Shared ownership A guide from GreenSquare

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What is shared ownership? Shared ownership is a scheme designed to help you buy a home of your own. It’s an alternative to renting or full ownership and is suitable if you cannot afford to buy a home outright. You can buy a share of a property and pay rent for the rest of it. You have the same rights and responsibilities as any other homeowner.

We offer brand new and resale properties for shared ownership. Shares start from 25% but vary for every property so please check with the sales team. There is a minimum initial share as advertised; however you can buy a bigger share depending on the property. This will depend on your finances and will be determined at the financial assessment stage. You have the same rights and responsibilities as any other homeowner.

Who can’t apply for this scheme ❙ You are able to buy a home outright. ❙ Your household income is over £80,000 a year. ❙ You are not able to meet the cost of rent and mortgage payments. ❙ You aren’t going to live in the property you are buying. ❙ You are using the scheme to fund a buy to let property. ❙ You currently own your property.

Who can apply for this scheme ❙ You must be in housing need and unable to afford to buy a home on the open market. ❙ Your household income must be £80,000 or less a year. ❙ You’re a first time buyer (or you used to own a home but can’t afford to buy one now). ❙ You rent a council or housing association property.

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Applying for shared ownership

How do I apply? Firstly you will need to be registered with the local Help to Buy agents for your area: see www.helptobuysouth.co.uk or call 0845 604 1122. Please then call us to discuss the properties currently available, or apply for one that you have already seen advertised. We will first check that you have an approved application with Help to Buy South. We will then need you to be financially qualified by an Independent Financial Adviser (IFA) recommended, not employed, by GreenSquare. We will ask you to complete a questionnaire for the IFA to carry out a financial assessment. This questionnaire will provide the IFA with your personal, employment, income, expenditure and credit details. We will also provide you with a checklist of documents the IFA will need to see in order to carry out your financial assessment. The IFA will then call you to carry out the assessment. They will then contact us to say whether your assessment has been successful or not.

The financial assessment you are asked to undertake is free of charge. You are free to seek advice from other sources when purchasing your mortgage. Please note our IFA will charge a fee if you submit your mortgage application with them. If you are successful you will then be sent an offer letter. Viewings will generally take place once you have passed the financial assessment. If you are applying for a shared ownership resale property, the next stage is to go ahead with instructing solicitors and applying for the mortgage. Our sales team will guide you through this process. If you are applying for a new build shared ownership property, the next stage is the reservation process. This is when we complete the reservation form with you and request your reservation fee of £250. (Please note that if you change your mind and pull out of the sale you will only receive 50% of this fee back; this will cover our administration fees.) You will then start the sale process by instructing solicitors and applying for your mortgage. Our sales team will guide you through this process.

What happens if there is more than one application against the property I apply for? Priority will be given to: ❙ Military personnel (or former members of the British Armed Forces that have been honourably discharged in the last two years, or bereaved partners of service personnel killed in action who apply within two years of bereavement) then: ❙ First come, first serve. The first applicant to return a completed financial assessment questionnaire. The only time this will differ is if there is a section 106 agreement on the development that stipulates applicants must have a local connection.

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About GreenSquare GreenSquare Group develops a range of high-quality new homes for sale, rent, and shared ownership and provides housing management, care and support, and commercial property services. GreenSquare Homes specialises in providing new homes across Wiltshire, Oxfordshire, and Gloucestershire. We offer a range of developments from luxury homes in village locations, to innovative, modern, low-energy homes. GreenSquare Group has charitable status and the surplus we produce from sales is reinvested into providing affordable homes in our operating areas.

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Your questions answered

How does it work? You buy a share in the property and pay rent on the share that you don’t own. The share can vary, but this will be stated when the property is advertised. We keep ownership of the share that you do not buy. In most cases, you can buy all or some of the remaining share in the future. (We do have some schemes where the share you can buy is restricted so please check this before buying.) Initially you normally buy a share between 25% and 75%. The higher the share the less rent you pay. Usually the share you buy will be funded by a mortgage, if you have sufficient savings you can pay cash. This will all be determined at financial assessment stage where checks will also be carried out to ensure you need shared ownership. Getting a mortgage on a shared ownership property holds the same risks as on an outright home purchase. Your home could be at risk if you do not keep up repayments. We recommend you take independent financial advice.

We will ask you to sign a lease (a legally-­binding document) that sets out what your rights and responsibilities are. It also tells you how much rent you need to pay, how to buy and sell shares, and which repairs you are responsible for. If you don’t understand the lease, you must ask your own solicitor to go through it with you.

How much will it cost? Shared ownership properties are designed to be within the price range of people who can’t afford to buy a home on the open market. The exact amount you pay will depend on the cost of the home and the share you are buying. The larger the share you buy the lower the rent will be. We will give you the rent and service charge figures and your mortgage adviser will give you the monthly mortgage payment figure.

There are some costs that you will pay as a one-­off before you move in: ❙ legal fees ❙ stamp duty on homes costing more than £125,000 ❙ mortgage adviser fee if an application is submitted ❙ mortgage valuation fee and any arrangement fees ❙ removal costs ❙ reservation fee to secure the property usually £250 (new build only). This fee is deducted from the sales price on completion ❙ deposit (amount determined by the mortgage product you choose) – a minimum of 5% of the share you are purchasing ❙ furnishing the property (carpets, curtains, furniture and appliances), please note this varies by property as some come with carpets and appliances. On completion, you will also be required to pay rent and service charge in advance which could be up to seven weeks depending on which day of the month you complete.

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EXAMPLE Property value: Share you purchase: Share we will charge rent on: Rent as 2% of unsold share: Monthly rent:

£140,000 25% (£35,000) 75% (£105,000) £105,000 x 2% = £2,100 a year £2,100 divided by 12 = £175 per month

Ongoing costs will include: ❙ mortgage repayments ❙ rent ❙ service charge ❙ repairs and maintenance ❙ our charge for buildings insurance ❙ contents insurance ❙ council tax ❙ gas, electric, water and ❙ telephone bills ❙ other household bills.

How do I get a mortgage? You will need to speak to an Independent Financial Advisor (IFA) to recommend a mortgage lender and product to suit you. You may have to pay your IFA once you have taken out the mortgage, although advice is usually free. You can find an IFA on the Help to Buy agent’s website: www.helptobuysouth.co.uk. GreenSquare also has a recommended IFA that you can speak to.

How do you decide what the rent will be – and will it go up? On a new property we will set the rent based on the share of the property that you do not own. The rent cannot be any higher than 3% of the value of the share of the property that you don’t own. We will set the rent for each property on an individual basis. The rent is usually less than we would charge for our social rent homes, because you are responsible for your own repairs and maintenance. The monthly rent payment due will increase each year from 1 April; you will be given at least 28 days notice of this change and rent will increase by no more than RPI plus 0.5%.

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What are service charges? If your property is on an estate, or in a block of flats, that we own, we have to provide services such as cleaning, repairs and grounds maintenance in shared areas such as staircases, lifts and communal garden areas. We will charge you a fee to cover the cost of these services. We will tell you approximately how much it will be before you sign the lease. If you buy a flat, you will also pay an amount that goes into a ‘sinking fund’ to go towards any major repairs needed in the future, such as if the building needed a new roof. There are also common areas to some houses (eg car parking areas) and there may also be a service charge payable for these. If there is a service charge payable this will also be reviewed annually with the rent. Service charges increase and decrease dependent on costs incurred for communal areas.

Does that mean you will repair and maintain my home? No. Generally, you are responsible for keeping the inside and outside of your home (including the garden) in good condition and carrying out any repairs needed. However, we will maintain shared areas and facilities such as footpaths and open spaces.

Your relationship with us is defined by the terms of your lease. When we grant you a lease, you accept those terms, so it is important that you understand them. The lease will say exactly what we will do for you and exactly what you promise to do. Please make sure that your solicitor explains the lease to you fully and gives you a copy of it.

In addition, if you live in a flat, we will:

Common queries:

❙ keep the whole building in good structural repair;

Decorating: You are free to decorate your home as you wish but will need our written permission before carrying out any structural changes or alterations. The lease prohibits any external decoration or changes to the building.

❙ insure the structure of the building; and ❙ keep shared areas (for example, staircases and lifts) clean, decorated and well -­maintained. If you buy a brand new home from us you will receive a one -­year defect repair policy for 12 months from the date you move in.

What is the lease? The lease is an agreement between you, the purchaser, and GreenSquare Group, the vendor. The length of the lease is generally a standard term of 99 years from a set date – although note that the term can vary.

Repairs: As a shared owner, you are an owner occupier, not a tenant. If you buy a house, you are responsible for maintenance and repairs to your home. In an apartment, you are responsible for all maintenance and repairs inside your home and we are responsible for the external maintenance of the building; you will pay for this through the service charge. The only time this differs is if you have purchased a new build home and are still within your 12 -­month warranty.

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Pets: Your lease prohibits the keeping of pets other than with our written permission. We consider each application on an individual basis and if permission is granted, it will be conditional, in that should we receive complaints from residents, we have the right to revoke that permission. Sub-­‐letting: Your lease does not allow sub-­letting. However, we may consider granting permission on a temporary basis in exceptional circumstances. The leasehold manager will consider each application on an individual basis and if permission is granted, it will be for a specified time period.

What happens if house prices change? If you buy or sell shares, the price is based on the current market value of the property (determined by a RICS valuation). You will benefit from any increase in value of the house proportionate to the share owned. However, it is important to realise that house prices fall as well as rise and should this occur you will suffer a decrease proportionate to the share owned in the same way that you would benefit from any increase.

Can I buy more shares? The answer to this generally is ‘Yes’. This process is called ‘staircasing’; purchasers can ‘staircase’ up to three times after the initial purchase, at a minimum of 10% each time. Once a further share is purchased, the rent is reduced on a proportionate basis. The value of the share will be determined by a RICS valuation (valid for 3 months) that you will need to pay for. Some properties have ‘restricted staircasing’; this is usually for properties purchased in rural areas and you will be advised if this restriction applies to the property that you are purchasing.

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Please note the following important information: ❙ We reserve the right to re-­value all properties for sale every three months. ❙ If you are renting, we would advise that you do not hand in your notice until purchase contracts have exchanged. ❙ If the property is currently under construction there may be changes to the specification. We will notify you of any changes prior to exchange. Service charge costs (if applicable) will be provided at the earliest opportunity.

What if I want to sell my shares?

What happens if I can’t afford the payments?

You can do this at any time. We have a detailed shared ownership resales pack that we recommend you read so you are aware of the process you will have to follow when selling a shared ownership property.

If you cannot afford to make your mortgage repayments, you must talk to your bank or building society immediately to try to find a solution. They can take possession of your home and sell it if you do not pay them.

To summarise:

If you are struggling to pay your rent and service charges, you should contact the leasehold team straight away to talk about the problem and they will give you support and guidance. We want to help people stay in their homes but, as a last resort, we can ask the county court to make you leave if you don’t pay. There are lots of sources of help available if you are struggling with money, for example your local Citizens Advice Bureau.

You will need to contact the sales team to arrange a RICS valuation (which you pay for) to decide how much your share is now worth. We have eight weeks to find a buyer for the share. This means that we can offer the property to someone else who is in housing need. If we find a buyer for your share, you will be charged a fee on the full market value of the property – please refer to the resales pack for the current fee. If we cannot find a purchaser in the timescale, you can then market your property with an estate agent, at the price you have already been given. Any buyer found must still pass the financial assessment stage with us. You can sell for less than the valuation if you wish, however you cannot sell for more. If you own 100% of the property, you can sell it on the open market.

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These guidance notes do not form part of the lease and should not be used when interpreting any provision in the lease. It is very important that you rely on the advice of your solicitor on these matters. This is a guide intended to make you aware of the commitment, responsibilities and costs involved with purchasing a shared ownership home. We strongly recommend you seek independent financial and legal advice and ensure you fully understand the lease you will be entering into.

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