1 APPLICANT ELIGIBILITY

1.1 The HomeBuy Agent must carry out a financial assessment of every applicant and ensure they meet the qualifying criteria for the scheme (see section 2 below). Every applicant must be able to demonstrate that they are:

• unable to buy a suitable home outright without the assistance of an equity loan;
  
• able to fund 75% of the purchase price through a conventional mortgage loan and/or a deposit and have sufficient savings to pay for their own associated legal and disbursements costs including other costs associated with the purchase such as stamp duty land tax, removal costs;
  
• able to demonstrate to the HomeBuy Agent that they  can sustain home ownership. (Applicants who are subject to immigration control - i.e who require leave to enter or remain in the UK under the Immigration Act 1971 - are less likely to be able to satisfy this requirement unless they have indefinite leave to remain in the UK.)
  

1.2 This financial assessment must be applied to anyone joining in the purchase.  The HomeBuy Agent can exercise discretion in making assessments, but in deciding whether an applicant or joint applicant has sufficient funds to buy through Open Market HomeBuy, the HomeBuy Agent must take account of:

• local circumstances, e.g. the affordability of homes in the area the applicant intends to buy in;
• the applicant’s household income (to consider the mortgage loan the applicant could support);
• savings and other capital assets of the applicant(s).

1.3 HomeBuy agents should encourage tenants to buy as large a share as they can afford and sustain.and as a guide are expected, but not limited, to use 3 x joint income and 3.5 x single income to determine the potential Purchasers' mortgage potential. Purchasers should be expected to maximise their borrowings sustainably.  HomeBuy agents should ensure that a rigorous affordability check is carried out which includes looking at savings and outgoings, to assess the sustainability of the purchase.  The FSA’s rules require lenders to take into account a borrower’s ability to repay a loan and the sustainability of the particular loan being considered.  Further guidance is available to lenders and mortgage intermediaries when assessing a borrower’s ability to repay a loan, and can be found by accessing the FSA’s website http://www.fsa.gov.uk
 
1.4  The applicant must qualify and obtain a mortgage from one of the participating lenders. Where there is a difference between the amount that the Lender will  make available and the sum determined by the HomeBuy Agent’s financial  assessment of the applicant’s financial capacity, the lower figure will prevail  for mortgage purposes

1.5  Applicants should have sufficient savings to cover the costs of buying and moving into their new home. In addition they may retain an additional £6,500 of savings to cover the costs of minor home improvements/ carpets, white goods, new furniture etc. and provide a financial buffer should there be an unexpected change in their circumstances. Where applicants have savings in excess of this, the balance should go towards financing the purchase.  Any further financial contributions from purchasers (e.g gifts from relatives) provided after the HomeBuy Agents initial assessment will require a reassessment and should be used to either reduce the HomeBuy Agent’s equity loan or the conventional mortgage loan depending on the chosen lender.  . 

2 QUALIFYING CRITERIA FOR APPLICANTS

2.1 As well as demonstrating financial suitability for the scheme, the applicant must be able to comply with certain other criteria.  It is the applicant’s responsibility to notify the HomeBuy Agent of any changes to their circumstances after the application details have been checked by the HomeBuy Agent.  The criteria are:

• the applicant must be either a tenant of an RSL or  Local Authority whose home is suitable for re-letting to a Local Authority nominee or have been nominated by  the Local Authority from the housing register (and who would otherwise have priority for social rented housing). t. Applicants who have been given a temporary tenancy, e.g. assured shorthold or licence would not qualify for the scheme unless nominated by the Local Authority as being in housing need.
• a key public sector worker as agreed and defined by Department for Communities and Local Government. This definition includes: all clinical NHS staff, teachers in schools and further education, police officers and community support officers, uniformed staff in Fire and Rescue Services, prison and probation service staff, social workers, occupational therapists, educational psychologists, speech and language therapists, qualified nursery nurses, local authority employed clinical staff and local authority planners, together with some other groups of key workers prioritised by Regional Housing Boards;
• Assistance may be provided to some other priority first time buyers, as defined by the Regional Housing Board.
• an applicant who demonstrates a need for a suitable alternative property but already owns or part owns a residential property may only be considered for the scheme if nominated by the Local Authority.  In these circumstances the applicant must sell their interest i.e. have exchanged contracts or completed the sale of the existing property at the same time as buying through HomeBuy. In exceptional cases where an applicant is prevented from accessing or selling their existing property an application may be considered, but only with the specific agreement of the Corporation. An example might be an applicant who is prevented from returning to the country where the property is located. HomeBuy Agents should contact the Corporation’s local Investment Officer and provide full details of why it considers an application should be allowed to proceed. However see EOMHB-3, para 1.2, bullet point 3 where a spouse/partner wishes to buy out the other’s share in a formerly shared home following a relationship breakdown. 
• 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.
• applicants in receipt of Housing Benefit may be considered for Open Market HomeBuy, but will need to demonstrate they can sustain home ownership.;
• in the case of joint tenants where only one tenant qualifies for the scheme, the purchase can proceed in the name of the qualifying tenant provided both tenants surrender the joint tenancy and vacate the tenanted property on completion of the sale.  In these circumstances the HomeBuy Agent should satisfy itself that the non-qualifying tenant is either intending to live with the qualifying tenant or has identified alternative private living accommodation suitable for their housing needs.
• an applicant who is an RSL or  Local Authority tenant must not be in rent arrears or in breach of their current tenancy agreement at the time of the application.  Where a tenant is or has been in arrears for a short period due to a sudden change in circumstances or an administrative delay or error in recording the rent paid in the RSL or Local Authority’s rent accounts, the HomeBuy Agent may use their discretion to allow the case to proceed where it is satisfied the rent is being paid and the applicant has sufficient income to support a mortgage loan.  In the case of private sector tenants, the HomeBuy Agent must be satisfied that the tenant has not had a history of rent arrears.
• for an application from an RSL or  Local Authority tenant, the rented property must be able to be re-let to a Local Authority nominee.  However, if the HomeBuy Agent has instructed the applicant to proceed and the Local Authority subsequently fails to nominate someone from its waiting list, the application can proceed on the basis the HomeBuy Agent will nominate a household from its own waiting list for the social rented unit.
• An RSL or Local Authority tenant whose property is required to be vacated for repairs or demolition and who needs to be re-housed in alternative RSL or  Local Authority accommodation may also be accepted onto the scheme providing they  meets the other eligibility criteria.
• Tenants of mutual co-operatives are also eligible to participate if they meet all the Open Market HomeBuy requirements.
  

2.2  Where a Key Worker is looking to exercise an opportunity via Open Market  HomeBuy to purchase an alternative property to the one they currently own on a like- for-like basis, whether or not it was purchased with government assistance, the HomeBuy Agent may approve such a request in the following circumstances:

• Disability of any of the household (mental or physical);
• Poor quality of current home (i.e. no central heating);
• Single parent needing to live closer to family for support;
• Move to be closer to a dependent relative;
• They will be closer to work;
• Their travelling costs will be significantly reduced;
• They will be closer to child care/child's school;
• They are suffering from neighbour problems or harassment;
• Separation (the purchaser must not have a current interest in the previous home unless it is still held subject to a court order)
• Domestic violence;
• Moving from a flat to a house (where there has been a relevant change of circumstances or where there are children in the household).

Key workers wishing to purchase on a like-for-like basis should be advised to speak to their current mortgage lender to establish the cost implications of such a move.

Joint purchases 

2.3   An eligible applicant who wishes to buy a home with someone else can only proceed on the condition that all joint applicants become joint owners.  Although joint applicants need not all be an RSL or Local Authority tenant, key worker or other priority buyer t, the person(s) must have their financial status assessed by the HomeBuy Agent.  Anyone joining in the application who already owns or part owns a home, must sell it at the time of jointly buying through HomeBuy.  The maximum number of people able to jointly buy a home is three or four depending on the participating lenders’ criteria.
 
2.4 A sole qualifying applicant wishing to purchase jointly may only proceed on the condition that they are to be a joint legal owner of the property. A deed of trust providing rights of occupation for a qualifying applicant is unacceptable as an alternative to becoming a joint legal owner.
 
2.5 An RSL or local authority tenant qualifying for the scheme may have a partner  who does not want to join in the application.  The application can proceed in the sole  name of the qualifying applicant provided the HomeBuy Agent gains vacant  possession of their current property and there is no obligation to re-house the partner.

2.6 Where the property is being purchased by Key Workers as joint owners the legal charge must be signed by both parties to ensure that both are fully aware of the terms, whereby at least one party must remain in eligible key worker employment. 

Click here for section 3 of the EOMHB chapter