1  Overview

1.1   Purpose

1.1.1 This section sets out the characteristics of Social HomeBuy (SHB) and the Agency’s Requirements to be followed by Registered Social Landlords.

1.1.2 It is a Funding Condition that RSLs comply with these procedures and any subsequent guidance.

1.2 Context

1.2.1 SHB allows RSLs and  Local Authorities to sell their eligible properties (see section 5) to eligible tenants (see section 4), at a discount either outright or on shared ownership terms

1.2.2 SHB, introduced in April  2006 (with four early pilots from October 2005), allows RSLs and  Local Authorities to dispose of their rented housing at a discount on shared ownership terms i.e. part buy/part rent and outright, to its secure and assured tenants who occupy properties eligible for the programme. The programme for 2006-08 was a two year pilot and a further 3 year programme is available for 08-11. RSLs are invited to consider participation to increase home ownership opportunities for their tenants, where this is sustainable.

1.2.3 SHB is funded by Purchase Grant (PG), paid under section 21 of the Housing Act 1996, and not as Social  Housing Grant. 

1.2.4 The Agency's power to recover Purchase Grant is contained within section 24 of the Housing Act 1996.

1.2.5 For properties funded by Purchase Grant, it is not just the Grant that is recovered, but the entire Net Disposal Proceeds (see DPF chapter section 2.2).

1.2.6 In respect of RSL property SHB discounts can only be paid by the Agency. An RSL SHB programme cannot be funded by local authorities

1.3 Main Features of the Product

1.3.1 SHB purchasers are allowed to buy an equity share of the social rented property they occupy (where their landlord has decided to participate). The cost of the share is based on a percentage of the full market value. See paragraph 1.3.8

1.3.2 SHB gives tenants the opportunity to:
• purchase their current home which may not qualify for RTB or RTA e.g properties provided without grant funding or grant funded prior to 1 April 1997. Some exemptions apply - see RTA - section 3.
• purchase their current home on shared ownership terms that makes the purchase affordable and sustainable
• benefit from a pro-rata purchase discount regardless of whether they buy outright or on shared ownership terms.

1.3.3 RSLs may only include self-contained property for rent. There are eligibility criteria for both properties (similar to Right to Buy /Right to Acquire) and tenants.

1.3.4 The range of initial equity shares can be any amount between 25% (minimum purchase) and 100% . Unlike New Build HomeBuy the purchaser can buy the property outright at the outset.

1.3.5 All SHB leases must allow the purchaser to buy further shares and staircase to 100%.

1.3.6 The purchaser is entitled to a discount on both the initial and subsequent shares purchased. The discount limits are the same as those applying to properties bought on RTA terms in that locality, and are pro-rated according to the size of the share purchased. For an example follow the asterisk.  

1.3.7 Discount is repayable if the purchaser moves within 5 years on the same basis as the RTA/RTB. Right to Acquire Discounts and Areas as at April 2008 are set out in the Housing (Right to Acquire)(Discount) Order 2002 (SI 2002 No 1091) and rural designated areas SIs 1997 numbers 620-625 and 1999  number 1307.

1.3.8 Landlords may offer their tenants an alternative property to purchase in certain circumstances - see section 8.4.4.

1.3.9 The SHB Programme gives RSLs the opportunity to:
• sell its permanent rented housing stock to secure or assured tenants at a discount;
• include non grant funded property;
• offer home ownership to tenants who do not have or cannot afford the Right to Buy/Acquire;
• provide replacement affordable housing by using the disposal proceeds receipts from sales together with private finance;
• develop mixed, balanced and  sustainable communities.

1.3.10  Scheme submissions must comply with the Funding Conditions as accepted and confirmed on line by the RSL’s System Administrator at the beginning of the financial year, plus any further conditions that may be issued by the Homes and Communities Agency in year.  See Finance chapter - section 2.
 
1.3.11  Consent to Disposal 

1.3.11.1 Most shared ownership sales will be exempt from the need for Section 9 consent.  Outright sales and shared ownership that is not exempt (because the rent is below the thresholds that would define it as an assured tenancy) will be covered by categories 1f and 1a respectively of the General Consent 2008. 
 
1.3.11.2  When an RSL uses the General Consent, it must make sure that it is able to make the certifications on form HACON 5, version 6, which derive from conditions in the General Consent.  After completing form HACON 5, an RSL should keep the original on its disposals register and pass a certified true copy to the purchaser's solicitors to assist registration of the change of ownership
 
1.4  Targeting and Publicity

1.4.1 RSLs operating the programme are responsible for distributing publicity material, to their tenants and publishing their policy. The Agency has produced publicity information which is available from the Agency’s website. RSL’s can download this information to provide to tenants in its entirety as a supplement to its own publicity/promotional material. General information about the product should be available from HomeBuy Agents. 

1.4.2 The Agency has produced sample letters which RSLs can send to tenants to:
• respond to a tenant who has registered an interest in SHB
• advise the tenant as to their eligibility
• provide a formal Valuation and offer.

Please refer to Section 8, paragraphs 8.12 and 8.13 for more detailed information.

1.4.3 For examples of the discounts and likely outgoings for different property values and discount percentages see section 8.2. 

1.5 Funding Arrangements

1.5.1 RSLs wishing to operate the product are able to bid for funds from the Agency each bid round.

1.5.2  Allocations for the SHB programme are subject to cash limits and where demand for applications exceed RSLs' funding, they must operate a waiting list and then approach their Regional Investment Team to see if further funding is available . Please also see section 3 - 3.1.1

1.5.3 The allocation of PG for the SHB programme is agreed as part of the Bid round. The individual scheme PG is confirmed and fixed at legal completion. 

1.5.4 The Grant is the discount payable in relation to the share that the buyer is purchasing based on the RTA discount payable in that area, pro rated to the share that is purchased. Grant is claimed after the initial, or any subsequent share purchase is completed.

1.5.5 RSLs operating the programme are required to pay the sales proceeds into their Disposal Proceeds Fund. For details on this topic see section 9.1.

1.5.6 RSLs must notify the Agency of any change to their programme from the original bid and provide reasons for the change. The Agency will decide whether to accept the changes on the basis of whether the strategic need for which the allocation of PG was given is still being met and whether the programme still offers value for money, particularly in light of other bids for similar schemes For details on Variations see General - Programme Management - Section 6.

1.5.7 RSLs must consult their private lenders prior to bidding for an allocation to ensure properties can be released from the lender’s security.