Who can use it . . .
- First time buyers
- Buyers looking to move home
- Buyers looking to stay in their current property without the need for mortgage
- Equity release
- Family break up situations
Your clients must have . . .
- Sufficient cash deposit (at least 10% of the full OMV)
- Good credit history (they should be able to access a mortgage for a lower value property)
- Household income at or below £80,000 (£90,000 in London)
- If equity release, then the customer must have income to support this
Your client must also meet. . .
- A permanent employment, have pension income or similar
- British or EU citizen or have indefinite right to remain in the UK
- Not have been bankrupt or have any outstanding bad credit such as CCJs
- This must be used to fund their only home
Your client's household incomes can be:
- Pension income
- Maintenance payments
The property must:
- Be of traditional construction
- Be immediately habitable
- Be second-hand (at least a year old and lived in)
- Not be sold at auction
Who can’t use it:
- Buy to let
- Anyone who will have 2 properties
- Someone who wants a brand-new home
How much can the client buy?
At the outset, the minimum share your client can buy is 10% of the property value- there is no maximum.
Over time, they will be able to purchase more of their property, thereby decreasing the amount of rent they will have to pay. Gradually increasing the ownership percentage in this way is known as ‘staircasing’.
Properties purchased via Your Home will be on a shared ownership lease, which for freehold properties will be for 999 years (the term of a “virtual freehold”) and for leasehold properties, 125 years. This lease will set out your clients rights to occupation as well as their obligations as a home owners.
Can they buy any property?
Yes they can! Provided that for leasehold properties there is more than 125 years remaining at the point of purchase and they are of standard construction within either England or Wales.
How much does Your Home cost?
Firstly, your client will need their deposit – this needs to be a minimum of 10% of the price of the property.
Secondly, there is the product fee of £1200 for freehold properties and £1800 for leasehold properties. This will cover the cost of processing your clients application and the solicitor’s fees for heylo to purchase the property and then sell them their share.
The client will also need to pay for a RICS Standard Valuation Report as well as paying their solicitors to purchase their share via the Your Home lease. Depending on the property purchased, they may also have to pay Stamp Duty.
All costs will be outlined throughout the process, but it is advised that your client has at least £3,500 set aside to cover the costs.
Can they take out a personal loan to pay for costs or fund part of their deposit?
Yes, they can – providing that it is unsecure (the costs per month would be taken into account when assessing their affordability. )
The client will need to make the Your Home team aware of this during the application process. As The Your Home team will need to see that the client has the funds available and take into account, this loan and any other loan repayments they may have in their affordability assessment.
What solicitor should I advise them to use to buy their share?
Your Home have a selection of solicitors for your client to choose from. These solicitors have been nominated as not only do they offer excellent customer service, value for money – but they also understand Your Home and shared ownership.
These solicitors will be able to help ensure that the buying process is a smooth and stress-free process.
If they change their mind at any time – can they withdraw from the process?
Yes, of course. Until the exchange of contracts your client is not legally bound to anything, so are free to change their minds.
We would strongly recommend that you advise your client to think about any reason they may not want to proceed before starting the process, as any fees they pay are non-refundable.
If they wanted to buy out an ex-partner out of the property, can they do this using Your Home?
Of course, this is a great way of using Your Home.
Providing the client can afford the monthly rent payment and there is a minimum of 10% equity value left I the property to act as their deposit. Your client would be able to repay the mortgage and any money owed – whilst staying in their own home. After heylo purchases the property and the client purchases their share through Your Home – the property will be solely in their name.
What is a RICS Standard Valuation Report and who needs to arrange this?
This is a market standard property valuation, the client will be required to organise and cover the cost of this. This will tell you the construction type of the property as well as the valuation.
The prices of a RICS Standard Valuation Report will vary depending on the value of the property they typically cost around £200 - £500 with payment made at the point of instruction.
What are the legal fees and associated costs?
Your client will need to instruct a solicitor to act on their behalf. They can select from Your Home’s list of recommended solicitors Disbursements (third party costs) such as Land Registration fees, search fees etc. will be charged in addition to the solicitors fees.
Their solicitor will also advise them on the cost of any Stamp Duty Land Tax payable.
What else will they need to pay for, in additional to the monthly shared ownership rent?
In additional to the rent, the Your Home lease will require payment of an annual management fee (currently at £181.44 including VAT*) and buildings insurance – both are payable monthly in advance.
Once completed, your client will need to pay the rent, management fee and buildings insurance for the remainder of that month, together with the following month. Their solicitor will inform them of the total fee, before completion.
Who will be responsible for the upkeep of the property?
The client will be responsible for the upkeep of the property.
Your Home may also be subject to third party service charge towards cleaning, lighting and maintenance of communal areas such as parking and shared gardens or unadopted roadways.
The client will need to request information on the services and estimated annual costs from the property vendor before deciding to purchase – as these costs will be included in the application process and affordability assessment.
What is the Your Home lease?
This is a legal agreement, that details what is expected of both the landlord and the leaseholder and has been created from a standard industry form but adapted to give the client the benefits of Your Home.
What is Stamp Duty Land Tax?
Stamp Duty Land Tax is generally payable on the purchase or transfer of property or land in the UK including leasehold and shared ownership transactions, where the amount paid or value of the rent payable is above a certain threshold. These transactions must be notified to HM Revenue & Customs (HMRC) on a Stamp Duty Land Tax return within a certain time limit – even if no tax is due, however your solicitor will be able to do this for you.
The client will need to pay the Stamp Duty Land Tax at the point of purchase.
How do I help work out their household income?
Household income is the combined gross income of all the members of a household who are of a legal working age and are going to be applicants for Your Home and ultimately own a share of the property.
Household income is important measure used by heylo to assess affordability.
How many people can be on a Your Home lease?
There is a maximum of 2 applicants per purchase - The clients do not need to be related in anyway.
How do they buy a bigger share?
The Your Home lease sets out the process to allow the client to buy a bigger share at any time.
Same as the initial purchase, an independent valuation will be undertaken and this will be used in a calculation specified in the lease to work out how much the client will need to pay based on the size of the additional share they wish to buy.
As well as the cost of a valuation, buying a bigger share will also involve legal fees and may require a Stamp Duty Land Tax payment.
What if they want to move?
The Your Home lease sets out the process to allow the client to sell their property outright and their entitlement to the sale proceeds. Like the initial purchase, an independent valuation will be undertaken.
When your client sells outright the actual sale price will be used in the calculations specified in the lease to work out how much the client will receive based on how much the initial share purchase was.