What is a Shared Equity Mortgage?
The new Social HomeBuy allows social housing tenants to buy their current home either outright or on shared ownership terms with the benefit of a discount. To do so, their landlord must have applied and been approved to take part in the scheme. As at August 2007 only a handful of Councils are participating, but it is believed that the Government may ‘roll this out’ as mandatory.
This is likely to be of interest to tenants who don’t qualify for the Right to Buy or the Right to Acquire or who are not currently in a position to buy their home outright.
What is Social HomeBuy and how does it work?
Where landlords are offering this opportunity, housing association or council tenants can buy their homes – this is usually on a shared ownership basis with a minimum 25% share being bought. However, the property can also be bought outright. For this you should seek the advice of a Mortgage Broker such as Council Tenants Advice Bureau (UK) Limited. Their comprehensive website can be located here www.counciltenantsmortgages.co.uk
CTAB are highly respected and actually recommended by many Councils and Housing Associations.
The maximum discount being offered will vary between £9,000 and £16,000, depending on where you live. The amount of discount you receive will be in proportion to the initial amount purchased. There is only one deduction of discount, and this is on the purchase of the initial share. For that reason, purchasers are encouraged to buy as large a share as they can afford from the word go.
If the property is sold within five years, the discount is repayable. When the purchaser comes to sell their home, the landlord will have the chance to buy the property back at market value or nominate another purchaser. Who is eligible and what is the selection criteria?
Only existing secure or assured tenants of participating housing associations or councils are eligible. Tenants who are facing legal action for anti-social behaviour or breaches of their tenancy agreement cannot take part. Special features
You can purchase a share or 100% of the property outright.