1. Policy Statement, Scope, and Aim
1.1 This policy and the associated procedures set out the principles under which Castles and Coasts Housing Association (CCHA) allocates and facilitates the sale of new build, Shared Ownership properties.
1.2 This policy is in place to ensure all those applying for new CCHA Shared Ownership properties are treated fairly and consistently, and for our criteria and procedures to be clear and open.
1.3 CCHA is committed to ensuing equality, diversity, and inclusion in everything we do. Where required, and where appropriate, we aim to provide specific support to existing residents and new applicants, according to individual needs.
1.4 As well as addressing the housing needs of individuals which cannot be met by the open market, this policy contributes to our aim to have a positive effect on local communities and to contribute to the development of local sustainable communities.
1.5 This policy applies to any individual who is interested in applying to purchase a share of a new build, Shared Ownership home that is offered for sale by CCHA, it does not apply to Resale Shared Ownership Homes.
1.6 This policy aims to ensure consistent and fair practice in the allocation and sale of our new build Shared Ownership properties, in line with CCHA’s charitable objectives and in accordance with the Capital Funding Guide Capital Funding Guide - Guidance - GOV.UK (www.gov.uk) and any appropriate local agreements e.g. Section 106 Agreements, which are detailed in this policy.
1.7 This policy applies only to new build Shared Ownership applications from 1st of August 2024, it does not cover property purchased on Shared Ownership terms, such as Right to Acquire, or Rent to Buy purchases, or new Shared Ownership applications received before the 1st of August 2024.
2.1 Shared Ownership is a scheme aimed at people in housing need who are unable to afford to purchase a suitable property for their needs on the open market. Shared Ownership aims to help people overcome the income and deposit barriers to home ownership. Applicants will need to meet various eligibility and affordability requirements which are detailed in this policy.
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advice obtained – 25th of July 2024
2.2 Main features of the scheme
2.2.1 Shared Ownership provides the opportunity for eligible applicants to purchase an initial equity share of a property of between 10% and 75% of the full market value.
2.2.2 The applicant/shared owner typically purchases a share of the property by taking out a mortgage, although cash purchases are also possible depending on the individual circumstances.
2.2.3 The shared owner is granted a leasehold interest in the property for the percentage share in the market value they are able to afford, and occupies the entire dwelling, while paying rent to CCHA (the provider, as landlord) for the share in the market value of the property still owned by CCHA.
2.2.4 The rent level is set by CCHA and the annual rent at the point of first sale must be no more than 3% of the value of the home still in the ownership of the provider. The exact percentage is confirmed on a scheme-by-scheme basis in the associated marketing material and application form.
2.2.5 There are model forms of shared ownership leases for houses and flats which are used and adapted for the specific site. Copies can be found on Capital Funding Guide website. These contain “fundamental clauses” highlighted blue on the model drafts, which shouldn’t be altered.
2.2.6 There are also “key information documents” which the provider must complete and provide to the prospective shared owner whilst the shared owner is considering proceeding. The stage at which these must be provided to the prospective shared owner is set out below in the procedures.
Worked example of a potential Shared Ownership property purchase:
Property value at initial sale
£250,000
Equity share paid for by shared owner at initial sale 30%
Payment to provider at initial sale
£75,000 (£250,000 x 30%)
Equity share not paid for at the point of initial sale 70%
Value of share not paid for at initial sale
£175,000 (£250,000 x 70%)
Maximum annual rent: £5,250 £175,000 x 3%)
2.2.7 CCHA as the landlord, will be responsible for external and structural repairs as set out in the lease during the first 10 years of the lease. CCHA will also support the shared owner to meet the cost of
Castles & Coasts Housing Association
Shared Ownership Allocation Policy – Version 1
Legal advice obtained – 25th of July 2024
Approved by ELT – 26th of July 2024
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essential repairs and maintenance of certain sanitary and utility installations as also set out in the leases, for the first 10 years of the lease (within specific circumstances as specified in more detail in the Lease, and up to a maximum value of £500 per annum).
2.2.8 The shared owner can purchase further shares in the property over time. This is known as ‘staircasing’ and in most cases shared owners may purchase additional shares in as low as 1% increments, up to 100% of the equity in the property and own the property outright subject to restrictions in specific circumstances.
2.2.9 As the shared owner purchases greater shares in the market value of the property, their rent falls proportionately according to the reduced percentage owned by the provider. The shared owner, as a leaseholder, remains liable for the whole of the insurance and service charge, they do not pay a proportion based on the share they own. 3.
Eligibility
3.1 To be eligible to purchase a Shared Ownership property, applicants must have a gross household income of less than £80,000 and be otherwise unable to purchase a suitable property for their housing needs on the open market. This assessment should be based on the income of all members of the household whether they have joined the application or not, with the exception of children under the age of 18.
3.2 Shared Ownership homes are available for existing outright owner occupiers or shared owners who meet the basic eligibility criteria in 3.1.
3.3 Owner occupiers or existing shared owners are required to have already sold their existing property or sell their property at the same time as buying a new Shared Ownership home.
3.4 CCHA as the provider are required to conduct an assessment of individual applicants to ensure;
3.4.1 All eligibility criteria is met
3.4.2 That an assessment of what share the applicant can afford is completed by a suitably qualified, experienced and regulated mortgage advisor or financial advisor
3.4.3 That the proposed purchase is affordable and sustainable in the longer term
3.5 New Shared Ownership homes are typically available on a ‘first come, first served' basis (See Section 6 and First Come First Served Policy below) providing that applicants meet the relevant eligibility and affordability criteria. However, the exception to this is for qualifying Armed Forces personnel, and for new shared ownership homes in certain rural locations with priority given to;
serving military personnel and former members of the British Armed Forces discharged in the last two years,
Shared Ownership Allocation Policy – Version 1
Legal advice obtained – 25th of July 2024
Approved by ELT – 26th of July 2024
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Those meeting specific Local Occupancy Restrictions for sites located in National Parks, Areas of Outstanding Natural Beauty and on rural exception sites or subject to a Local Lettings Policy
Where these additional criteria apply, this will be made clear in the marketing information for a particular scheme.
3.6 Joint applicants for a Shared Ownership home can only proceed on the condition that both applicants become the joint legal owners of the home. For a joint application both applicants must meet the Shared Ownership eligibility criteria and the assessment of affordability will be based on the financial circumstances of both.
3.7 It is the applicant's responsibility to notify CCHA of any changes to their circumstances after the initial application if there are any changes which may impact upon the meeting of the eligibility criteria. Failure to do so will result in the application being cancelled.
3.8 CCHA will also need to check the applicant's immigration status. Those applicants who are subject to immigration control (i.e. who require leave to enter or remain in the United Kingdom under the Immigration Act 1971) are less likely to be able to satisfy this requirement unless they have indefinite leave to remain in the UK. Applicants that are subject to immigration control will need to demonstrate their ability to sustain their home ownership obligations, having indefinite leave to remain in the UK would typically be considered one such reason, however if applicant’s that are otherwise eligible for Shared Ownership are subject to immigration control, in line with the principle of ‘first come first served’, CCHA will assess applications on a case by case basis, taking appropriate legal advice where required.
3.9 CCHA will usually outsource the verification of eligibility to an external organisation such as an Estate Agent that will be marketing the new homes. Any applicant should satisfy themselves with the contents of the Estate Agent’s Privacy Policy, and Data Protection Policy, and data will be shared with CCHA in accordance with the appropriate policies.
4. Affordability
4.1 Whether an applicant is able to obtain a mortgage and, where they can, the amount that they can suitably afford must be assessed by a qualified and experienced advisor who is regulated to give mortgage advice. CCHA have a panel of advisors and will recommend one of those advisors to all applicants. An applicant can choose to seek advice from a qualified and regulated advisor that is not on CCHA’s panel, however it will be at the discretion of CCHA if they are willing to accept this assessment and a separate assessment by one of CCHA’s panel may still be required. This would be at no cost to the applicant, however it may impact upon the speed at which the applicant can put a formal offer forward, and the applicant will need to consider the ‘first come first served’ nature of the priority given to applicants.
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Castles & Coasts Housing Association
Shared Ownership Allocation Policy – Version 1
Legal advice obtained – 25th of July 2024
Approved by ELT – 26th of July 2024
An Equality Impact Assessment for this policy was completed
4.2 Shared Ownership applicants can expect their financial assessment to be carried out free of charge by a suitably qualified and experienced advisor that is regulated to give mortgage advice. Applicants are not obligated, however, to arrange a mortgage with the advisor undertaking their financial assessment.
4.3 Applicants should be encouraged to purchase as large a share as is suitable based on their individual circumstances and affordability, taking into consideration any known or foreseeable changes in the future. An affordability assessment will therefore be carried out prior to the offer of any shared ownership, leasehold purchase. CCHA strongly advise any applicant to take independent legal and financial advice regarding this type of tenure to be satisfied that they fully understand the rights and obligations that will apply, should they proceed.
4.4 CCHA will decline Shared Ownership applications that do not pass an affordability assessment. There is no right to appeal, as the financial advisor’s assessment is impartial and considered final however see section 2.6 regarding general complaints.
4.5 Applicants must be able to afford their purchase and sustain their housing costs. CCHA must undertake appropriate checks on the applicant to ensure that they are able to do this.
4.6 An applicant must be able to afford the minimum share available (usually 10%) and meet the requirements in CCHA’s Monthly Minimum Surplus Income policy (see below).
4.7 If applicants are unable to obtain a mortgage, or there is no appropriate mortgage product available but they have sufficient savings, then they can purchase their share in cash, subject to the full affordability assessment being completed satisfactorily. An exception to this may be if mortgage products are unavailable due to an applicant’s adverse credit history.
4.8 If an applicant is able to obtain a suitable mortgage but wants to purchase a share using cash only, it is unlikely this will be acceptable, however the advisor will make a recommendation to the provider, setting out the applicant’s rationale as to why they are seeking not to take out a mortgage and whether the rationale is considered appropriate or not.
4.9 Cash purchasers are able to retain a reasonable level of savings associated with emergencies, known foreseeable events and depending on their individual circumstances. This will be assessed as part of the affordability process and a rationale included as to why the proposed level of savings is considered appropriate. Castles and Coasts may decline applications where the applicant wishes to retain what it considers to be an unreasonable level of savings, and where the rationale has not been clearly explained or justified by the applicant.
4.10 Applicants will be expected to liquidate (sell and convert to cash) what capital assets they have which may include savings, bonds, shares, land and any other assets or investments.
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& Coasts Housing Association
Ownership Allocation Policy – Version 1
advice obtained – 25th of July 2024
by ELT – 26th of July 2024
CCHA will not consider any person who has been involved in proven anti-social behaviour, has current or previous landlord or mortgage debts and the balance is not cleared in full, or has been excluded from any housing association or local authority waiting list.
6. Definitions
Capital Funding Guide - contains the rules and procedures for all social housing providers delivering affordable housing through one of Homes England's affordable homes programmes.
S106 Agreement – An agreement pursuant to Section 106 of the Town and Country Planning Act 1990, between a landowner and a local planning authority about measures that the landowner must take in relation to the housing scheme. For the purpose of new Shared Ownership Homes, provisions in the S106 Agreement will relate to Local Occupancy Restrictions which will need to be met by applicants in order to be eligible.
First Come, First Served – means that applicants will be given priority based on the date and time they completed an application/ provisional offer form with CCHA’s appointed Estate Agent following the official launch of the development for marketing. To complete an application/offer form, the applicant must have successfully completed the Eligibility and Stage 1 Affordability Assessment, which should be completed at the earliest opportunity after making an enquiry. Once an application/provisional offer form has been submitted, applicants must then proceed with the full Stage 2 affordability assessment, which must be completed within 10 working days of the date of the application/provisional offer form. Formal offers cannot be submitted until the applicant has fully completed Stage 2 of the affordability process. The property will continue to be advertised during this period, with other enquiries logged and held on a reserve list, should any applications not proceed.
7. Cross References
This policy will be applied in conjunction with the following CCHA policies and procedures:
Equality, Diversity & Inclusion Strategy
Right to Shared Ownership Policy
Leasehold Management
Complaints Policy
Procedure
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Castles & Coasts Housing Association
Shared Ownership Allocation Policy – Version 1
Legal advice obtained – 25th of July 2024
Approved by ELT – 26th of July 2024
An Equality Impact Assessment for this policy was completed
1. Applications for housing by CCHA Staff, family members, members or those with a connection
1.1 In line with CCHA’s Employment, Housing and Contract Awards to Staff, Members and their Family Members Policy, we ask applicants to provide details on their application as to whether they are members or employees of CCHA, whether they are closely related or connected to a member or employee, as any offer of accommodation to such applicants must be approved by the Chief Executive. This is to ensure no undue influence or priority is given to such applications.
• ‘Staff’ includes employees, interims and temporary staff.
• ‘Family member’ or ‘related’ to includes partners, parents, siblings, children, grandparents, grandchildren, nephews, nieces, first degree cousins, step relationships and anyone else whom it would be reasonable for the Association to consider as being a close relative.
• Members’ includes any member of a Committee or Board, whether or not a Board Member. Someone is ‘connected’ with a company, partnership, or other organisation if they, or a family member or close connection:
• Is employed by the Association, either directly or as a sub-contractor or agent
• Is a Director, owner, Board Member, trustee, or has some other controlling or financial interest in the Association
• Hold shares in the Association or has some other financial stake or interest in its success
• If there is some other connection or link that a reasonable person could take to create a conflict of interest
2.1 We have determined that certain people will be deemed to be ineligible as per eligibility guidelines within the Capital Funding Guide, and these circumstances will be declared at the point of application. Such circumstances may include, but are not limited to;
2.2 Where there is a Section 106 Local Occupancy requirement, and applicants are unable to provide the evidence they meet the criteria.
Castles & Coasts Housing Association
Shared Ownership Allocation Policy – Version 1
Legal advice obtained – 25th of July 2024
Approved by ELT – 26th of July 2024
An Equality Impact Assessment for this policy was completed
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2.3 Applicants will be required to complete a financial assessment detailing income, expenditure, assets and debts. Supporting evidence will be requested to support the assessment. Where the financial assessment outcome does not meet the required criteria, your application will be deemed ineligible as detailed below in point 4.
2.4 If an applicant has been found to have provided false information or deliberately withheld information in connection with their application.
2.5 If you are a tenant of CCHA and apply for a Shared Ownership property, we will not consider you if:
• You owe CCHA money for rent or rechargeable repairs and the balance is not cleared in full.
• Legal proceedings are underway to end the tenancy. This includes the service of a Notice of Seeking Possession, injunction, or any legal proceedings. If CCHA were unsuccessful in any legal proceedings than the applicant would be able to be considered.
2.6
Complaints
Applicants who are not satisfied that the application process has been correctly followed as detailed in this policy, can raise a complaint in line with CCHA’s Complaints Policy.
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Shared Ownership Allocation Policy – Version 1
Legal advice obtained – 25th of July 2024
Approved by ELT – 26th of July 2024 An Equality Impact Assessment for this policy was completed