What is Social HomeBuy?
Social HomeBuy is a brand new Government Grant Funded scheme which enables tenants to buy their current home. Those that can’t afford to buy outright will be able to buy shares of at least 25%. They will pay a reduced rent of 2.75% (reviewed annually) on the share that remains with Mercian Housing Association and benefit from any increase in the value of their share.
The scheme also provides a discount to help reduce the cost of purchasing. The amount being based on the current Right to Acquire Discount and the size of the share being purchased.
The aim
We want to give as many people as possible the opportunity to get on the housing ladder. We believe that this scheme could make home ownership a reality for many of Mercian tenants. And we will use the money we get from selling shares to provide new homes for rent, so that we can give even more people the chance of an affordable, secure home.
Am I eligible?
We are only able to accept applications from assured or secure tenants who have been a tenant in local authority or housing association accommodation for at least two years starting before 18 January 2005. For those that became tenants after 18 January 2005 the qualifying period is 5 years. In addition you must not have breached your tenancy agreement for 2 years. This includes having arrears of no more than a month on your rent account for the last two years and not being subject to a possession order.
It may not be possible to sell shares in a small number of our properties because we acquired them on the condition that they remained affordable rented accommodation. We will have to check whether your property is eligible as part of the application process.
Sheltered schemes and specially adapted properties are excluded from the scheme and we have limited funding so reserve the right to prioritise the properties sold.
Can I afford it?
This will depend on your income levels and the value of your home. You can get an idea of how much your home is worth from your local estate agent, property papers and the internet. You must be able to afford to buy a 25% share in your home. As a rough guide, we would expect your overall housing costs (rent, mortgage and service charges) to represent no more than a third of your income.
You will also need to have at least £3,000 in savings to cover your legal costs and survey fees.
What share, what discount?
You must buy a share of at least 25% but we will expect you to buy the biggest share you can afford, taking into account your discount. Over the 25% the share can be any multiple of 10% right up to and including 100%. Your lender will give you advice on how much you can afford to buy under the scheme.
The discount on offer depends on the Local Authority where you live and can range from £9,000 to £13,500. If you buy 75% of your home you will get 75% of the discount, if you buy 25% then you will get 25% of the discount. It has been recently confirmed by the Government that a discount wil also be available for all future shares purchased.
Once you’ve bought, you will be able to buy more shares if you want to – although you must buy at least 10% each time. This is called 'staircasing'.