Shared Ownership at Derwenthorpe A Step By Step Guide

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1 Shared Ownership at Derwenthorpe A Step By Step Guide

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3 Derwenthorpe Building began on the Lothertington and Seebohm Quarters of the Derwenthorpe development in 2013 after the success of the Stephenson Quarter of 64 mixed tenure houses which was completed early Building on the Rowntree Quarter began in Built in partnership by the Joseph Rowntree Housing Trust and David Wilson Homes, each home has been designed with eco-friendly features including communal heating from a central biomass boiler and a drainage system that prevents flooding.

4 The pioneering mixed housing scheme in Osbaldwick, York, scooped silver for Best Development at the 2013 What House? Awards. What House? Judges said: this year s silver award goes to an outstanding scheme of contemporary homes located within a mature landscaped setting in the popular village of Osbaldwick. About a third of the site has been allocated as public open space for the benefit of the whole community, including wild flower meadows, ponds and play areas. These shared areas will encourage the residents to engage with their community and each other

5 Shared Ownership A Guide for Purchasers Shared Ownership helps a range of people who cannot afford to buy a home of their own outright. This guide provides information about shared ownership, about how the scheme works, what is involved and what to do if you would like to buy a home. Local Connection Please note that all purchasers at Derwenthorpe must have a local connection to York What is Shared Ownership? Shared ownership is an alternative to renting and full ownership. It is particularly suitable for people with a regular income who want to buy their own home but cannot afford to do so outright. With shared ownership you buy a share of your home and pay rent on the remainder. Shared ownership does not mean that you share your home with someone else. Shared ownership is usually arranged through Registered Providers (RPs) like JRHT. They are non-profit making organisations that provide good quality affordable homes for rent and shared ownership. The total monthly costs of the rent and mortgage should be lower than the cost of a mortgage needed to buy 100% of the same home. This is because shared ownership is often supported by government money which reduces the level of rent to be charged.

6 Who Can Become a Shared Owner? Shared ownership is for people who are unable to afford the full cost of outright ownership. People can be nominated from the Local Authority waiting list or people can apply direct. Shared owners might include those looking for their first home, someone leaving their owner-occupied home following a relationship breakdown or an owner-occupier moving for work reasons to somewhere with higher house prices. Who Cannot Become a Shared Owner? Those who can afford to buy a home that meets their needs (this may be determined by the local area you wish to purchase in) Anyone with a household income greater than 60,000 per annum. Those who cannot afford the combined cost of the rent and mortgage. How Does Shared Ownership work? You can usually buy between 25 and 75% of the value of the property. On re-sale the property is often sold on at the percentage the current owner has. Shared owners pay a monthly rent to the landlord, covering the share they have not purchased.

7 For the percentage share you purchase, you will normally require a mortgage with a cash deposit. Some applicants may have the funds to buy a share without a mortgage. Mortgages are available from building societies and banks and will often give you an idea of how much they will lend without a particular property in mind. JRHT is unable to recommend a particular Bank or Building Society. We can however give an indication of some we have worked with in recent years. These are as follows: Halifax Santander Nationwide Leeds Building Society HSBC Lenders will usually require you to have a deposit (at least 10% but possibly more) to reduce the amount borrowed. How Much Does Shared Ownership Cost? The exact amount you pay each month will depend on such things as the price of the property, the size of the share you buy, the rent and mortgage costs. The larger the share you buy, the higher the mortgage costs. Rent will be less on a higher share as you are only paying rent on the equity owned by JRHT. As with buying a house of your own, becoming a shared owner involves certain costs. Some costs are one

8 offs, others will be regular. Examples of the costs involved are listed below: Legal fees - for your solicitor or conveyancer which are usually in excess of 450 Valuation / survey fees These are required by your lender. There are three levels of survey with the basic survey starting at approximately 150 Stamp Duty This is payable on properties where the purchase price exceeds 125,000 (the threshold is currently 250,000 for first time buyers) Property Price Up to 125, , , , ,000 Rate of Stamp Duty 0% 2% 5% Mortgage Arrangement Fees Please check with your individual lender Insurance Premiums Insurance can be taken out to cover you in the event of death or serious illness, unemployment, sickness. You will also be required to insure your own belongings (contents insurance). Under the terms of the shared ownership lease, JRHT insures the building on your behalf.

9 Deposit the greater the amount you are able to pay at the beginning, the lower the costs will be in terms of your monthly mortgage payments. Moving Expenses removal costs plus costs involved in furnishing a property, re-direction of mail etc. Don t forget that once you ve moved in there are everyday living costs which you need to be careful not to underestimate! Rent Mortgage payments Service charge (if applicable) Council tax Utility bills (gas/electric/water/telephone) Other household bills (TV licence etc.) Repairs and Maintenance costs. Remember, you as shared owner are often responsible for these. Although you may only own a percentage of the property, you have the benefit of the whole of the property and are usually therefore responsible for maintaining it. The rent charged is simply to allow JRHT to offer the property at a discounted price initially. You should be aware that your home is at risk if you do not keep up repayments on a mortgage /rent or other loan secured on it.

10 Can I Buy a Bigger Share in My Home? Usually, a year after you have moved in, you can apply to increase your share. This is known as staircasing and in most cases you can ultimately own the property outright. There is no obligation on you to do this but shared ownership is designed to be flexible to meet your needs as circumstances change. Each time you buy at least a further 10% share and this will cost a percentage of the market value at that time. Your rent will be reduced as you purchase further shares however your mortgage payments may increase if you borrow more to fund the purchase. If you have completed improvements to your home then the Surveyor will be asked to estimate the value that this has added to the property. This amount would then be disregarded in calculating the price to purchase further shares. What Happens When I Want to Move? It is no different from moving when you own your home outright. The first step is to inform JRHT of your decision. You should also inform your mortgage lender. We do not buy the property from you rather JRHT usually has the option to nominate a buyer and keeps a register of people wanting to purchase homes on a shared ownership basis. If we are unable to do this, then the option to use a local estate agent will be given.

11 Who Benefits From Any Increase in Value When I Sell? You, as the shared owner benefits from any increase in value of the property on the share you own. If the value of your home has increased by 20,000 and you own a 50% share, your share of the increase would be 10,000. Remember though, house prices can fall as well as rise. If this happens, you will have to bear a share of the loss too. What Should I do When I Have Been Offered a Property? Instruct a solicitor to act on your behalf. Confirm in writing that you wish to proceed and give us details of your solicitors Arrange for a mortgage if necessary.

12 Do JRHT Recommend Solicitors? As with the mortgage lenders, the Trust is unable to recommend individual firms of solicitors. Listed below however are some firms we have recent experience with. Harrowell Shaftoe, 1 St Saviourgate, York Guest Walker & Co, 12a The Shambles, York Ware & Kay, Sentinel House, Peasholme Green, York Langleys Solicitors, Queens House, Micklegate, York North Yorkshire Law, Albermarle Chambers, Albermarle Crescent, Scarborough Birdsall & Snowball, 10 York Place, Scarborough Drabble & Co, 409 Scalby Road, Scarborough Cooper Wilkin Chapman, The Hall, Lairgate, Beverley Norton Hall & Co, 12a Saturday market, Beverley Hague & Dixon, 12 Smiddy Hill, Pickering Ellis Lakin & Co, 8 Hall Garth, Lairgate, Pickering Do I Need to Pay a Reservation Fee? You will be required to pay a 250 non refundable fee to secure the property on reservation

13 What Legal Obligations am I Taking on? You will be buying the property on a leasehold basis. The lease usually runs for 99 years. The lease sets out your obligations to the landlord and your rights. Your solicitor will receive a copy of the lease and will go through the details with you. It is also advisable to read the lease yourself and keep a copy for reference. What Happens if I Become Unemployed or My Family Circumstances Change? It is advisable to take out insurance at the outset. This is designed to ensure that your mortgage/rent and associated costs are paid for a specified period of time if you suffer accident, unemployment or sickness. If you do get into financial difficulties and would like some advice, please contact us as we can ensure you are receiving all that you are entitled too. JRHT also offers in certain circumstances, reverse staircasing. This is where JRHT buys back part or all of your share in order to release equity to clear the mortgage for example. This is not an automatic entitlement or right but it can help some residents whose homes might be at risk.

14 The Buying Process We are sure that buying a new home at Derwenthorpe will be a really positive experience. Buying a new home is an exciting time and is usually straightforward. Listed below is a guide to help you through the buying process. Application You will need to complete a shared ownership application form and gain my4walls approval to ensure that you are eligible for shared ownership. JRHT will approach CoYC on your behalf to gain approval for your application. (In line with our partnership agreement) You can either complete a Help to Buy NEYH application form online at or call or to arrange for a form to be sent to you using the contact details below: Telephone: admin@helptobuyneyh.co.uk Reservation Once your application has been approved by JRHT, My4 Walls and CoYC you will be offered a property to purchase. This is the time you will need to complete a reservation form and pay a reservation fee of 250. This secures your property to enable the legal process to begin. During the reservation period Now is the time to apply for your mortgage and instruct a solicitor. There are a number of banks and building societies that offer shared ownership mortgages, it may be advisable to use an Independent

15 Financial Adviser to assist with this. You will be asked to pay a valuation fee to the mortgage company for them to survey the property on your behalf. Your solicitor will receive the Lease for your property, and will request a search fee to enable them to carry out the Local Authority Searches. This is the first step in the Legal Process. They will advise you on the Lease and raise any queries with JRHT s solicitors. Exchange of Contracts Once your solicitor is satisfied with the Lease, has received your mortgage offer and searches, you will be asked to pay your deposit to your solicitor so that Contracts can be exchanged. This is the point when the property is contractually yours and cannot be sold to anybody else almost a proud homeowner! You may be given your move in date at this time if this date is known. After Exchange and Before Legal Completion Shortly before Legal Completion you will be invited to attend a home tour of your property with a member of JRHT and the Site Manager of David Wilson Homes, this is a very useful tour of your property and you will learn how everything works and be reminded of all the features and benefits of your new home. Legal Completion CONGRATULATIONS!! You are now the proud owner of a beautiful new home at Derwenthorpe. Completion takes place when all outstanding monies are received by JRHT s solicitor. You will be invited to meet at your home at Derwenthorpe and the keys will be handed over to you with your Home User Guide (HUG). This is a file of useful information regarding your home and the local area. Meter readings will also be taken at this time. It s that simple however if you do have any problems or need any help or advice JRHT are always here to assist. We will visit you once you are settled in to ensure that everything is to your satisfaction.

16 Joseph Rowntree Housing Trust The Garth White Rose Avenue New Earswick York YO32 4TZ Call for further information & ask for a member of our sales team