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

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

May 16, 2023 141 likes •415 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

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SLIDE 1

Help to Buy

Housing and Development Consultants

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SLIDE 2

Help to Buy

Housing and Development Consultants

 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

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SLIDE 3

Help to Buy

Housing and Development Consultants

 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?

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SLIDE 4

Scope of Help to Buy 1

Housing and Development Consultants

  • £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
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SLIDE 5

Scope of Help to Buy 2

Housing and Development Consultants

  • 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

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SLIDE 6

Principles of the scheme

Housing and Development Consultants

  • 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)

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SLIDE 7

Advantages for the developer

Housing and Development Consultants

  • 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
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SLIDE 8

Advantages for the consumer

Housing and Development Consultants

  • 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

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SLIDE 9

Administrative Process

Housing and Development Consultants

  • Registration as a provider
  • Conditions precedent
  • Administration Agreement
  • Identification of properties
  • Approval by Help to Buy Agent
  • Exchange, completion and cash
  • Post-sales administration
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SLIDE 10

Registration as a developer

Housing and Development Consultants

  • 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

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SLIDE 11

Which properties are eligible?

Housing and Development Consultants

  • 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,

  • ffices to flats are)
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SLIDE 12

Which individuals are eligible?

Housing and Development Consultants

  • 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
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SLIDE 13

Finding a property

Housing and Development Consultants

  • 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

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SLIDE 14

Valuations, incentives, mortgages

Housing and Development Consultants

  • 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

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SLIDE 15

Role of Help to Buy agents

Housing and Development Consultants

  • 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
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SLIDE 16

Arrangements for London

Housing and Development Consultants

  • 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
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SLIDE 17

The role of the purchasers’ solicitor

Housing and Development Consultants

  • 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
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SLIDE 18

The Conveyancing Process

Housing and Development Consultants

  • 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
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SLIDE 19

Post-Sales Administration

Housing and Development Consultants

  • 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
  • ff 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)
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SLIDE 20

What happens if properties are repossessed?

Housing and Development Consultants

  • 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

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SLIDE 21

Strengths and weaknesses of Help to Buy

Housing and Development Consultants

  • 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)

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SLIDE 22

Likely take-up

Housing and Development Consultants

  • 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
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SLIDE 23

Help to Buy 2

Housing and Development Consultants

  • 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

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SLIDE 24

What do commentators think?

Housing and Development Consultants

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SLIDE 25

What do you think?

Housing and Development Consultants