Social HomeBuy is a new shared-ownership scheme that enables you to buy a percentage share in your present council home.
You choose the percentage you would like to buy, from a full 100% to an initial share of as little as 25%.
If you purchase less than 100% you will pay rent on the share still owned by the council. You can buy further shares when you are in a position to do so.
To be eligible for the scheme you must:
- be a secure tenant of Croydon Council
- have held a public sector tenancy (council or housing association) continuously since 17 January 2005
- have complied with your conditions of tenancy.
If you are a tenant of a housing association you will need to contact your housing association to see if they offer this scheme.
Can I get a discount on the purchase price?
Yes. You will receive a discount on the price of each share you buy. The discount is calculated as a percentage of £16,000.
For example, if you buy a
- 50% share, the discount will be 50% x £16,000 = £8,000
- 25% share, the discount will be 25% x £16,000 = £4,000.
So I pay rent on the share that I don't buy?
Yes. Rent is based upon the value of the share remaining in the council's ownership. The greater the percentage share you buy, the less rent you pay.
If your home is a house or bungalow (not a flat or maisonette), your rent will be reduced by a further 15% in recognition of the fact that you will be responsible for repairs to the property.
For example, if your home is valued at £160,000 and you make a 50% purchase:
- your share is worth £80,000, your discount will be £8000 (50% x £16,000) and the purchase price will be £72,000
- you will pay rent on the council's share, which is £80,000. This figure will be reduced by 15% if the property is a house or bungalow.
If you make a 25% purchase:
- your share is worth £40,000, your discount will be £4000 (25% x £16,000) and the purchase price will be £36,000.
- you will pay rent on the council's share, which is £120,000. This figure will be reduced by 15% if the property is a house or bungalow.
In each case, the amount of rent you pay will reduce if you buy further shares. If you acquire a full 100% interest, you pay no rent.
Purchasing further shares
The minimum purchase at any one time is an extra 10%. You can, of course, purchase more than this.
The cost of the shares will be based upon the value of the property at the time you apply to purchase them.
Will the council give me a mortgage?
The council is unable to grant mortgages. These must be obtained from a mortgage lender such as a bank or building society. Most mortgage lenders employ financial advisers who can help you decide which type of mortgage will be most suitable for you.
As well as rent and mortgage payments, what other expenses will I have?
If you purchase a flat or maisonette, you will be responsible for all internal repairs to the property. You will also have to pay service charges to the council in proportion to the share you buy.
For example, if you buy a 40% share, you will pay 40% of the services charges for regular services such as caretaking, and for the one-off costs of major repair work carried out by the council.
Some houses or bungalows are also subject to service charges. The Home Ownership team will be able to advise whether your home is one of these properties.
If you buy a house or bungalow, you will have to arrange for the insurance of the property and payment of the annual premium. You will also be responsible for the cost of all repairs to the property, both internal and external.
Please note: internal repairs can sometimes be expensive. For example, the cost of replacing a boiler or a central heating system can amount to £2,000-£3,000.
What about the costs of actually buying?
There are additional costs associated with the purchase of property. For one, it is advisable to employ an independent qualified surveyor to assess the condition of your home before you buy it. You will also need a solicitor during the conveyancing process, and may need to pay Stamp Duty Land Tax on the purchase price.
These costs can amount to £3,000-£4,000 in total.
If you join the scheme and complete the purchase of an initial share of between 25% and 100%, the council will refund some or all of your purchase fees up to a maximum of £5,000.
What happens when I want to sell my home?
If you have purchased full ownership, you will be free to sell your home without involving the council.
If you own less than a 100% interest, you must first offer the property back to the council, who can repurchase your share or nominate another buyer.
However, if neither of these options is taken up, you will be free to place your property on the open market.
If you sell within the first five years of buying your initial share, you will have to repay some of the discount that you received when you first bought.
For more information on the Social Homebuy Scheme please contact the Home Ownership team at the details below.