2.1 General

2.1.1  This section explains in more detail how the scheme operates.

2.1.2  Applicants will initially rent a NBHB property on intermediate rent terms. For further details about how Intermediate Rent operates please see the Intermediate Rent chapter.
 
2.1.3 Applicants will be expected to be a tenant on an intermediate rent arrangement for up to a maximum of 5 years. The overriding objective is that NBHB properties developed for sale on shared ownership terms do not become, or remain void.

2.1.4  RSLs must allow the tenant the opportunity to apply to buy on NBHB terms at any point during their tenancy, and will then undergo formal  assessment by a HomeBuy Agent to determine the size of the share that they are able to afford to purchase and sustain longer term under the NBHB product.   

2.1.4a  However towards the end of the defined intermediate rent period where tenants have not already purchased their initial share, landlords should ask those tenants to confirm the amount of share that they wish to purchase. It is suggested that a reasonable timescale be adopted to enable the required HomeBuy Agent assessment, checks and legal processes to be undertaken. Whilst not prescriptive, landlords may consider six months to be suitable.  For further details about how New Build HomeBuy operates, click here.

2.1.5  It is expected that most tenants will still be in a position to purchase the property.

2.1.6  Tenants, who are assessed as not being in a position to buy at the end of the defined period due to a change in circumstances, will have their position reviewed by their landlord, but there is no guarantee that the intermediate rent tenancy will be renewed. Landlords will be expected to discuss alternative housing options with these tenants and provide advice in order to prevent the tenant becoming homeless.   
 
2.1.7  RSLs will have the flexibility to agree with applicants as part of the tenancy agreement, that RSLs can reserve the right to defer the sale of the property if market values have fallen substantially.
 
2.1.8  RSLs choosing to exercise the right to defer the sale of the property, can only do so if:

• This is a clear condition of the tenancy; and
• The level of the price fall at which deferment will become an option is set out at first letting.

In doing so RSLs can set a reserve price that can be lower but no higher than the open market value at first letting.

2.2 The use of Options Agreements

2.2.1 It is a condition of the Rent to HomeBuy product that where all eligibility criteria are met tenants have the opportunity to purchase a share of the property, at any time during the tenancy period and be granted a NBHB lease. The use of an options agreement is not a specified requirement of this product.  Recognising that landlords may wish to put the expectation to purchase on a more formal footing we are making available further guidance on the use of Options Agreements.  For further information click here.