Affordable Housing

Introduction

There are two main types of affordable housing scheme. One, which allows you to part buy and part rent your home allowing you to buy further shares in it when you want to. This is known as Shared Ownership. The other provides you with an Equity Loan, which is put towards the cost of buying your home. There are also special schemes available to keyworkers.

Shared Ownership

This is a scheme whereby you buy a percentage share of a property (between 25% and 75% ownership) and pay a subsidised rent, usually to a Housing Association on the remainder. As a rough guide, the annual rent payable, is usually calculated at between 3% and 3.5% of the value of the part owned by the Housing Association but varies dependent on which Housing Association is involved and the scheme.

Dependent on your financial circumstances, you have the ability to buy a further share of the property, or even buy the property outright after the first year and this is what we call “Staircasing”.

Shared Ownership normally applies to New Build properties only, which are being developed specifically for low cost housing. Having said that, Housing Associations also have resale properties on Shared Ownership available. This is where someone who has previously bought a Shared Ownership property has decided to move on and sell his or her existing share. An advantage of these properties is that the rent tends to be even lower as they would have been set some time in the past.

To apply for this scheme, you will need to be registered with your local authority and you will need to contact them in the first instance and ask them what affordable home ownership schemes are available within the Borough.

Homebuy Loans

Homebuy is not Shared Ownership. This is where you find a property on the open market and the Housing Association provide an equity based loan of 25% of the purchase price in order to help you buy. There are no monthly payments to make on this loan but it must be repaid on sale. As an example, say you find a property for £200,000 and the Housing Association gives you £50,000 towards the purchase. Years later you decide to sell and the full value of your home is now £300,000. The Housing Association will expect to receive £75,000 being 25% of the current value. The same applies however, should the worst happen and the values decrease. In this case, the Housing Association would make the same proportion loss as you would.

To apply for this scheme, you will also need to be registered with your local authority and you will need to contact them in the first instance and ask them what affordable home ownership schemes are available within the Borough.

Key Workers

If you are a teacher, nurse or public sector worker in the South East, you may be eligible for a special Government housing scheme called Key Worker Living. Essentially this is either Shared Ownership New Build or an Equity Loan of up to £50,000, although a small group of Teachers can qualify for a loan of up to £100,000.

I would suggest you contact www.keyworkerliving.co.uk for more details of the schemes available and to see, in the first instance, if you qualify.