss the scheme and in particular, the financial implications of the purchase.
Following that meeting and confirmation that you still wish to proceed with the purchase we will organise for a formal valuation of the property to be carried out. To this end would you please contact …………………. to arrange a meeting with one of our advisers at your convenience.
Please do not arrange a mortgage or appoint a legal representative until you receive details of the purchase price and are sure you wish to proceed with the purchase, as expenses you may incur cannot be reimbursed if you choose not to proceed.
Option 2
Unfortunately you are unable to buy your home at a discount because …………………..
Option 3
Unfortunately you are unable to buy your home at a discount because ....... However, you may be interested in buying another property in our ownership or buying on the open market with the assistance of an equity loan through the Open Market Homebuy scheme. If you wish to take up one of these alternatives please contact ....( to include the HomeBuy Agent).....
Yours Sincerely,
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1.3 The Stage 2 letter advises the tenant of their eligibility for the scheme and provides the additional information for them to make an informed decision as to whether to proceed with the purchase, together with actions required. It represents the formal offer on the basis of which the tenant will be looking to secure a mortgage.
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Sample Letter 3 Stage 2
Formal Valuation and offer
Dear
Further to your application to purchase your property at ……………………………….. through the Social Homebuy Scheme, I can confirm that the Association is able to sell you the property at a discount.
The formal valuation indicates that the market value of the property is £ ……………and the maximum discount, if you purchase your property outright, is £………….
You will have been given information at the meeting with our advisor as to the lenders who we know have confirmed their willingness to provide mortgages to finance Social Homebuy purchases. If you are intending to obtain a mortgage from another lender, please check with us that they are qualifying lenders as not all lenders are able to provide mortgages for the scheme. You are advised to seek independent financial advice before obtaining a mortgage.
When you have received your mortgage offer please send a copy to us together with the name and address of your legal representative. If you do not need a mortgage please provide evidence of how you will be funding your purchase.
The amount that you borrow or have available will determine the share you will be able to buy, and the discount you will be entitled to and we are attaching an updated guide to the cost of buying your home on SHB terms. . Don’t forget that the discount payable is only available once – on the initial sale.
Also enclosed with this letter is information relating to your property regarding:
-Service charges payable
- Sinking Fund contributions required
- Management and Building Insurance Costs payable
- Known/Anticipated works within 5 years to which purchasers will be required to contribute.
- Any structural defects
The rent payable, if you are buying on shared ownership terms, will be calculated when it is known what share you are purchasing. The initial rent is based on a maximum of 3% of the value of the share that you don’t own.
Please let us know if you are ready to proceed with the sale on the basis of the information provided by returning the enclosed form. If it is your intention to proceed, you should be in a position to arrange your mortgage and instruct a legal representative on your behalf.
We will instruct our solicitors in respect of the sale when we have received your written confirmation that you are proceeding with the purchase. If we do not hear from you within a month of the date of this letter we will assume you are no longer interested in buying your home and your application will be treated as withdrawn..
Yours sincerely
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1.4 The form below is the suggested format for the tenant to confirm their intent to proceed with the purchase of their current home through the Social Homebuy Scheme.
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Sample Response Form
NOTIFICATION OF INTENTION TO PROCEED WITH SOCIAL HOMEBUY
I/We……………………………………………………………………………………
…………………………………………………………………………….… ( Names)
.intend to proceed with the purchase of
…………………………………………………………………………………………
…………………………………………………………………… (property address)
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Purchase Option
Mortgage – I / We can borrow a maximum of £………………….. (amount) from
…………………………………………………………………………………………
………………………………………………………. (lenders name and address)
I / We intend to borrow £…………………………
I / We wish to purchase ……….. % of the equity of the above property –.
[this proportion of the valuation should corresponds to the amount you wish to borrow above] based on our mortgage potential and the discount applicable
Or I / We have the capital required for this purchase option and do not require a mortgage (Please delete as necessary)
Legal Representative
My / Our legal representative for the purchase is
…………………………………………………………………………………………
…………………………………………………………… …… (name and address)
Independent Financial Advice
I / We have / have not consulted an Independent Financial Adviser (IFA)
(Please delete as appropriate).
If you have, then please put the name of the IFA ………………………………..
Signed ………………………………………………………………………………
…………………………………………………………………………………………
Date ……………………………………………………….
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1.5 It is advisable to send out an ‘Offer Confirmation’ letter once the applicant has returned the ‘Intention to Proceed’ form. This will confirm the equity share % and other issues pertinent to the sale. It ensures that both parties have an understanding of the agreed position.
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