Homebuy schemes
New build homebuy
New Build HomeBuy was until the summer of 2011 the Government's favoured term for traditional 'part buy / part rent' shared ownership. It’s known as shared ownership because you share your ownership with a housing association – you pay rent on their share and take out a mortgage with deposit on your share. It's called 'New Build' HomeBuy because the properties are usually new build flats or houses. However, it is possible to purchase a second hand shared ownership property where an existing shared ownership tenant wishes to sell their share. This is known as a 'resale'.
You can typically purchase between 25 and 75 per cent of your home at the outset and when you can afford it, you are able to buy additional shares until you own 100 per cent of your shared ownership home - this process is known as 'staircasing'. In terms of eligibility, shared ownership is usually available to first time buyers with a maximum income defined by the scheme provider, but is also targeted at 'priority groups' such as existing social housing tenants, serving members of the armed forces and people on local authority waiting lists.
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Homebuy direct
HomeBuy Direct is a shared equity rather than shared ownership scheme – that is, instead of buying a share in a property (shared ownership), you buy the whole thing but with a deposit provided in the form an equity loan. In September a new version of this product will be launched called FirstBuy. Like New Build homebuy, the Home Buy Direct scheme (and FirstBuy) is for new build properties. In this case, HomeBuy Direct participants are given help to purchase a new build home from certain recognised builders. The purchaser takes out a mortgage to cover at least 70% of the purchase price (up to a maximum of 85%) and this is topped up with an equity loan covering up to 30% of the price. The maximum value of homes purchased through HomeBuy Direct is £300,000. The Government shares the cost of the equity loan 50/50 with the developer. You can click here for information on the strengths and weaknesses of shared ownership schemes (such as new build homebuy) v shared equity schemes (such as homebuy direct). Please note that the Share to buy mortgage team, which specialises in shared ownership mortgages with no broker's fees, provides all types of homebuy scheme mortgages – including shared ownership, shared equity and Homebuy Direct. With FirstBuy, the figures are slightly different and the maximum equity loan is 20% with 5% deposit from the customer and a mortgage for up to 70% of the property value.
Rent-to-homebuy
Rent to HomeBuy, known simply as Rent to Buy since summer 2011, enables potential shared ownership home buyers to pay reduced rent on a new-build home. The idea is that these tenants can then save their discount towards a deposit for a shared ownership property purchase. The main point to bear in mind is that, since the credit crunch, minimum deposits have gone up across the board but particularly for mortages on new build properties, and therefore this scheme enables people who might otherwise have trouble saving a deposit for an affordable mortgage to take part in Rent to HomeBuy as a scheme that will eventually lead to full participation in shared ownership of a home. In the scheme, the tenant pays a rent set at no more than 80% of the current market rent on a home for up to five years. Again, it is a new build property and the eventual purchase would take place under the new build homebuy scheme, i.e. part buy / part rent shared ownership.
Social homebuy
Social HomeBuy allows existing secure or assured tenants of participating housing associations and councils housing to buy their home on a shared ownership basis or outright, with the benefit of a discount. Tenants usually buy their home on a shared ownership basis with a minimum share of 25%, but outright purchase is also allowed. The maximum discount available through Social HomeBuy varies from £9,000 to £16,000, depending on the location of the property. Discounts are also available on any subsequent shares purchased. If the property is sold within five years, the discount is repayable.
Registration and eligibility for homebuy schemes
If you are looking for information about eligibility and how to register for homebuy schemes, you need to contact your 'homebuy agent'. Homebuy agents are housing associations designated to be the first port of call in your region if you are interested in homebuy or shared ownership, and in addition to scheme details, they have information on shared ownership and homebuy properties, including shared ownership homes for sale or rent in your area. You can find details of your homebuy agent by contacting the Homes and Communities Agency or use the drop down menu to find properties available for shared ownership schemes in your area, but note that if we do not have any properties you can register to receive alerts when we do:
Select your local authority or county
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If you have any difficulties in making payments on your shared ownership mortgage, please contact your mortgage provider or housing association immediately.