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Help to Buy Housing and Development Consultants Help to Buy Scope - PowerPoint PPT Presentation

May 16, 2023 •141 likes •410 views

Help to Buy Housing and Development Consultants Help to Buy Scope of Help to Buy 1 Scope of Help to Buy 2 Principles of the scheme Advantages for the developer Advantages for the consumer Process Registration as a

  1. Help to Buy Housing and Development Consultants

  2. Help to Buy  Scope of Help to Buy 1  Scope of Help to Buy 2  Principles of the scheme  Advantages for the developer  Advantages for the consumer  Process  Registration as a Provider  Which properties are eligible?  Which individuals are eligible?  Finding a property  Valuations, CML, mortgage requirements Housing and Development Consultants

  3. Help to Buy  Role of Help to Buy Agents  Arrangements for London  The role of the purchasers’ solicitor  Conveyancing process  Post-sales administration  What happens if properties are repossessed?  Strengths and weaknesses  Likely take-up  Help to Buy 2  What do commentators think?  What do you think? Housing and Development Consultants

  4. Scope of Help to Buy 1  £3.5billion over 3 years (April 2013 to March 2016) – more than the HCA ADP for 2011 to 2018  74,000 estimated completions (so £47,300 each, more than double the grant rate per unit for the ADP)  Applies to all newbuild properties under £600k where developer has registered  Applies only to England  Property sales must be complete by March 2016  No additional property quality standards  Equity loan scheme Housing and Development Consultants

  5. Scope of Help to Buy 2  To be introduced in January 2014 (although applications can be made now)  Primarily aimed at second-hand properties although new properties are eligible  Value limit of £600k  Mortgage guarantee scheme – insurance policy for slice of equity between 80% and 95%  Estimated £12bn guarantees funding £130bn of mortgage finance  Widely criticised by economists for potentially promoting a property bubble Housing and Development Consultants

  6. Principles of the scheme  Equity loan scheme with HCA providing 20% of the finance  Customer provides 5%, mortgage lender 75%  Loan is interest free for first 5 years, thereafter 1.75% p.a. (index-linked)  Any developer can register – minimum scheme size is 1 unit, no maximum  Designed to meet developer’s needs  Aimed mainly at first time buyers (although second- time buyers also eligible) Housing and Development Consultants

  7. Advantages for the developer  Gives access to first-time buyers (who only need a 5% deposit rather than up to 20%)  Minimal procedural and property requirements  Works with existing mortgage criteria (NHBC, CML incentives rules, etc.)  Not restricted only to large developers  No cash input required (unlike FirstBuy)  No continuing contract with the buyer  Allows increased prices (or reduced discounts Housing and Development Consultants

  8. Advantages for the consumer  Allows access to new homes with 5% deposit (rather than up to 20%)  No additional requirements other than normal mortgage criteria  Simple qualification criteria – designed simply to prevent outright abuses of the system Housing and Development Consultants

  9. Administrative Process  Registration as a provider  Conditions precedent  Administration Agreement  Identification of properties  Approval by Help to Buy Agent  Exchange, completion and cash  Post-sales administration Housing and Development Consultants

  10. Registration as a developer  Any developer can register  Registration only applies to properties for sale on the open market (i.e. not shared ownership)  Simple factual form with minimal programme details  Application is to HCA at Maple House  Housing associations register as with any developer  Developer must sign Administration Agreement – effectively the HCA/developer contract  Conditions precedent mainly concern money-laundering and Consumer Credit Licence Housing and Development Consultants

  11. Which properties are eligible?  Any newbuild property in England sold for less than £600k (provided developer is registered)  Must have NHBC, Premier, or equivalent  Sales must be completed by March 2016  Homes developed to meet s.106 not eligible  Must have planning and building regulations consent  Rehabilitated properties are eligible, but must not have been previously occupied (so house conversions are not eligible, offices to flats are) Housing and Development Consultants

  12. Which individuals are eligible?  First or second-time buyers only  Must be principle residence (so second-time buyers must sell first home)  Buy-to-let investors and second home buyers not eligible  No absolute income rules, but applicants must be able to afford mortgage (maximum of 45% of net income available for housing costs)  No local connection rules, and no local authority involvement  Assessments made by Help to Buy agents Housing and Development Consultants

  13. Finding a property  Developers offer properties through Help to Buy on the open market  Customers access them direct  Also advertised on Help to Buy Agents Websites  Customer reserves plot and pays reservation fee (must not be >£500)  Housebuilder sends Property Information Form to Help to Buy agent for approval Housing and Development Consultants

  14. Valuations, incentives, mortgages  Valuations must equal property sale price  Customer must contribute 5% (minimum) deposit  HCA contribute 20% (maximum) as equity loan  Developer must comply with CML Disclosure of Incentives form (and incentives must not > 5% in any event)  Part-exchange properties must not be involved in the process  Mortgage must be repayment; interest only is not permitted Housing and Development Consultants

  15. Role of Help to Buy agents  Help to Buy Agents each administer separate area of England – list on the HCA Website  Generally the same as Homebuy Agents (except in London)  Role is to approve each transaction, approve each purchaser, and process payments (through IMS)  Also HtB Agents disseminate information about the scheme and may advertise properties for developers  Paid by the HCA and not developers Housing and Development Consultants

  16. Arrangements for London  London arrangements follow replacement of Housing Options (Metropolitan and L&Q) as Homebuy Agent by SharetoBuy in April 2013  As GLA SharetoBuy do not have resources to run Help to Buy, responsibility for administration is delegated back to the HCA  HCA has delegated responsibility to Moat and Lea Valley Homes (part of Aldwyck) although neither are based in London  Moat responsible for 11 South London boroughs, Lea Valley Homes for the remaining 21  Arrangement is temporary to be reviewed in April 2014 Housing and Development Consultants

  17. The role of the purchasers’ solicitor  Purchaser’s solicitor has crucial role  Effectively acts as the HCA’s solicitor  Carry out checks on the property similar to normal conveyancing checks  Register HCA’s equity loan as a second charge  Generally verify all details (such as purchaser’s identity)  Generally liaise with the Help to Buy agent Housing and Development Consultants

  18. The Conveyancing Process  Property Information Form submitted to Help to Buy Agent by developer  HtB Agent issues Authority to Proceed (valid for 3 months) to purchaser’s solicitor  Buyer instructs IFA to make full mortgage application  Valuation carried out and mortgage approved  Solicitor applies to HtB agent for approval to exchange  Solicitor exchanges contracts (must not be >6 months before completion)  Sale completed and charge registered in HCA’s favour Housing and Development Consultants

  19. Post-Sales Administration  Post-sales administration administered by Post-Sales Agent on behalf of HCA  Equity Loan must be repaid on sale of property or after 25 years. Repayment is for 20% of value (but some may be written off if prices have fallen)  Rental fee = 1.75% of loan from year 6, increasing by RPI + 1% thereafter  Customer can staircase at any time voluntarily  Further advances not allowed  No redemption fees (other than admin costs) Housing and Development Consultants

  20. What happens if properties are repossessed?  If properties are repossessed, pecking order is mortgage lender first, HCA second, customer third  So if a £200k property falls in value to £160k, mortgage lender will get £150k (75%), HCA £10k, customer 0  Similar rules exist if properties sold whilst in negative equity  HCA will not chase customers for the write-off amounts as long as they have complied with mortgage terms Housing and Development Consultants

  21. Strengths and weaknesses of Help to Buy  No direct investment in housebuilding  Removes high deposit block for first time buyers  Uses existing newbuild sale mechanisms  No affordable element as such  May increase housebuilding in some areas  Almost certain to increase prices (or reduce discounts)  To some extent self-financing (through repayments tied to market movements ) Housing and Development Consultants

  22. Likely take-up  Estimated 10,000 reservations and 2,000 completions to September 2013  Differing pattern of regional take-up (mainly outside London)  Too early to say  Help to Buy 2 may be a competitor for Help to Buy 1 Housing and Development Consultants

  23. Help to Buy 2  Launched at Conservative Party conference Sept 2013 but officially starts January 2014  No HCA or social housing involvement  Mainly state-owned banks participating to date  May not be obvious to customers whether a property is within Help to Buy system or not Housing and Development Consultants

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