The shared ownership scheme is a first-time buyer scheme provided by the Government to help you get on the property ladder quicker. With Heylo housing shared ownership properties you will essentially own part of the home and pay rent on the side you don’t own.
You can then increase your ownership in the shared ownership property by buying more shares with a shared ownership mortgage or with cash.
Heylo Housing shared ownership offers first time buyers and home movers a version of shared ownership (part buy, part rent) where they can buy a property without a mortgage and where clients buy either an existing property (via its Your Home scheme) or a new build (via its Home Reach scheme). Additionally, when you come to sell up, Heylo allows you to take 75% of the value of any increase of the property for the share which you didn’t own.
As with all shared ownership, there are some issues but in general, we weren’t able to find any negative review in regards to the Heylo housing shared ownership team.
Here are some things you should watch out for with the Heylo housing shared ownership.
- Is the rent fair market value on your Heylo housing shared ownership property
- Selling your Heylo housing shared ownership property might be very hard
- What are the conditions for staircasing on your Heylo housing shared ownership property? Are there any costs involved?
- Is your shared ownership property located amongst other housing association properties?
- What is the rate and service charge on your Heylo housing shared ownership property and how often will it increase and by how much?
- To have an annual maximum household income of £80,000 outside London
- To have an annual income of £90,000 in London
- Be a first-time buyer
- Be a UK resident or an EU citizen or someone with the right to remain in the UK
- To have a monthly income which is at least 65% more than the monthly cost of the shared ownership property you intend to purchase. This, of course, depends on the price of the property and how much you want to purchase(which will directly affect the rent you pay)
- Have a minimum deposit of 10% of the selling price of the property
- Have ‘good credit’
- Be able to satisfy ‘typical affordability criteria’ such that it’s clear you can afford the home you wish to buy, all outgoings considered
- Be in permanent employment, have pension income or similar
- Not have been bankrupt or have any outstanding bad credit such as CCJs
- On the day of purchase, with the Your Home scheme, Heylo has to have an investment of at least £100,000 of the unpurchased property value; but NB if the full value of the property is less than £100,000 then Heylo has to have a minimum 50% of the property’s value.
- On completion, the property you’re buying must be your main and only residence, although you can be a property owner at the time you apply.
- You cannot use the scheme as an investor or if you are looking to buy to let.
For the Your Home scheme (existing property) by Heylo, the property must:
Be of traditional construction;
Be immediately inhabitable and of good habitable condition;
Be second hand (at least one year old and have been lived in);
In either England or Wales;
Not be sold at auction; and
If you want a brand new home, you should use the Home Reach scheme.
Household incomes can be derived from employment, self-employment, pensions and maintenance payments including Tax Credits and benefits.
You have to pay Heylo Housing £120 per year for this (at the time of going to press), this is payable monthly in advance.
Under the Your Home scheme you are charged £16.02 monthly in administration fees which will have been included in the rental figure given to you.
Under the Home Reach scheme you are charged £18.60 monthly in administration fees which will have been included in the rental figure given to you.
Management company service charges (only if applicable)
For certain properties, if there is an existing management company which looks after them and charges service fees for doing so, then Heylo Housing passes these charges directly onto you.
Heylo Housing recommend that, in addition to your deposit funds, you have at least £4,000 and possibly as much as £6,000, depending on the stamp duty you are liable to pay, set aside to cover costs.
These are fixed at £1,200 (incl VAT) for freehold properties and £1,800 (incl VAT) for leasehold properties for either scheme.
In the case of new builds, this covers Heylo Housing’s affordability assessment, application processing and legal fees for setting up your contract.
In the case of existing properties, this also covers the cost Heylo Housing incurs when buying the property you’ve selected.
You have to instruct conveyancing solicitors to carry out your conveyancing with Heylo on your behalf.
Heylo offer their own panel of solicitors for this purpose, picked because of their wealth of experience with, and understanding of, shared ownership.
Heylo Housing require you to buy your required property searches (click to find out more) through them and charge you ‘in the region of £500’. The exact price can vary as it is calculated on an individual property basis.
Under the Your Home scheme, you are only required to get a basic RICS valuation to establish the value of your property, however for your own peace of mind, you may wish to get more in-depth defect survey such as a RICS HomeBuyers Report.
Minimum 10% deposit on exchange
You have to pay a minimum of 10% of the selling price of the property as a deposit on the point of exchange. You can opt to buy a larger percentage of the property at the outset; in this case, you pay the remainder (minus the 10% you’ve paid at exchange) at the point of completion.
On completion, Heylo purchases 100% of your property and sells you your share at the same time.
Rent on completion
You have to pay your first instalment of your monthly rent at the point of completion – this is the rent for the portion of your property which you do not own. You must pay the rent covering the time between your completion day and the end of that month PLUS the next full month.
This rent is charged at 4.89% of the value of the remaining portion you don’t own and this increases with the Retail Price Index (RPI) plus 0.75% each year. If RPI is zero or negative your rent will increase by 0.75%.
Note that payments on your landlord’s share are linked to inflation (not interest rates) and Heylo Housing claims that this means they should more closely match your household income over the medium and long term.
Can you use a mortgage when buying a Heylo home?
Yes you can. You have to have funds for the minimum 10% deposit required but you can also use mortgage funds to enable you to buy a larger initial share of your property.
What are the downsides of the schemes?
Unlike standard shared ownership, you have to pay a minimum full 10% deposit on the whole of the purchase price. This compares to a much smaller deposit of 10% of the percentage share you are buying for standard shared ownership.
For the new build scheme (“Home Reach”), you are restricted to buying new builds which are sold at a discount to prevailing market rates for an area and from organisations which have established a relationship with Heylo Housing.
There are other nuances which accompany shared ownership in general such as the fact that the accompanying conveyancing, whether for the initial purchase or for subsequent staircasing, is more expensive than for normal purchases.
How do you proceed if you want to use Heylo Housing?
Apply to Heylo Housing who give you a decision in principle, (effectively this details Heylo as a cash buyer for the entire purchase price you’ve proposed).
You use the Your Home scheme if you wish to buy an existing property on the open market and negotiate with the estate agent or vendor. Once your offer has been accepted, you should instruct your solicitor, then you contact Heylo, book your RICS valuation (or RICS HomeBuyer Report – see above) and pay your £1,200 product fee.
You use the Home Reach scheme to buy a new build, you find your discounted property (must be minimum 25% discount from prevailing market prices) by consulting Heylo about eligible properties in the area you wish to buy in – you may also find that new build developers themselves advertise that they’re working with Heylo) then put in your offer and negotiate with the developer over price. Once your offer has been accepted, you should instruct your solicitor, then you contact Heylo, book your RICS valuation and pay over your £1,200 product fee.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.