Your Guide to

buying a shared ownership home – resales

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YOUR STEP BY STEP GUIDE TO BUYING THROUGH RESALES Once you have been offered a property, you will need to book a full financial meeting with a panel financial advisor who will assess your affordability, collate all of your documents, and then send them to East Thames. Please note that it is a requirement that you purchase the highest share that you are able to. Your mortgage should be from a high street lender. The term of the mortgage should be no more than 25 years and made on a repayment basis. Interest only mortgages and self-certified mortgages are not accepted. The maximum interest rate we will allow is currently 7.5%. A reservation deposit of £500 is payable at this stage. You will then need to appoint a solicitor to deal with your purchase and we have enclosed our panel should you need any assistance in choosing. If you do not select from our panel, please make sure the firm you choose has experience of shared ownership to avoid delays. Once you have provided us with details of your solicitor and mortgage lender, along with the items above, we will send out a memorandum of sale outlining details of the sale. This information is required within one week of your application being accepted. By this stage you should have given your solicitor instructions to act on your behalf and completed your mortgage application. Your solicitor is likely to require you to pay some money up front and will ask for around £300 to start the purchase process. Your mortgage advisor will also ask you to pay for your mortgage valuation and possibly arrangement fees at the start of the process to enable to them to progress your application. Once your mortgage application has been approved, the lender will instruct a surveyor to value the property to confirm that it is worth the price you are paying. Once you receive a copy of your valuation survey report, you must forward a copy to East Thames. If your mortgage valuation comes in lower than your agreed purchase price, we may be able to provide comparable evidence to challenge the valuation. If this is unsuccessful, we will negotiate with the seller to try and reach an agreeable compromise on the sale price. After the valuation has been carried out and approved by the lender, you will be issued with a mortgage offer. You will need to send a copy of your valuation and offer to East Thames.

0300 303 7333 |

[email protected] | www.east-thames.co.uk

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YOUR STEP BY STEP GUIDE TO BUYING THROUGH RESALES –continued–

If you have chosen to purchase additional shares in the property, we must have a valid valuation on file. Valuations are valid for three months. If the valuation expires, we will need to arrange for an update to be carried out, the cost of which you will be responsible for. If the property is old or in need of repair, your mortgage survey may recommend that certain reports are carried out, for example gas safety check, electrical test, timber and damp report etc. You will be responsible for the cost of these reports. If there is no current gas safety / electrical inspection in place, it is advisable to have one carried out yourself for Health and Safety reasons. Your mortgage offer will need to be approved by East Thames to ensure that it includes all of the necessary features for us to fulfil our government funding obligations. Where a mortgage offer is not approved, East Thames is not liable for the costs associated with delays, the production of a revised mortgage offer, or withdrawal from the sale. When we have approved your mortgage offer, we will advise the solicitors. You will need to keep in constant contact with your solicitors along the way to make sure they are acting quickly for you. Once your solicitor has received everything they need, they will issue you with a contract for you to sign and return with your deposit money. When all parties have signed their paperwork, the solicitors will exchange contracts. The purchase is legally binding at this stage and a completion date will be set. On completion, your mortgage money will be sent to the solicitors for them to pass to the sellers’ solicitors. Once all the monies have reached the top of the chain, your solicitor will call you to advise that the purchase has completed. You will then be able to collect the keys from the seller/East Thames.

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[email protected] | www.east-thames.co.uk

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IMPORTANT INFORMATION ABOUT YOUR LEASE Each lease is different and will contain clauses that you should be aware of. Your solicitor should go through these with you so you are aware of the agreement you are entering into. Shared ownership leases are normally either 99 or 125 years from the date the property/ development first came into shared ownership. The leases are fully repairing which means you will be responsible for maintaining the property, carrying out essential repairs and keeping it in good order. Properties are sold as seen and you should satisfy yourself prior to purchase that the services/appliances are in satisfactory working order, as after completion you will be liable for any repairs required. If you are purchasing in joint names you must both be on the mortgage and the shared ownership lease and will have equal rights and responsibilities for the property. The monthly rent is reviewed every April and you will be notified of any increase in March. Your monthly payment to East Thames is broken down into rent, buildings insurance (if applicable) and service charges (if applicable). Most properties are insured under East Thames block policy, although there are exceptions. You will be advised if the property you are purchasing is not insured with East Thames and will be required to join our buildings insurance cover (unless insurance is covered via a managing agent). If in the future, you need to claim under the policy, please contact us so that we can put you in touch with the insurers. Pets are only permitted with permission from East Thames. If you are buying a flat, it is unlikely that you will be allowed pets that require outdoor space, such as cats and dogs. If you have a pet, please check with East Thames that your animal will be allowed before proceeding. Some leases will not allow satellite dishes and you should check this with your solicitor. If the property has allocated parking, this will be defined in your lease. Please check with your solicitor which space(s) come with the property. If you wish to make structural alterations to your property, i.e. new kitchen, bathroom, double glazing, central heating, extension etc., you will need East Thames’ permission before you start.

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[email protected] | www.east-thames.co.uk

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IMPORTANT INFORMATION ABOUT YOUR LEASE –continued–

If applicable, we will need to see planning consent/building regulations. Once works have been carried out, evidence will need to be provided, i.e. receipts, paid invoices. These improvements will need to be registered with East Thames if you wish to benefit from them should you choose to staircase. There is a small administration fee for this. Cosmetic alterations such as decorating, carpeting/flooring, landscaping etc. do not require consent as these are not considered to add substantial value and will not affect the value of the property when you staircase. The lease does not allow for the property to be sub-let. It must be your home for you to live in, not to rent out. If this happens without East Thames’ permission, you will be in breach of your lease and could be forced to surrender the property. You must be considerate to your neighbours and inform us of any change to your circumstance, i.e. if you wish to transfer the lease from joint to single names. Payment of your rent is due on the first day of each month and should be paid in advance by direct debit. If you experience difficulty in paying your rent, please let East Thames know. If you are entitled to housing benefit, this can be used to pay towards the rent. If you do not pay your mortgage and/or rent, your home could be repossessed.

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[email protected] | www.east-thames.co.uk

5

BUYING COSTS FOR RESALES The approximate cost of purchasing a shared ownership resale property is between £2,300 and £3,000 plus mortgage deposit, broken down as follows:-

Reservation fee £500.00

Solicitor’s fees £1200.00 (will vary) Notice fees (East Thames) £144.00 (paid via solicitor – additional fees may be payable to a managing agent where applicable)

This fee is paid to East Thames when you reserve the property. This will not be refunded if you withdraw from the purchase. When you complete, we will collect one month rent in advance, plus rent to the end of the month you complete in, calculated on a daily rate. The reservation fee will go towards this amount.

These fees are normally payable on completion. This will include legal fees, searches, land registry, bank transfers etc. Your solicitor may require approximately £300 up front to start work for you. Your mortgage deposit will be paid at the point of exchange.

Building Society mortgage valuation £350.00

If gas/electrical tests are not available, you are strongly advised to instruct your own. The mortgage survey may also recommend certain tests, such as timber and damp.

OR Homebuyers survey £600.00 (recommended on properties over 10yrs old) Mortgage arrangement fee £500.001000.00 (will vary from lender to lender) These fees are payable to your mortgage lender / broker. The mortgage arrangement fee can only be added to your mortgage if the total borrowing is less than the share value.

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Contractors reports before exchange £300

Valuation fee £36-£500 (Please note this could be significantly higher, please call the valuer for a quote prior to instruction) If you purchase additional shares in the property, a valid valuation will be required at completion of the sale. If your mortgage valuation is not available, we will need to instruct an updated valuation, the cost of which you will be responsible for.

[email protected] | www.east-thames.co.uk

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BUYING COSTS FOR RESALES –continued–

Stamp Duty Land Tax (SDLT)

Additional costs after completion

Stamp duty is normally only payable on a resale property where the value of the share exceeds £125,000, unless you are purchasing a property where a new lease is being created. New stamp duty regulations came into force from 1 April 2016 and your solicitor will be able to confirm any amounts payable. Please note that if duty is not paid on your purchase now, there may be a requirement for you to pay in the future if you either staircase above 80% or sell 100% on the open market. Your solicitor will be able to advise further on the implications of this.

After completion, additional costs that should be considered include removal costs, utility connection fees, and mail redirection charges.

0300 303 7333 |

[email protected] | www.east-thames.co.uk

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INFORMATION TO PREPARE BEFORE YOUR MORTGAGE APPOINTMENT You will need to take the following with you: • Last three months’ wage slips • Last two P60’s •E  mployer’s name and address – notify employer they may be contacted for a reference •L  andlord’s name and address – notify landlord that he/she may be contacted for a reference • Two forms of identification from the following: •P  assport or driving licence • Armed Forces ID card •K  nown employer’s ID card bearing photo and signature If these are not available, contact your lender or East Thames for a list of other documents that may be accepted. •P  roof of residency for the last three years, e.g.: Household bills Electoral roll As part of your mortgage you may wish to include insurance against accident, sickness or unemployment. Please note that East Thames staff are not qualified to provide financial advice and you should discuss any matters relating to mortgage and insurance products in detail with your mortgage advisor.

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NHBC / Repairs Resale properties are generally second hand homes and are therefore sold as seen. The shared ownership lease is fully repairing and you will be responsible for maintaining the property once you move in. If your property is covered by the NHBC and you need to make a claim for any defects covered by this, you will be responsible for the cost of the excess in the same way as you would for any buildings insurance claim. If you live in an apartment, the freehold owner of the block is responsible for the maintenance of the common parts and the exterior of the building. The cost of any work will be passed on to you in your service charge payments. You are responsible for undertaking any maintenance or repairs to the inside of the apartment including any pipes, electrical wiring and glass in all windows and doors. If you are purchasing a house, maintaining the doors, windows and window frames to your property is also your responsibility. Please note that any replacement of external doors and/or windows would require permission from East Thames. Your lease will set out repair and maintenance responsibilities for your home in more detail. Please make sure you understand and accept these responsibilities before signing your lease.

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INFORMATION TO PREPARE BEFORE YOUR MORTGAGE APPOINTMENT If purchasing an apartment, the window frames or external doors may be the responsibility of the freeholder to repair or replace. Please check your lease to ensure you are clear on what your obligations are before signing. If solar

0300 303 7333 |

panels are installed at your house it is your responsibility to maintain them. Solar panels installed on communal roofs such as blocks of apartments will be the responsibility of the freeholder to maintain.

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THE CONVEYANCING PROCESS Buying or selling a home is a complicated procedure and East Thames will seek to guide you through the process every step of the way. The exact order of events varies slightly but this will give you an overview of what the solicitors do on your behalf. Once East Thames has received all requested detail and information from you, we will send out a sales memorandum to put the solicitors in touch with each other. The sellers’ solicitor will obtain the title deeds and prepare the draft contract to send to your solicitor; this will contain details of the sale. Your solicitor will check through the paperwork and raise enquiries with the sellers’ solicitors. They will also send off for the searches, including Local Authority search (whether there are any developments/plans in the area that might affect the property), Environmental search (matters affecting the land on which the property has been built), Drainage/Water search. The standard set of enquiries sent to the sellers’ solicitors will include questions about neighbourhood disputes, boundary disputes, planning permissions, rights of way, restrictive covenants, guarantees, utilities, items included, lease details term, Management Company, service charges etc.

0300 303 7333 |

Your solicitor should send you a property information form or a copy of the draft contract for you to check. This should include copies of the title deeds, fixture and fittings form and property information form. Whilst the legal side is progressing, you will apply for your mortgage and the property will be surveyed on behalf of your lender. Your solicitor should be sent a copy of your mortgage offer. East Thames will require a copy of your valuation survey and mortgage offer. Your solicitor will send you a mortgage deed to sign. Once all the enquiries have been answered and your solicitor is satisfied with all the replies, you will be asked to sign your contract and pay a deposit in readiness for exchange. You sign a copy of the contract which is sent to the seller for them to sign. Once your deposit has cleared and both parties have signed the contract, the solicitors will exchange and set a completion date to be agreed by all parties. At this stage, the sale is legally binding. Once contracts have been exchanged your solicitor prepares the draft transfer document. This document transfers the title of the property from the seller to the buyer. Once both parties have agreed on the draft, it is signed by the buyer and the seller.

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10

THE CONVEYANCING PROCESS –continued–

Your solicitor will also deal with the finalisation and signing of documentation relating to your mortgage, and will arrange for the money to be available on completion of the sale. Your solicitor carries out final searches and enquiries. There will be various matters for you to deal with in the run-up to completion. There will be documents to sign and payments to be made to your solicitor to cover the balance of their fees.

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On the day of completion, your mortgage lender will transfer your mortgage funds to your solicitors account. The funds will then be transferred up the chain until they reach the seller at the top. Once this happens, this is completion. You can then arrange to collect the keys from the seller.

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11

BUYING MORE SHARES – STAIRCASING If you decide not to purchase further shares on the initial application, you have the option of purchasing further shares in the future, which is called staircasing. On most leases you can own 100% of the property, however a small minority of leases have a restriction and you should check with East Thames before proceeding. The lease allows for the purchase of three further shares in the property (please note that if a previous shared owner has already staircased, this will count as one of these three steps). When you staircase, your property will need to be re-valued by a chartered surveyor, the cost of which you will be responsible for. Valuations are initially valid for three months. After this time they will need to be updated.

When you increase your percentage share in the property, the rent will decrease. The service charges and insurance (if applicable) stay the same. When you staircase to 100% ownership, East Thames will transfer the freehold (if applicable) of the property to you. At this stage you will be responsible for your own buildings insurance. Please note that if you sell your property within three months of staircasing to 100% ownership for more than the value that you staircased at, you will be required to pay East Thames back its percentage of the increase in price. You will be liable to pay any associated costs, i.e. solicitors, surveyors, mortgage costs.

The value that any major improvements have added to the property, such as a new kitchen, which you have previously registered with East Thames, will be deducted from the valuation. The value that the improvement has added to the property and not the cost to carry out the works will be deducted. You must therefore inform East Thames before you carry out any improvements and provide comprehensive details on your planned works.

0300 303 7333 |

[email protected] | www.east-thames.co.uk

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SELLING YOUR PROPERTY You can sell your property at any time but you must come back to East Thames if you own less than 100%, under the terms of your lease; so that we can try and find a buyer from our database. When you wish to sell, please contact the Sales team for a sales pack. Your property will need to be valued by a chartered surveyor, the cost of which you will be responsible for. Your property will then be sold for the current market value including the value of any improvements you have carried out. Please note that you will only see the full benefit of your improvements when you staircase. We cannot make any special payments for improvements carried out as we are selling your share to a new purchaser. East Thames’ share will remain in the property and we will not receive any money for our share.

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East Thames has typically two months in which to find a buyer (as defined by your lease). If we are unable to sell your property within this timescale, you are then able to sell through an estate agent. If you sell the property outright through an estate agent, you must sell for a minimum of the valuation price. Once a buyer has been identified, the normal timescale is approximately 8 weeks from when the solicitors are instructed. Once the sale completes, you will pay a fee to East Thames (which is defined by your lease). This can be up to 1% of the full value + VAT.

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FURTHER ADVANCES/ RE-MORTGAGING If you wish to re-mortgage to another lender, to gain a better rate of interest for example, you are only able to do this with East Thames consent providing you are not borrowing more than the original mortgage amount. You are not able to consolidate loans into the mortgage. Further advances are only agreed if they are to carry out essential repairs or maintenance that is not covered by buildings insurance or to buy out a joint leaseholder. The additional borrowing will only have the benefit of the mortgagee protection clause if you are borrowing for one of these purposes. Further borrowing over the original mortgage amount can be secured against the property but it will sit behind East Thames in priority and will not benefit from the mortgagee protection clause.

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Always check with East Thames before applying for any borrowing. You are able to borrow further money by way of a personal loan that is not secured on the property. Please bear in mind that if you miss any repayments for loans secured against your property, your home may be at risk. Please note that the market value of properties can go down as well as up. Your home is at risk if you do not keep up repayments on a mortgage, rent, or other loan secured on it. The information contained in this booklet is for guidance purposes only and may be subject to change. Please check with East Thames if you are unsure about any of the information provided.

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For further information contact our Sales Team on: 0300 303 7333 [email protected] www.east-thames.co.uk

29-35 West Ham Lane, London, E15 4PH