What is Open Market HomeBuy?
HomeBuy is intended to help those who wish to buy a property but are unable to afford it as well as those who wish to rent but cannot afford to pay market rents.
The HomeBuy Scheme is targeted at groups such as public sector key workers or people in other priority groups, such as council or housing association tenants or those identified by Regional Housing Boards as being in priority need. It is a Government-backed scheme which provides equity loans to supplement a mortgage loan with one of four participating lenders.
The scheme has been operating since October 2006 and enables the fortunate applicants to purchase 75% of the equity in a property of their own choice from the open market. The remaining 25% will is provided by an equity loan split between a HomeBuy Agent and of the four mortgage lenders participating in the scheme.
HomeBuy Eligibility
The HomeBuy scheme has four separate offerings which are as follows:-
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Open Market HomeBuy is prioritised for key public sector workers, existing tenants of housing associations and local councils, those on housing waiting lists and some other priority first time buyers, meaning not many First Time Buyers - Cheers Gordon!
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New Build HomeBuy offers new homes on a part buy, part rent basis; where they purchase a share in the property, typically 50%, and pay a discounted rent to the housing association on the remaining share.
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New Build discounted rent - new homes available at approximately 80% of market rents for homes of similar size and specification in the surrounding areas. These are available only to key workers.
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Social HomeBuy - offers some housing association tenants the opportunity to buy a share in their home. You will need to contact your own landlord if you are interested in buying your housing association rented home. Some feel that this is giving people an unfair advantage on the property ladder and equally reducing the number of housing association properties on the market, which is considered to be a public service.
The HomeBuy Scheme profess that the majority of their clients are first time buyers, they are also able to help someone who needs to buy a property in a situation such as a relationship breakdown or where the household has outgrown existing circumstances.
The Governments defined priorities for assistance under HomeBuy are:-
- Social tenants
- Those on the housing waiting list
- Public sector key workers as defined under Key Worker Living in the South East
- Other priority groups recommended by Regional Housing Boards
Home Buy for key workers
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NHS:
All clinical staff employed by the NHS except doctors and dentists. -
Education:
Qualified teachers in schools and sixth form colleges, lecturers in FE colleges, children's social workers and qualified nursery nurses in LEA nursery schools only. -
Police:
Police officers and community support officers including those working for the British Transport Police or the Civil Nuclear Constabulary (CNC) in certain areas. Some front line civilian police roles are also eligible - this varies by force. -
Prison Service:
Prison officers and related grades, operational support grades, nursing staff, industrials and instructional officers working at specified locations. -
Probation Service:
Probation officers, senior probation officers, probation service officers. Trainee probation officers are eligible for discounted rent properties only. -
Local Authority:
Local authority employed clinical staff, adult social workers, occupational therapists, educational psychologists, speech and language therapists, rehabilitation officers for the visually impaired and qualified nursery nurses. Local authority planners employed by the Local Planning Authority delivering statutory planning services. Connexions Personal Advisors provided that they are employed by a local authority or a Connexions Partnership. Connexions Personal Advisors employed by private or voluntary sector organisations are not eligible. -
Fire Fighters:
Uniformed fire and rescue staff below principal level. -
MOD Posts:
('New Build and HomeBuy only) Regular service personnel (i.e. regular service personnel, including Military Provost Guard Service, in the Navy, Army and Air Force), Clinical staff (with the exception of doctors and dentists), MOD Police Officers, Uniformed staff in the Defence Fire Service.
NB: In addition Full Time Reserve Service (Full Commitment) will qualify for intermediate rent schemes only
HomeBuy FTBI
FTBI is the government's apparent attempt to make more affordable homes, available to first time buyers who are priced out of the current housing market. It is part of the Government's new "HomeBuy" low cost home ownership initiative and is available through HomeBuy Agents across England.
First Time Buyers Guide
FTBI enables potential first time buyers, who cannot afford to purchase a home outright (under a mortgage), to buy a property with a more affordable mortgage option, the government retains an entitlement to a share of the future sale proceeds which is the percentage of equity required to meet the full purchase price of the property, this additional level of capital must be greater than £25,000.
Thus enabling a FTBI buyer to take out an affordable mortgage (minimum 50% of the total purchase price) on which they make repayments. The new home owner can also choose to reduce the Government's entitlement at any time by making repayments at the prevailing market value. The minimum additional repayment is 10% of the market value.
For the first three years of the FTBI home ownership scheme, there's nothing to pay on the Government's equity share. However after three years, the buyer will need to pay a charge to Government (through a HomeBuy Agent) of 1% per annum on this entitlement.
The charge rises 1% annually, reaching a maximum of three per cent after five years in the property. FTBI subsequently acts as stepping-stone for buyers to attain their own home. Not quite as good a deal as those who get to buy a council house for a fraction of the real market value though.
Selling an FTBI Home
When owners sell their FTBI home, they will repay Government entitlement. So if a buyer initially purchased the property with a seventy-five per cent mortgage, they will repay the Government twenty-five per cent of the value at the time they sell.
A HomeBuy Agent will recover the Government's repayment. So the homeowner must make sure that the equity is available in the property.
Who can buy an FTBI home?
Anyone who cannot afford to buy a suitable home on the open market and is a first time buyer can apply. Around 50% of the homes to be made available through the initiative will be for key workers such as nurses, teachers and police officers living across England. The remaining homes will be available to those groups identified as priorities by Regional Housing Boards.
For certain groups, a maximum household income of £60,000 will apply. Lower limits may apply to other eligible groups. Priority will be given to people currently in social/private-rented or temporary accommodation.
As well as being in an eligible group to purchase, applicants for FTBI homes must be able to demonstrate access to savings or sufficient funds to cover the costs of buying which will include solicitor's fees, stamp duty, a reservation fee and deposit.
Where will FTBI homes be available?
The initiative is starting now with the aim of making FTBI homes available nationally over the next four years. Homes will only be available on designated schemes where the house builder has agreed to provide FTBI properties.
How do buyers find out more and make an application?
First time buyers should contact their local HomeBuy Agent to make an application and find out more about availability of FTBI homes in their area.
The Government Agency providing the funding and establishing agreements with house builders to make FTBI homes available is English Partnerships: -
English PartnershipsCorporate Headquarters
110 Buckingham Palace Road
London
SW1W 9SA