This is the most widespread scheme as is commonly known as shared ownership. the first-time buyer purchases a share of between 25 and 75% of a new build house or flat and pays a subsidised rent on the part that the housing association, or house builder, retains. Buyers can increase their share over time; an option known as “staircasing”.
This section of the scheme is split into two parts that vary in the levels of government funding;
Open Market HomeBuy (Private Lenders Scheme)
With this option the first-time buyer typically pays for 75% of a property from the open market, financed in the following way:
• A participating lender such as Halifax or Nationwide will offer an interest free loan for 12.5% of the property’s value
• An interest-free government loan for 12.5% of the value of the property
• A regular mortgage for the remainder, probably with the participating lender who provides the interest-free loan
No interest is charged on either loan for the first 5 years. After this period, interest of up to 3% is charged on the participating lender’s loan, rising to the lender’s standard variable rate after ten years. Both loans must be paid back in full if the house is sold.
Open Market HomeBuy (Government-Only Scheme)
For this scheme the government will provide the first-time buyer with a loan of 17.5% of the property’s value, with the remainder being financed by a regular mortgage. There is no interest charge on the loan but the homeowner must share any increase in the property’s value with the government when it is sold. Not that both open market schemes are administered by a HomeBuy agent or a housing association that acts on behalf of the government. As such there are certain restrictions, as follows:
• If the owner decides to sell, the property will be valued by a HomeBuy agent
• In the event of a re-mortgage, permission must be granted by the HomeBuy agent
• In some cases, if the house is being sold, the HomeBuy agent will nominate the buyer
This part of the HomeBuy scheme allows council tenants the chance to buy 25% or more of their rented home. It is aimed at council tenants whose landlords do not participate in the right to buy or right to acquire schemes
Regional Rules for First-Time Buyers
You may not be a key-worker or a social housing tenant, but as a first-time buyer you could still qualify for the HomeBuy scheme in your area. Here are a brief summary of the regional rules:
You will need to work in or have a local connection with the area with a maximum household income of £52,000.
Open to people with a maximum household income of £60,000 who cannot afford to buy.
You must be able to prove that you contribute to the local economy and have a maximum household income of £60,000.
Open to professions such as medical secretaries, medical receptionists, teaching assistants, learning assistants or local authority care workers with a maximum household income of £60,000.
Available for people living in areas where large-scale demolition is taking place, areas where inward migration has increased house prices beyond the reach of local residents or where there is not enough local housing.
People with an expected average income of around £20,000 that cannot afford to buy in their local area could be eligible.
Eligibility for first-time buyers who cannot afford to buy in their local area and people who live in areas of large-scale demolition or those whose circumstances have changed due to divorce or separation.
To be considered for the HomeBuy scheme in the North West you must have a local connection, be an elderly person in need of suitable accommodation or be an owner-occupier affected by large-scale demolition.
As with most other areas, you will need to have a local connection, live in an area where large-scale demolition is taking place, be elderly or on a limited income. The North East will also consider you for HomeBuy if you have graduated from a local University.