A resale property is a shared ownership property that was previously purchased and is now available for sale by the current owner.
In order to proceed with the purchase you must buy at least the current owner’s share in the property, based on affordability calculations set by the Homes & Communities Agency, the Government agency that funds and regulates housing associations.
Why buy through a shared ownership scheme?
If you buy through shared ownership:
- You will own part of the value of your home, rather than paying rent with no return
- Your monthly mortgage and rent can work out cheaper than buying outright, and often not much more than renting
- You can buy more shares (stair-casing) or sell your share and move if you want to in the future
- You buy the share the current owner owns or more if we feel you can afford it
When I buy a resale property, what am I buying?
A resale property is a shared ownership property that the current owner bought new from us or as a resale. The property is a part buy/part rent scheme. Shared ownership properties are designed as a stepping stone to completely owning your own home, allowing you to buy as much as you can afford when you can afford it.
Buying a resale property makes you an owner-occupier, not a part tenant. You are buying at least the current owner’s share on the existing lease. Your lease is a legal document that proves you own part of your home. Your lease sets out certain conditions, such as:
- How often your rent and service charge is reviewed
- The conditions of the lease which must be adhered to
- The conditions regarding selling or buying further shares
- What you should expect from us
- Your rights and responsibilities as owner-occupier
As you own a lease on your property you will be a ‘leaseholder’ and we will be what is known as the ‘landlord’. You will have the same rights and responsibilities as a full owner-occupier. You will require a solicitor when buying a property to deal with the legal work associated with your mortgage and home.
If you decide to buy the remaining share of your home, you will own your home outright. If you own a house, your solicitor will arrange for you to get the freehold (in most circumstances) like any other house owner. If you own an apartment, you will remain a leaseholder like any other apartment owner. This is because your home is a block of apartments, your lease sets out responsibilities for use and maintenance to all shared areas. You will still be responsible for the ground rent and service charge which will include buildings insurance.
How much will it cost?
The amount required does depend on the value of the home you are buying but you should consider the following as a starting point*:
- Reservation fee – this is £500 to reserve the property. This money goes towards the rent and service charge due at completion
- Mortgage valuation fee – your mortgage lender will arrange a valuation of your home for mortgage purposes, to check the property is worth the price you are paying. These costs vary from lender to lender but range from free to £300 - £450
- Mortgage arrangement fee – for some mortgage products, such as fixed rate mortgages, the lender will charge an ‘arrangement’ or ‘application’ fee. These vary depending on the lender; generally the longer the interest rate is fixed for the higher the fee. Your financial advisor will be able to advise you on these when comparing mortgages.
- Independent Financial Advisor – many financial advisors charge for their services. This fee can range from £350 upwards.
- Solicitors fees – these should usually be in the region of £600 to £1000 including Land Registry fees, local search fees and other expenses (known as disbursements) but excluding Stamp Duty (SDLT). You usually pay a deposit and the remainder is paid at completion of the purchase
- Stamp Duty Land Tax (SDLT) – this is a Government tax on buying a home. Your solicitor will be best placed to advise you on this as the fee depends on the value of the property. Alternatively, take a look at the Revenue & Customs website: https://www.gov.uk/stamp-duty-land-tax
- Advance rent and service charge – on completion, Housing Solutions require this to be paid from the date of completion to the end of the month plus one full calendar month. This payment will come from the initial £500 reservation fee you paid.
- Removal cost – hopefully family and friends can help. If you are going to use a removal company make sure you get a number of quotes as costs can vary greatly. You usually pay this on the day you move.
*all prices are approximate, this is a guide and buyers should research the options available to them.
What happens when I see the home I want?
You may have already seen a resale property you are interested in on our website or the Help to Buy website. A member of our Sales Team will be happy to explain anything that you may be unsure of.
After viewing the property, please contact us on 0800 876 6060 or telephone the number on the sales particulars.
You will need to complete our application form which can be found by clicking on the 'Apply' button on the property and you will need to provide the following supporting information:
- Proof of your identity (i.e a full colour copy of your passport or photo driving license)
- Full Equifax Credit Report
- Proof of savings. You will need to have enough savings to cover any deposit your mortgage provider has asked you to pay, as well as savings to cover all the legal and other costs associated with buying a property;
- Proof of your income (pay slips covering the last three months or three years’ accounts if you are self-employed i.e. copies of your SA302’s and your latest P60);
- A letter from each applicant’s employer stating you are in permanent employment, where you work, how long you have been employed at that location and details of your annual salary;
- Bank statements covering the last three months;
- Documents showing details of any loan agreements;
- Credit card statements for the last three months;
- A copy of your rent book, rent statement or mortgage statement for the last six months (if applicable);
- A reservation fee of £500.
All prospective purchasers of resale properties are subject to a financial assessment. The financial assessment is to establish affordability based on criteria set by the Government's Homes & Communities Agency (HCA). This assessment forms part of the application process and must be carried out in order for your application to be considered.
The assessment is carried out by an Independent Financial Advisor, approved by the HCA, and assists all applicants with a guide to the right share level they are able to purchase. The assessment takes into account gross income, bonus and overtime amounts, working tax credits, disability allowance and guaranteed maintenance. It will provide you with details of the maximum level of share you can afford to purchase.
Once your application is complete we will then complete the assessment of your eligibility and affordability to buy the home and the on-going costs of owning a home. We will allocate the property in line with Housing Solutions Allocation Policy.
Allocation of the property
Once we have allocated the property to you, we will issue a Memorandum of Sale (MoS) to all parties involved. The MoS summaries the details of your proposed purchase and confirms the date by which we want ‘exchange of contracts’ (this makes your intention to buy your home a legally binding agreement and allows the seller to finalise their move also). You should aim to exchange contracts within 28 days of the MoS being issued.
You need to act fast and ensure that you have a full mortgage offer in place.
Arranging your mortgage and appointing a solicitor
You will need to speak with an Independent Financial Advisor, bank or building society to make a formal application to apply for a mortgage. You must make sure that you tell them you are buying a share in a shared ownership property. You will need to appoint a solicitor to act on your behalf in the purchase of the property. Your solicitor will:
- Make sure you have everything necessary to help you buy your home quickly
- Check the lease and speak to your mortgage lender as well as the seller’s and Housing Solutions solicitors
- Carry out what are known as ‘searches’. These involve checking the ownership and making sure there are no planning developments (such as new roads) that will affect your home
- Check that all the paperwork and your mortgage are in place in time for you to move into your home
- Deal with registering you on the title deeds after completion
You should make sure you get a quotation of the likely costs before you appoint a solicitor. The costs will include the solicitor’s fee for their work and any expenses (known as disbursements). Its advisable to call a number of solicitors to find out how much their fees are. It is important that you choose a solicitor who is experienced in dealing with shared ownership properties.
Once you have received your mortgage offer you should contact your solicitor to arrange an appointment to sign your contract and arrange for a copy of the mortgage offer to be sent to our Sales Team and our solicitors. Once this has been done, your solicitor will prepare to exchange contracts with the seller’s solicitors. Exchange of contracts sets the day for completion. You are then legally bound to buy the property and the seller is legally bound to sell.
On the completion day, your mortgage lender will send your solicitor the money to buy your home. Your solicitor will then pass that money and any additional money you are adding, onto the relevant parties’ solicitors. Once this is done, you can arrange to collect the keys from the seller.
On completion day, please ensure that you get all the keys and any manuals or instructions for the appliances from the seller as Housing Solutions will not have any of these documents or keys. Make sure that you read all of the meters and contact the suppliers with your readings so that they can be transferred into your name, as you will be responsible for all utility bills.
Once the sale has completed, your solicitor sends Housing Solutions any monies due to them. This will include your rent and service charge from the day of completion to the end of the month plus the following month. On receipt of this our Finance team will set up your account and will contact you to set up your direct debit for paying your future rent and service charge payments.
After you move into your home we have a dedicated Customer Contact Line which can answer many enquiries or put you in touch with the relevant teams if needed. They can be contacted on 0800 876 6060.
Your responsibilities and on-going costs
Repairs – you will be responsible for all repair and maintenance to your property, just like an owner-occupier. You will need to make sure that you allow a sufficient budget for the upkeep of your property.
Services – you will be responsible for all utility bills such as gas, electric, council tax, water, contents insurance etc. You should include these costs in your monthly budget.
Mortgage repayments – your monthly mortgage repayments will depend on the size of your mortgage and interest rates.
Rent payments – you will pay an affordable rent on the share of the property you do not own. Rents increase on April 1 each year, details of how rent increases are calculated are set out in your lease. Rents are paid monthly in advance by direct debit.
Insurance – Housing Solutions will insure the building and recover the cost of these through service charges. You will need to insure your own personal possessions and the contents of your home from the date that you move in.
Service charges – in some cases, particularly if you buy an apartment or maisonette, you may have to pay ground rent and services charges, which will be set out in your lease. Service charges normally cover the costs of maintaining the shared parts of the building, any gardens and car parking areas. Housing Solutions will give you details of these before you buy.
How do I buy more shares in my home?
A year after you buy the property you will be able to buy more shares in your home if you wish. You must buy at least 10 per cent each time you choose to increase your share. This is called staircasing. The value of any additional shares you buy is based on the market value at the time you buy the shares.
If you choose to staircase to 100 per cent the lease agreement between us will no longer exist and we will transfer the freehold title to you, unless you have bought a flat from us and then you will continue as a leaseholder. If you increase your share in the property your rent will decrease proportionally.
Some local authorities will restrict how much you can buy, especially in rural areas so the homes are always available to local people. We will let you know about any restrictions before you buy.
Can I make alterations to my home?
You must get written confirmation from our Home Ownership Team before you carry out any work. You may also need to get approval from your mortgage lender, as well as any legal permission you need, for example, planning permission or building regulations approval.
Can I keep pets?
Your lease will tell you if you can keep pets in your home. If you live in a house there are not usually any restrictions. If you live in an apartment you are unlikely to be able to keep a pet.
Can I sell my property?
You can sell your home at any time. Your lease says that you must give us up to eight weeks to find a buyer if you choose to sell. If we cannot find someone within this time, you can then sell your share on the open market. Please contact us for information on what you need to do before you contact an estate agent to sell your home for you.
Can I sublet my home?
No. Government money goes into affordable home ownership schemes, so we have to control who benefits from it. Also, if you have a mortgage on your home, your lender will probably be concerned if you let it to someone else.
What happens if I die?
If you hold the lease in a single name or as joint tenants, the shared ownership lease can be passed on or sold in line with your will or the law of intestacy (dying without making a will). If you hold a joint tenancy, the lease automatically passes to the survivor.