Buying an affordable home
Affordable housing helps people who would like to own their own home but cannot afford to buy a property on the open market.
Affordable housing schemes
The following affordable housing schemes are available in the Preston area:
- Shared Ownership
- Discounted Market Value
- Help to Buy schemes
Shared Ownership allows you to purchase a percentage of a property rather than buying 100% outright. The property might be on a new build development or a property being resold as a shared ownership property.
Depending on the conditions of the scheme you could start by buying as little as a 1% share of the property. Often purchasers can initially buy between 25% and 75% of the property, but you can buy more shares in the property which could eventually lead to you owning 100% of the property. Some but not all schemes allow this.
You pay rent on the share of the property you don't own.
The property can be purchased with a mortgage and savings. The remaining shares are usually owned by a housing association and an affordable rent is charged on this share.
Who can purchase a Shared Ownership property?
You will need to meet certain criteria to be eligible to buy a Shared Ownership property. The criteria can vary on each scheme but will take into account your annual household income (household must earn less than £80,000 a year) and you will have to pass a financial assessment demonstrating that you are financially able to purchase and support the monthly costs. Some developments require you to have a local connection. This will be outlined in the individual eligibility criteria.
How can I find where there are shared ownership properties for sale?
To find shared ownership properties for sale check the national property websites or the Help to Buy website.
Can I buy additional shares?
Yes. You could increase the share you own in your property at any time after you complete your purchase. This is known as 'staircasing'. As you increase your share in the property, the amount you pay in rent will decrease. Before you purchase make sure you check the terms about 'staircasing'.
Can I sublet the property?
No. You are unable to sublet your entire property, however you could let out a room under the GOV.UK - rent a room scheme.
Several new build developments in the Preston area include a number of properties that are sold at a discount off the market value. This lets you buy 100% of the property but at a reduced price. The discount available is usually either 20% or 33% of the open market value.
Who can buy a discounted property?
The exact criteria to buy a discounted property can differ between schemes but generally includes the following criteria:
- You are unable to afford a property on the open market, (total household income less than 45k)
- Must have a local connection to Preston area.
- Be a first time buyer or if you are currently a home owner (or named on the mortgage) you can apply but must sell the property (or name removed) before you can complete the purchase of a discounted property.
What is a local connection?
In order to buy a discounted property you must have a local connection to Preston, this can be a person who;
- Is a resident in the local area; or
- Is permanently employed in the local area and reasonably required to be housed there in order to maintain that employment; or
- has accepted an offer of permanent employment in the local area and reasonably requires to be housed there in order to take up that employment; or
- has a long standing connection to the local area and is in need of family support from relatives living within the local area or has relatives living in the local area who reasonably require support.
How do I find a discounted property?
New build discounted homes are sold and advertised directly through the developer. The sales offices at the schemes will have the paperwork you will need to complete in order to see if you qualify for the scheme.
Search on property websites for new build or resale discounted properties or contact Housing Advice for information about which developments have discounted units available.
Can I buy a bigger percentage of the property over time?
No. With the discounted scheme you cannot buy the discounted amount back.
Can I sublet the property?
No. You are required to use the property as your only or principal residence. However, you are able to let out a spare room under the GOV.UK - rent out a room scheme subject to the consent of your mortgage provider.
When can I sell?
There is no restriction on how long you have to live in the discounted property before you can sell it.
What happens if I want to sell the property?
The discount will remain with the property throughout all subsequent sales. If you want to sell the property, you would need to sell at a discounted price to a person who fits the eligibility criteria. The Council will set the discounted price with reference to three valuations on the property that the buyer provides. You must inform the council before putting the property up for sale and when you have a buyer in place.
Can I part exchange?
No. Whoever buys the property must live in the property as their only or principal home, so the property cannot be sold on a part exchanged basis.
Help to Buy schemes
Current Government backed Help to Buy schemes are listed below:
Equity Loan scheme
Available for home owners or first time buyers wishing to purchase a new build home up to the value of £600,000.
The Government loan can be up to 20% of the value of the property, which means if you pay a 5% cash deposit, you will only need to borrow 75% of the value from a mortgage lender. You won't have to pay loan fees for the first five years of owning your home.
The loan is repaid as a percentage, once the property is sold. Therefore, if you borrow 20% of the value of the property, you will repay 20% of the sale value.
How to apply
For more information on eligibility and how to apply please visit the Help to Buy website - Equity Loans.
To help you save for a deposit you can open up this ISA where the government will top up your savings with a payment of up to £3,000 when you purchase a qualifying property.
For more details visit GOV.UK - Affordable Home Ownership Schemes.