RENEW Housing Products - support for home ownership
Home ownership in North Staffordshire is significantly below the West Midlands average, particularly in urban core areas within Stoke-on-Trent, and this clearly correlates with low incomes. Therefore while promoting home ownership, RENEW North Staffordshire has worked hard to ensure that the type of tenure chosen by residents is appropriate for their individual circumstances.
Most of the home builders in the pathfinder area offer a form of shared ownership or shared equity deal, or assistance with deposits to help potential purchasers acquire a new home in the area.
Several hundred homeowners have been helped to acquire a home using this route. The Government backed First Time Buyer Initiative (FTBI) has proved to be hugely successful in the area, and the more recent Home-Buy Direct, where purchasers acquire 70% of the equity in a home, is having a similar level of success. More information on these products can be found at Homebuy
In addition to the above, all our social landlords – housing association partners - also have a range of low-cost home ownership options for outright sale or shared ownership. These particularly suit first time buyers or existing homeowners struggling to afford 100% home ownership through various shared ownership arrangements.
How it works
You agree to purchase a 75% or 50% share in the property, depending on your income and savings, and pay a discounted rent on the remaining share to the ousing association. You will be responsible for furnishing your home and for paying council tax, insurance, heating, utility and other bills - like any other homeowner. After a year, you can buy more shares in your home, usually up to 100%. This is called ‘staircasing’.
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More ways of helping people into home ownership have just made available in the area. These include ‘rent to home-buy’.
Typical ‘rent to home buy’ schemes, also offered by most of our housing association partners, allow you to rent the property for a maximum of five years while you save for a deposit. You can, however, purchase the property any time after the first six months, providing you can obtain a mortgage and meet our shared ownership affordability criteria.
While renting the property, you pay a discounted rent equivalent to 80% of the market rent. In other words, if the rent per month is £500 elsewhere, you would only pay £400, saving you £100 per month. Please note that you will be required to pay a service charge, if one is applicable, but you do not pay for any buildings insurance, sinking funds or ground rents.
The monthly savings are to help you build up a deposit towards purchasing your home. You will receive free independent financial advice to assist you in starting a savings plan.
The scheme is available to:
- Anyone living at home with parents
- people currently renting a property
- Anyone who cannot purchase a home now because they need to save a deposit
- People needing a home as a result of a relationship breakdown
- Any key workers
Your household income must not be higher than £60,000 per annum. Rent to home-buy is designed to help you get on to the property ladder
RENEW products aim to plug the gaps – particularly with regard to assisting residents affected by clearance. Since 2006, RENEW has sought to tailor its support to meet the needs of existing home owners affected by clearance and potential owners by:
- Funding a home options team to support residents relocating from clearance areas. Backed up by this assistance, the majority of owner-occupiers are able to use their market value and home-loss compensation to find new homes without the need for further support.
- Jointly acquiring with registered social landlord (RSL) partners a number of properties in sustainable area for improvement. These have then been disposed of to residents facing clearance, on either a ‘key’ swap when value share more or less the same as the property being acquired for clearance, or with the benefit of a property appreciation loan (PALs) supporting the difference, or, if more appropriate, using a shared ownership product.
- PALs are also available to assist with funding the difference between the owners existing home and their chosen new home. This can be an existing property or a new build home.
PALs are available to applicants living in properties that are due to be demolished or acquired to support clearance. The replacement home must be within an area defined by the council. Applicants will be informed of areas at the time of their application. The replacement property does not have to meet all elements of the Decent Homes Standard, but must be mortgageable and capable of being brought up to Decent Homes Standard within the resources available to the applicant. The property must be a suitable replacement property, having regard to the applicant’s needs.
RENEW will take advice on the market value of the replacement property. If the market value is less that the asking price, this lesser figure will be used in determining the amount of assistance the applicant may be eligible to receive. If there is any dispute over the RENEW’s valuation, the matter will be referred to the District Valuer for an independent valuation.
Clients must intend to acquire an owner’s interest in the replacement property. This means that the applicant must buy the property either freehold or leasehold. In the case of leasehold properties, a minimum of 50 years remaining on the lease will normally be required.
|Value of existing home||£50,000|
|Market value including home loss statutory compensation||£55,000|
|Value of new home||£70,000|
|Assume same mortgage transfers to new property||£15,000|
|Shortfall towards new property purchase price||£15,000|
Homeowners can borrow up to 50% of free equity in their existing home. In the example here, the free equity of the existing home is £40,000, and so the owner could borrow £20,000 – however, they only require a loan of £15,000.
If the property does not meet the Decent Homes Standard, then the applicant must demonstrate how they intend to bring the property up to the Decent Homes Standard within a reasonable period (not more than a year).
Kick Start loans carry no interest for the duration of the loan and are only repayable on sale, death of the owner or transfer of the property to another person. The loan is then repayable in the same proportion to value as when initially agreed. In the example above, the loan of £15,000 is 21.4% of the value of £70,000 at the time of purchase. If the value when it is sold is £80,000, the loan to be repaid will be 21.4% of £80,000, approximately £17,140.
The loans carry a no repossession guarantee. There are also further conditions that need to be satisfied. For more information, call 01782 749202 or email email@example.com
For Kick Start Loan Information, click here.
Help for first-time buyers
Before starting your search for a new home, speak to your bank or a mortgage broker to work out how much you can afford.
Today’s first time buyers are likely to need a minimum of a 10% deposit on top of additional funds (typically between £2,000 - £3,000) to cover expenses from legal fees to stamp duty and survey costs.
As a first-time buyer, you will find a range of packages and services that are available to you exclusively via the new homes market. A range of government-led shared equity initiatives allow first-time buyers to front just a percentage of the full purchase price (as low as 25%) and gradually increase their share over time. This significantly reduces the size of mortgage required, and therefore the finance needed to make a purchase.
Help for existing homeowners
If you own your own home and need to carry out repairs and improvements, but don’t have the money or the means to do it, Staffordshire Housing Association's Revival Home Improvement Agency can help you with the Kick Start scheme. Kick Start offers a range of low cost loans and project-manage the improvement works on your behalf.
Kick Start offers a range of low cost loans and project-manage the improvement works on your behalf.
Most Kick Start loans are not paid back until your home is sold. Alternatively, for smaller jobs, there is an interest-free loan of between £250 and £2,000, which you pay back in monthly installments.
All work will be carried out by reputable builders and the scheme is fully backed by Stoke-on-Trent City Council and Staffordshire Moorlands District Council.
Loans are provided by Art Homes Limited.
For more information, call 01782 749202 or email firstname.lastname@example.org
For Kick Start Loan Information, click here.
Kick Start loans carry a no repossession guarantee