Rural Repurchase

8.1 General

8.1.1  New Build HomeBuy schemes built in qualifying rural areas (i.e. settlements with less than 3,000 inhabitants) on  rural exception sites will be subject to Repurchase arrangements.

For a brief explanation follow the asterisk.  

 

8.1.2  SHG will be made available on a case-by-case basis by the Regional Investment Teams to fund rural repurchases where the homes are required to remain affordable in perpetuity.  SHG will only be provided when all other funding options have been explored and exhausted by the RSLs.

For Guidance follow the asterisk.  

 

8.2 Features of the Scheme

8.2.1  The repurchase scheme operates on the basis that when a New Build HomeBuy/shared owner (or the owner in the 21 years after the property has been staircased to 100%) wishes to dispose of the property, RSLs are able to repurchase it and resell it on a shared ownership basis.  The equity level at which resale take place will depend on the means of local residents.

8.2.2  RSLs must fund the re-purchase from the following sources if possible:

1. RCGF,
2. their own resources, or
3. private loan.

8.2.3  If the RSL is unable to fund the re-purchase through this route they are expected to invite another appropriate RSL to use its RCGF, own resources, or private finance to purchase the property instead.

8.2.4  If it is not possible to fund the re-purchase through these routes then the RSL can seek SHG funding from the Regional Investment Team.  The Regional Investment Team will assess such applications on a case by case basis.

8.2.5  The price to be paid for the property will be the Market Value, where the freehold or full lease is being acquired, or the proportion of the Market Value equivalent to the current shared owner’s equity stake in the property.

8.2.5  RSLs must use their Right of First Refusal / Buy-Back Option  see 5.3.24 .

8.2.6  The Rural Repurchase arrangements do not apply to Shared Ownership for the Elderly.

8.3 Scheme Criteria

8.3.1  To qualify for inclusion in the Rural Repurchase arrangements a NBHB scheme must comply with the following criteria:

• it is developed on a rural exception site or as part of the rural programme of the Agency’s NAHP. (Details of the Agency’s current guidance on eligibility criteria for the rural programme are given in the Rural Settlement Gazetteer and the Housing in Rural England booklet.  Both publications are available from the Agency’s Publications Department, email publications@housingcorp.gsx.gov.uk 
• Grant Confirmation was given on or after 1 April 1990 or an allocation after April 2006 and the scheme was identified as Rural Repurchase at that time. 
• Grant Confirmation was given before 1 April 1990, but the leases were granted after September 1990 and the RSL informed the Agency’s local office by 1 November 1990 that it intended to include the option to repurchase clauses in the leases.

 8.3.2  To qualify for SHG for a repurchase the following criteria must be satisfied:

• the option to repurchase clause is included in the lease;
• a local purchaser has been identified who can purchase at the proposed level of equity.  In this context ‘local’ is defined as a person(s) with connections to the area and complies with the planning requirements (the S106 Agreement, Condition on the planning permission or Unilateral Undertaking as applicable);
• the RSL has attempted to market the property at the current level of equity and no local purchaser is available who can afford the current level of equity; and (where the RSL is selling at less than the original equity percentage sold) no local purchaser has been found who can afford the original percentage of equity sold;
• the RSL is unable to fund the re-purchase through:
• their RCGF
  their own resources
  a private loan
• The RSL has  invited another appropriate RSL to use its RCGF or private finance to purchase the property but they are also unable to fund the purchase, and
• the sum of surpluses made on any previous staircasing of that unit must be less than the SHG calculated as due for the repurchase. 

8.4  Grant Framework 

8.4.1  There are no cost or value limits when SHG is paid on repurchase by the RSL.
 
8.4.2  Any surplus made on previous staircasing sales of the unit subject to repurchase will be taken into account in the SHG calculation and the SHG payable will be reduced by the amount of the surplus.  No SHG will be payable if surpluses exceed the SHG needed..
 
8.4.3  On repurchase, the unit is treated as a single unit scheme. 

8.4.4  There may be more than one repurchase of a particular unit.

 
8.5  Submission of Application 

8.5.1  When RSLs have ensured that all the Scheme Criteria are met , see 8.3 above, and the qualifying applicant has exchanged purchase contracts, they can make a submission for SHG onto the Agency’s PIMS. 
 
8.5.2  RSLs must make the submission for Grant payment no later than 7 days after the exchange of contracts.
 
8.5.3  At the point of claiming SHG RSLs must confirm that the application for Grant payment is correct and conforms with the Funding Conditions as signed on behalf of them by their Chief Executive and Chair at the beginning of the financial year. For RSLs unable to confirm this, Grant payment will be rejected.
 
8.5.4  RSLs must ensure that:

• the Agency has been notified of any fundamental change that has occurred to the scheme which could affect it ;
• the property to be acquired offers good title.  A leasehold interest must be at least 99 years to enable RSLs to offer shared owners a 99 year lease. 
• a valid valuation by a qualified independent valuer has been supplied and is kept on the RSL’s file;
• RSLs have on file a record of the surpluses made on previous staircasing transactions on the property.  Where there are no surpluses this fact must be stated on the RSL’s records.

 
8.5.5  Where RSLs are offering the property as security for a loan they will need the TSA’s Consent under Section 9 of the Housing Act 1996.

8.5.6  Payment will not be made earlier than the completion date. The Agency will pay SHG direct to the RSL within 8 working days, upon receipt of a correct and accurate claim.
 
 
8.6  Lease Requirements 

8.6.1 - see section 5.4

8.7  Recovery of SHG 

8.7.1 For details of SHG recovery/recycling on staircasing for Rural Repurchase schemes refer to the Recovery Chapter of this Guide.

 
8.8 Examples of SHG Framework

Follow the asterisk for guidance.