NewBuild HomeBuy explained

More commonly known as shared ownership or part-rent, part-buy, NewBuild HomeBuy is designed to help people who cannot afford to buy the home they need. Octavia are building a number of properties for New Build HomeBuy over the next few years.

It is a part buy, part rent scheme which lets you buy a share of from 25-75 per cent of the value of your home. You then pay a reduced rent on the part you don’t own to Octavia Housing.

Buying your first home is a big commitment so you should always consult a financial adviser and use a solicitor.

Am I eligible to buy a NewBuild HomeBuy home?

In most instances, key workers, existing council/housing association tenants and people registered for housing with the council, are given priority, but other people can also apply for shared ownership. You must also meet the following criteria:

Only people who cannot afford to buy a home outright on the open market are able to benefit from this scheme.
Your income is enough to cover your mortgage, rent and service charges per month.
You will need to have some savings to cover the initial purchase costs.
You have not had any arrears of rent or mortgage in the past six months.
You have a good credit history with no record of County Court Judgements or loan defaults registered against you in the past six months. Any previous debts should be fully paid and a Certificate of Satisfaction of Debt provided.

What will I own?

You will buy a home on a lease, which, for new homes usually lasts for 99 to 125 years. You will own a part of your home and pay rent on the outstanding part at a reduced rate.

If you are buying a second hand property, the length of your lease will be based on the number of years remaining since the original lease was first issued. If the property is a house and you later decide to buy it outright, you will normally then be given the freehold.

You will have to read your lease carefully to check what conditions apply as you will have to abide by the terms of your lease.

Can I buy more equity in my home?

Most leases state that after one year, you are able to purchase more equity in your home, or even purchase it outright. However, if you are not buying your property directly from Octavia Housing (for instance if you are buying a NewBuild HomeBuy home from an existing leaseholder of Octavia Housing), you may purchase more equity in your home after three months.

Some Leases may only allow you to purchase up to a specified percentage of the equity in your home. However, if this is the case it will be clearly stated on our sales material for the property.

What are the other ongoing costs?

Mortgage payments
If you have taken out a mortgage to buy your home, you will need to pay a monthly mortgage payment.

Rent
For the remaining part of the home that you do not own, you will need to pay a monthly rent to Octavia Housing. With some properties, usually flats, there will also be a service charge payable to cover the cost of maintaining the exterior of the building and any communal areas.

You only pay rent on the part of your home that you do not own, which means that the more equity you own, the less rent you pay. And, if you should decide to purchase your home outright in the future, then there will not be any rent payable.

If you tell us that you wish to buy additional equity in your home, we will instruct an independent valuer from the Royal Institution of Chartered of Surveyors to determine its value at that time, which you will be charged for. The price you pay for any additional equity will be based on this valuation.

Service charges
The service charge is payable even if you should decide to buy your property outright in the future.

Buildings insurance
We have to insure the building, which we will charge you a monthly rate for but usually this is included in the services charge.

Other considerations
Even though you will not own the whole property, you will still be responsible for your household bills.

What are the initial costs involved in the purchase of my new home?

The costs of buying a NewBuild HomeBuy home are the same as buying a house on the open market. We recommend that you have a minimum of £3,000 in savings before proceeding with any purchase and below, we have tried to give you some idea of what the likely costs will be:

Holding / administration fee
When you view one of our properties, you will have the option to pay a holding/administration fee of £250 to secure the property of your choice. If we are unable to offer you your choice of property, your cheque will be returned to you.

If you accept an offer of a property from us and then do not proceed to complete your purchase, we will retain this fee to meet our legal and administrative costs.

Survey and valuation report
When you are buying a property, it is always advisable to have a survey report carried out.

Your mortgage lender will want to carry out a survey of the property to make sure that it is in a reasonable condition and is worth the money that you are about to pay for it.

If you are buying a new property, this will normally be a standard mortgage valuation report. If you are buying a second hand shared ownership property, you will require a more extensive survey report, normally a Homebuyer’s Report and valuation. You should allow between £175 and £450 depending on the property you are buying and the type of survey you decide to have.

Legal fees
You will need a solicitor to act on your behalf. Fees vary but generally, you should allow around £500 to £850. Always obtain a quotation from your solicitor before proceeding and remember to ask them about any disbursements (additional costs for Land Registry searches etc).

Stamp duty land tax
All properties over a certain value are subject to stamp duty land tax and your solicitor will advise you of the current rate at which this is payable and how it should be paid.

Deposit on Exchange of Contracts
When you exchange contracts on your new home, we will ask you to pay a further £250 deposit. This will be added to any holding / administration fee you have already paid to form a total deposit on exchange of contracts of £500.

This is not an additional cost. When you complete your purchase we will deduct any rent and service charge payable and the remainder will be deducted from the purchase price.

Some mortgage lenders may give you a mortgage for the full value of the equity share you are buying, subject to status. However, you may be required to fund the first 5% of the purchase price.

Can I sell my home?

Yes - whenever you choose just like any other home owner. To make sure that your home can then be made available to others who cannot afford to buy outright, we will, for a short period, have the right to find a buyer for your home.

We charge a small fee for this service but it is less than you would pay an Estate Agent.

If we are unable to find a purchaser within the period specified within your lease, then you are free to make your own arrangements to sell your home.

We will instruct an independent valuer from the Royal Institution of Chartered of Surveyors to determine the new value of your home if you decide to sell, which you will be charged for. The price you sell your equity for will be based on this valuation.

How do I apply?

Contact our home ownership team to discuss any of the options and an application form.

As demand often exceeds the number of properties we have available, it is possible that we may be unable to help you even if you qualify. However we will always tell you of the current position.

Most shared owners are first time buyers, but it is not available for people who can afford to buy a home outright.