Affordable Housing scheme terms and conditions
Applicants may apply for a property which has one room more than they need. For example, a single person or a couple can apply for a two bedroom property.
If more than one applicant is applying for a property (even if the applicants are not married, long term partners or carers), both names must be on the mortgage to ensure that they remain committed to their purchase and do not under occupy a property on the scheme (e.g. 2 friends or a brother and sister applying to live in the same property).
Priority for the allocation of accommodation will be given to an applicant where a Compulsory Purchase Order has been served on their current home, provided the property is situated within the Borough. The applicant will be required to provide proof of the Order.
Further considerations are as follows:
- Two people requiring re-housing as individuals (i.e. not as a couple) for a 2 bedroom property would take priority over 1 individual or a couple with no dependents applying for a 2 bedroom property at the same time
- One bedroom will be allocated to children of the same sex (maximum of 2 per room).
- One bedroom will be allocated to children of the opposite sex up to the age of 10 years old (maximum of 2 per room).
- An additional bedroom will be allocated to an applicant who is 20 weeks pregnant or more. The applicant will be required to provide a copy of her Maternity Certificate (Mat B1) to confirm the pregnancy.
- Where applicants cannot be separated by the methods outlined above, priority will be given to the applicant who registered first on the Affordable Housing Waiting List.
- In cases where demand for a property is low and the Council risk losing their nomination rights, the property (regardless of size or type) may be offered to any applicant on the Affordable Housing Waiting List, subject to a full financial assessment. This assessment will take into account your income, capital investments, savings and the amount of mortgage your bank or building society will agree to lend you.
- In order to confirm your eligibility, we will multiply your gross annual income by 4 if you are a single applicant or by 3.5 if you are making a joint application. The Council cannot allow you to borrow more than this, even if even if a bank or building society is prepared to lend you more.As long as this figure plus any savings, equity, investments etc is less than the full market value of the property you will be eligible. For example:
- Property price (full market value before the discount): £100,000.
- Property price (after a 25% discount): £75,000.
- Single applicants gross income: £20,000 per annum x 4 = £80,000 (the gross income will be multiplied by 3.5 if it is a joint application).
- Savings: £19,000. Total:£99,000 - the applicant is eligible as this figure is less than the full market value.
Under the Home ownership / Discount market housing, what happens if I wish to sell the property?
This is a long term scheme as, on subsequent sales, owners will have to sell to prospective buyers with the same discount percentage that they received when purchasing the property.
You may sell the property at anytime but you must notify the Principal Strategy Officer - Corporate Policy of your intention to sell. At that time, you will need to obtain three current written valuations (less than one month old) from reputable local estate agents. These will be assessed by the Council, together with records of recent sales of similar properties in the locality, in order to establish the open market value of the property. In the event of a dispute, the open market value will be decided by an independent surveyor whose decision will be final. The independent surveyor's fees in respect of any assessment must be paid for by the Council and the owner equally.
Once the value has been agreed, your property will be advertised for sale on the Affordable Housing Webpages for a minimum period of ten weeks (this will vary depending upon the legal agreement attached to each development - please ask the Principal Strategy Officer - Corporate Policy for details) at the market value less the level of discount obtained through the original sale. The property will then be offered to the qualifying person or qualifying household identified as having the most priority on the Affordable Housing Waiting List.
If a buyer has not been found within the timescales, you will be entitled to sell the property on the open market at market value through a reputable estate agent, subject to the restrictions on sale price.
Important: Where owners are allowed to make sales on the open market at market value, they are required to pay the Council the proportion of the sale equal to the level of original discount upon completion (please contact the Principal Strategy Officer - Corporate Policy if you decide to reduce the sale price at anytime during marketing, as this could affect the amount that you have to pay the Council upon completion). They will also have to pay for all costs/charges of the Council to remove the affordable housing restriction (approximately £300 plus a £60 sealing fee). The open market value of the property will be determined by the Council as above.
In cases of negative equity, the owner will still be required to sell the property at market value and pay the Council the proportion of the sale corresponding to the original discount percentage.
Please contact the Principal Strategy Officer - Corporate Policy if you have any questions or require further information.
Under the Shared ownership / Shared equity scheme, what happens if I want to buy more shares in the property?
It may be possible for you to buy more shares and own a larger percentage of the property. This is called staircasing - please contact the housing association (joint owner of your property) and they will advise you accordingly.
Under the Shared ownership / Shared equity scheme, what happens if I wish to sell the property?
You must contact both the housing association who own a share of your property and the Principal Strategy Officer - Corporate Policy and tell them of your intention to sell. The housing association will send you an application form to complete and details of the sales process. Please note, the sales process may be different for each scheme. However, your solicitor should have explained the sales process to you at the time of purchase.
What is negative equity?
Property prices vary according to market conditions and the value of your property may go down as well as up. This could mean that your mortgage exceeds its market value. This is called negative equity, a term commonly used to describe the situation of having a home that is worth less than your mortgage.
There is no easy solution to the problem of negative equity. You may want a bigger house or need to move to a different area for employment reasons. Negative equity becomes a problem if you want to sell or are forced to sell your property. The real concern over this is that if you had to sell your property, you would still owe money on your mortgage.
If you are in negative equity and need to sell your property, contact your mortgage lender as soon as possible and ask if there are any schemes they run to help with negative equity.
Some lenders may have packages for their existing borrowers but usually only if you have a good payment record. For example, there may be a maximum amount of debt on your old mortgage that can be included in your new mortgage. This is not necessarily a cheap option as the interest rate may be higher and there may be a fee. You are also putting your new home at risk of repossession if you cannot keep up the total mortgage payments on the new home. Payments will be larger than normal because of the shortfall having been included.
Remember, you will need to pay solicitor fees and the costs of moving as well.
The Council cannot accept any liability if you find yourself in negative equity after you have purchased a property on this scheme.
Death of the owner
If the owner of an Affordable Housing Unit dies, their heirs will be allowed to continue to live in the property, providing that this was their principal or main home at the time of the owner's death. They will be liable under any covenants existing for the original owner.
Where the Affordable Housing Unit is not the principal or main home of the heirs, the property must be sold under the terms of the procedures outlined above.
Where the property is subsequently sold, the normal resale procedures outlined above will apply.