SHARED OWNERSHIP STEP BY STEP your guide to the scheme www.rooftopgroup.org 1
INTRODUCTION The average home in the West Midlands costs nearly nine times the average local wage and private sector rents are expected to rise by almost 60% in the region over the next decade. Shared ownership is an antidote to the affordability challenges facing first time buyers and the insecurity private renters face, with the average West Midlands shared ownership home costing 132,777. 2
Why buy on SHARED OWNERSHIP? Shared Ownership Step by Step Guide Shared ownership is a great alternative for those on a regular income who want to buy a home but cannot afford to buy outright. Shared ownership works by allowing buyers to get a mortgage to purchase a percentage of a property and then pay rent on the remaining share. You are able to: own part of your home and pay rent on the other part have a monthly mortgage and rent which can work out cheaper than buying outright, and sometimes not much more than renting buy more shares or move if you want to only buy what you can afford so you don t overstretch yourself financially Who is ELIGIBLE? Almost anyone can apply to become a shared owner, as long as: you are able to afford the cost of the rent and the mortgage your joint household income is less than 80,000 you are able to secure a mortgage with an approved lender you have a minimum cash deposit between 5% and 10%, depending on the lender of the mortgage We give priority to Ministry of Defence Personnel or bereved partners If you are not sure if you qualify to become a shared owner, please phone Rooftop free on 0800 0421 800 and we ll be able to tell you. 3
What am I actually BUYING? Shared ownership is designed as a stepping stone to completely owning your own home*, allowing you to buy what you want, when you can afford it. Buying a Rooftop shared ownership property makes you an owner-occupier, not a part-tenant. You start off buying a share in your new home, on a lease which is typically 99 years. Your lease is a legal document that proves you own part of your home and sets out certain conditions such as: how often your rent and service charge go up how much it will go up by what you should expect from us; and your rights and responsibilities as an owner-occupier Since you ll own a lease you will be a leaseholder and we ll be the freeholder. You will have the same rights and responsibilities as a full owner-occupier. If you decide to buy the remaining share of your home, you will own your home outright. If you own a house, you should get the freehold like any other house owner, however, this will be confirmed at the time. You will have the same rights and responsibilities as a full owner-occupier. If you own an apartment, you ll remain a leaseholder like any other apartment owner. This is because your home is in a block of apartments and your lease sets out responsibilities for use and maintenance to all shared areas. * In some rural villages, ownership is capped at 80% maximum. 4
What are THE STEPS? COMPLETION 6 THE SALES PROCESS 5 APPOINTING A SOLICITOR 4 MAKING AND ACCEPTING THE OFFER 3 APPLYING FOR YOUR HOME 2 ELIGIBILITY 1 5
1 Step one: ELIGIBILITY You need to be registered with your local Help to Buy agent before you apply. To find which is your local agent, visit www.helptobuymidlands. co.uk or www.helptobuysouth.co.uk You will then need to: fill out our Eligibility Checklist use our online Affordability Calculator at www.rooftopgroup.org/our-homes/buying-a-home/ AffordabilityCalculator to check you can afford shared ownership register and complete a Help to Buy application form at www.helptobuymidlands or www.helptobuysouth.co.uk 2 Step two: APPLYING FOR YOUR HOME Once you have been approved by the Home Buy Agent, Rooftop then needs to carry out an affordability assessment. To do this you will need to supply the following financial documents: your completed Eligibility Checklist your completed Financial Statement your copy of the Help to Buy agent s letter in response to your online application copies of your last three months wage slips copies of your last three months bank statements, making sure that the dates match with your wage slips your mortgage promise letter from your bank or building society indicating how much you may borrow on your current earnings 6
If you are self-employed, your audited accounts for the last two years from a certified or chartered accountant, or the last two years tax assessments from the Inland Revenue PLEASE NOTE: All the above paperwork then needs to be sent to Rooftop s Head Office address, found on the back of this booklet. This then completes your application. 3 Step three: MAKING AND ACCEPTING THE OFFER We will forward you our offer letter and at this stage you will be asked for a reservation fee of 250 (by cheque). This sum will be taken off the purchase price of your home at completion. Rooftop may be able to refund this fee if the solicitor has not stated contract documentation. 7
4 Step four: APPOINTING A SOLICITOR Everyone who buys a home needs a solicitor to do the necessary legal work. Your solicitor will: make sure you have everything necessary to help you buy your home quickly check the lease and speak to your mortgage lender and our solicitors carry out searches, checking that we actually own the home we re selling you and making sure there are no planned developments (such as new roads) that will affect your home check that all the paperwork and your mortgage are in place in time for you to move into your new home You should make sure you get an estimation of the likely costs before you appoint a solicitor. It should include the land registry fee, search fees and any expenses (known as disbursements). 8
5 Step five: THE SALES PROCESS Shared Ownership Step by Step Guide You usually exchange contracts some weeks after your offer. During this time your mortgage lender will be preparing your mortgage offer and your solicitor will be doing the legal paperwork. Early on, a valuer will inspect your new home on behalf of your mortgage lender, to make sure it is worth what you are paying for it. Your lender will also be getting references about you from your employer, your bank and your landlord. If you have not received your mortgage offer three weeks after our offer you must let your financial advisor know so that they can chase it up for you. However, our sales team will move things along for you and they will contact you regularly to make sure everything is going smoothly. Once you receive your mortgage offer, you should contact your solicitor straight away to arrange an appointment to sign your contract. Your solicitor may ask you to leave a deposit. Once you have paid your deposit and signed your contract, then the exchange of contracts can take place. Exchange of contracts means that your solicitor and our solicitor swap the signed contracts. You are then legally bound to buy the home and we are legally bound to sell it. We ll give you a date on which you can move into your new home as soon as it is ready. We ll give you a date on which you can move into your new home as soon as it is ready. This date is called the completion date. 9
6 Step six: COMPLETION On the completion date, your mortgage lender will give your solicitor the money to buy your home. Your solicitor will then pass that money on to our solicitors. Once this is done, we can give you the keys to your new home so you can move in. Our sales team will make arrangements to meet you at your new home and hand over your keys. On completion day you will also receive: more information about being a home owner all the instructions for your central heating and other appliances a resident s information pack We will also take meter readings so that you can pass these on to your utility suppliers. We will make arrangements to meet you at your new home and hand over your keys. 10
How much does it all COST? It is important from the beginning you know exactly how much your new home will cost you, both the starting-out costs and your monthly costs. To help you, we have included some information here: STARTING OUT COSTS You must have at least on average 5,000 savings to cover the costs of buying (depending on the value of your home). These costs are made up of the following: The reservation fee This is the 250 you pay to reserve your home. You ll get this back when you buy your home (it is taken off the purchase price). You will need to pay the reservation fee to the sales team when you receive the offer letter. The mortgage valuation fee Your mortgage lender will arrange a valuation of your home, to check that it is worth the price you are paying. This costs around 400-500 but it may vary from lender to lender. You pay this when you apply for your mortgage. Mortgage arrangement fees For fixed rate mortgages there are usually arrangement or application fees. These vary from lender to lender but you should allow 400 to 1,500. Generally, the longer the interest rate is fixed for, the higher the fee. These fees are non-returnable, so if you pull out later, you may lose this money. Your lender will tell you when you need to pay it. Solicitors fees These should usually be 600 to 1000 including Land Registry fees, local search fees and other expenses. You pay these on the completion date. 11
Removal Costs If you are going to use a removal company to move your furniture, make sure you get two or three quotes as costs can vary enormously. You could pay 150 to 500, so it pays to shop around. You usually pay this on the day you move. MORTGAGE LENDER DEPOSIT Your mortgage lender may also require a deposit for you to secure a mortgage. This normally ranges between 5-25% of your share, depending on the mortgage product you ve secured. The financial advisor will have already discussed this with you. 12
What will I pay EVERY MONTH? Each month you will need to pay the following: Your mortgage (on the percentage share of the property you own) Your rent (on the percentage share that Rooftop own) Your service charge (see page 15) YOUR MORTGAGE PAYMENT Each month you ll make your payment to your mortgage lender, usually by direct debit. The mortgage payment is between you and your mortgage lender, but as we own part of your home, we want to make sure our investment is protected, just as much as you do. What happens if I am unable to pay my mortgage? If you fall behind on your mortgage payments, or you think it could happen, ask for help from your mortgage lender. Many mortgage lenders will allow you to stretch your payments over a longer period while you both find a permanent solution. If you do not get help, or your financial problems continue and you get into debt, the mortgage lender can repossess your home and repay your mortgage. If this happens you might lose all the money you put into your home, including the interest you have paid up to that point. Losing your home in this way could also mean that you ll have trouble getting a mortgage in the future. The most important thing is to let us and your mortgage lender know as soon as possible. We ll do everything we can to help you sort your problems out. REMEMBER: Your home is at risk if you fail to keep up payments on any mortgage, rent or other loan secured on it. Please make sure you can afford the repayments before you take out a mortgage. 13
YOUR RENT On a set day each month you ll pay your rent to us by direct debit. This makes payment simple and convenient as the payments are taken directly from your bank account. On a set day each month you ll pay your rent to us by direct debit. Your rent will be reviewed at the beginning of April each year by an amount agreed in your lease. We ll let you know your new rent at least one month before it is due. What happens if I am unable to pay my rent? If you miss a payment it is important you contact us as quickly as possible, we may be able to help you get support if you are in financial difficulty. If we do not hear from you we will charge you interest. If you do not pay your rent we will take you to court and you could lose your home. Everyone who owns their own home through shared ownership pays a management and insurance charge each month along with their rent. 14
YOUR SERVICE CHARGE Your service charge is calculated as a monthly rate and covers all of the following: Management charge This helps cover the cost of running Rooftop Housing Group, including: rent and service charge collection new build defects reporting property management (repairs, management of shared cleaning and gardening contracts) Insurance Because we own the freehold of your home, we need to make sure your home is adequately insured. We have a block policy which covers all our properties. As we require insurance on so many properties, the premium payable is reduced and we can pass these savings on to you. Property service charge The service charge covers the following: the cost of all day-to-day and future repairs and maintenance to the outside of the building and all the shared areas. This could be the roof, communal TV aerial, entry phones or anything else that is used by everyone in the apartment block the cost of cleaning and gardening to shared areas OTHER CHARGES You will need to organise payment of your own contents insurance, council tax, TV licence, water, electricity and any other utilities that you require, such as broadband, telephone or satellite television. 15
What happens AFTER I MOVE IN? So you ve moved in, had the house warming and are enjoying living in your own place. Down the line you may need information on repairs and maintenance or maybe want to increase the share of the property that you own. You may even decide it s time to move on. Here s some information to help you with those questions. Who is responsible for any repairs and maintenance? If you own a house, you are responsible for all repairs and maintenance to the inside and outside of your home. If you own an apartment, you are responsible for maintaining the inside. We ll take care of day-to-day repairs, maintenance and decoration to the outside of the apartments and any shared areas. This is paid for through your service charge. What about repairs just after I move in? With all new homes, there are bound to be teething problems. Most of these will be minor, like cracking as the property dries out, or sticking doors or windows. The builder will inspect the property, usually after 12 months of handover. We will arrange for the builders to put these problems right. How quickly they do this will depend on how urgent the repair is. You will be responsible for any accidental damage. Your home is also covered by the National House Builders Council s (NHBC) warranty or equivalent. This covers your home for defects in the building workmanship for the first two years after you move in and for structural problems for 10 years, and in some cases 12 years. Do I need permission if I want to make any alterations or improvements in my home? You don t need our permission for redecorating and simple repairs, but you will for anything more complicated. 16
Make sure you keep all the benefit of any improvements that add value to your home by agreeing the work beforehand. That way if you decide to buy more shares in your home, we will exclude the value of any improvements you have made. It is important to note when you sell your home improvements are dealt with differently and you will receive your share of the full market value (including improvements you have made). If you own a 50% share you will receive 50% of the full market value at the time of sale. How do I increase the share of the property I own? You ve found your new home, bought it and moved in. You then have the choice of buying a bigger share in your home if you want to. This is called staircasing. The price you pay for any extra share is based on the market value of your home at the time you want to buy. This value can go up or down according to house prices generally. The value will be set by an independent valuer. There will be some costs involved in staircasing, such as a valuation fee and solicitor s fees, although it shouldn t cost as much as buying your first share. What happens when I want to sell my home? You can sell your home at any time. Your lease will provide details of this. Like staircasing, the price you sell your home for will be based on the market value at the time. Like any home, the value can rise and fall along with the housing market. You must feel comfortable with the risks of these ups and downs before you decide that shared ownership is for you. However, the advantages of shared ownership are that you only buy as much as you can afford to start with and you decide if and when you buy more. 17
Our selection GUIDELINES CRITERIA FOR SELECTION Shared ownership is aimed at first time buyers able to afford it but unable to buy a suitable home in any other way. Applications may also be considered from people who have previously owned their own home. However, they must meet the general criteria and also be selling, or have sold, their home for one of the following reasons: owned a home jointly and the relationship broke down need to move into an area because of their job and are unable to afford to buy outright are shared owners whose income has fallen and they could only access affordable housing by moving to a smaller, cheaper home are shared owners whose family have grown but who are unable to afford to buy outright or rent on the open market are currently living in unsatisfactory rented accommodation or able to demonstrate housing need, and; are a priority under a scheme such as Key Worker Living Household income requirements will differ from scheme to scheme in line with prevailing house prices, the equity shares we have for sale, and in certain instances, local authority policy. We will only offer a home to people with a maximum income of 60,000 per annum (single applicant salary or combined joint applicant salaries). Purchasers need to be at least 18 years old to be able to obtain a mortgage. OUR EQUAL OPPORTUNITIES STATEMENT Rooftop Housing Group Limited, as a social landlord and an employer, is committed to giving equality of opportunity to all persons in every aspect of activity carried out by the Group. In ensuring that our Equality and Diversity policy underpin all its activities, we will follow the guidance and good practice as recommended by our regulatory bodies and formally adopt the codes of practice of the Equality and Human Rights Commission for rented housing and employment. 18
Shared ownership is a great alternative for those on a regular income who want to buy a home but cannot afford to buy outright. 19
CONTACT US We re here to help so please do contact us with any queries you may have along the way. We re available between 8.30am and 5.00pm Monday to Friday. 0800 0421 800 sales@rooftopgroup.org www.rooftopgroup.org ROOFTOP HOUSING GROUP 70 HIGH STREET EVESHAM WORCESTERSHIRE WR11 4YD Published February 2016