Shared Ownership Policy
| Document Author | Karen Askey (Sales & Commercial Manager) |
| Document Owner | Kelly Webb (Director of Customers) |
| Legal Advice | Forbes Solcitors LLP Reviewed 10 December 2024 |
| Consultation | Director of Development Reviewed 13 December 2024 |
| Approved by | Leadership team |
| Review date | January 2028 |
| Corporate Plan Aim | People, Place, Prosperity. |
| Equality Analysis |
Completed 12 December 2024 The following risks were identified
OM will ensure that this policy is applied fairly to all our customers. We will never intentionally discriminate against any person or group of people because of a protected characteristic under the Equality Act 2010 unless it falls within one of the exceptions stated therein. |
| Key changes made |
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1. POLICY PURPOSE
1.1 The purpose of this document is to provide guidance on One Manchester’s (OM) approach to affordable home ownership, setting out the values, principles and aims that will be followed by OM in its engagement with customers.
1.2 The policy takes into consideration the OM Corporate Plan along with relevant legislation and guidance relating to the management of grant funded shared ownership properties.
2. POLICY SCOPE
This policy outlines One Manchester’s (OM) approach to the allocation, sales and management of homes developed or made available for affordable home ownership through Shared Ownership.
This Policy should be read in conjunction with the property’s lease.
3. RELEVANT LEGISLATION & REGULATION
3.1 Homes England Capital Funding Guide.
3.2 The Regulator of Social Housing’s Regulatory Framework.
3.3 Housing Act 1988 and 1996.
3.4 Landlord and Tenant Act 1985 and 1987.
3.5 Deregulation Act 2015.
3.6 Defective Premises Act 1972.
3.7 Law of Property Act 1925.
3.8 Leasehold Reform, Housing and Urban Development Act 1993
3.9 Commonhold and Leasehold Reform Act 2002
3.10 The Leasehold Reform Act 2022
3.11 Consumer Protection from Unfair Trading Regulations 2008
3.12 Money Laundering Regulations.
3.13 Prevention of Social Housing Fraud Act 2013.
3.14 Data Protection Act 2018.
4. POLICY CONTEXT
4.1 One Manchester operates a fair and transparent regulatory compliant Shared Ownership offer which is open to scrutiny and challenge. OM approach is guided by the following considerations to deliver the best outcomes for customers.
4.2 Shared ownership gives those who cannot afford to buy a home outright the opportunity to buy a home. Rent will be charged on the percentage of the property that the customer does not own. The amount of rent paid is agreed and fixed at the outset, and there is a maximum amount by which it can increase each year. The more of the property owned, the lower the rental payments will be
4.3 Over time shared owners can purchase more shares in their property – this is known as ‘staircasing’. This can be done at any time after initial purchase, and it will reduce the amount of rent payable as the percentage share owned increases.
4.4 The new model Shared Ownership applied to shared ownership homes delivered as part of the Affordable Homes Programme 2021-2026.
4.5 The Government has introduced the new Right to Shared Ownership, which will give the vast majority of social tenants, living in new rented homes delivered by the Affordable Homes Programme 2021-26, the opportunity to purchase a stake in their home and then purchase further shares when they can afford to do so.
5. MARKETING
5.1 One Manchester may advertise available properties via the website, social media, lettings agents or direct marketing.
5.2 Customers may have the opportunity to register their interest for any new build schemes, they will then be informed when properties are available for reservation.
6. ELIGIBILITY
6.1 Eligibility criteria is in line with the guidance set by Homes England under the Capital Funding Guide.
6.2 Additional affordability criteria is at the discretion of OM and will be applied in line with the Capital Funding Guide.
6.3 One Manchester will not offer a property to any applicant who does not satisfy criteria set by Homes England and OM.
6.4 To be eligible to purchase a Shared Ownership home applicants must
6.4.1 Be at least 18 years of age.
6.4.2 Have a total gross household income of less than £80,000 per year.
6.4.3 Be unable to buy a home that meets their needs on the open market.
6.4.4 Not own a property either in the UK or abroad at the time of purchase.
6.4.5 Have the financial ability to purchase and sustain the home.
7. ALLOCATIONS – ‘FIRST COME, FIRST SERVED’
7.1 Homes available for Shared Ownership are in limited supply, where demand exceeds availability, OM are required to consider applicants on a first come, first served basis.
7.2 The exception to this is:
7.2.1 Qualifying current or former (within 2 years) British Armed Forces personnel, who will be given priority wherever possible.
7.3 One Manchester’s ‘First Come, First Serviced’ policy will be applied as follows
7.3.1 Applications will be processed in the order they are received to the email address provided following launch.
7.3.2 All documentation requested in the launch email must be provided by the applicant. The documentation usually requested, includes but is not limited to, completed application form, a mortgage agreement in principle, an initial affordability assessment carried out by a OM appointed mortgage broker.
7.3.3 Offers will be made to eligible applicants in order of receipt of the requested documentation.
7.3.4 All offers will be subject to a full assessment by a OM appointed mortgage broker within a set period.
7.4 One Manchester operate a plot to applicant ratio. This is to ensure applicants are not inconvenienced unnecessarily with potential abortive costs.
7.4.1 The plot-to-applicant ratio is 4:1 (four applications per plot)
7.4.2 The plot to applicant ratio is introduced at the outset of the scheme launch.
7.5 One Manchester will ensure that all applicants are aware of the process before they make any transactional decision.
8. AFFORDABILITY
8.1 OM will follow Homes England guidance to ensure that any shared ownership sales are affordable to applicants.
8.2 Surplus Monthly Income Policy
8.2.1 OM will follow Homes England guidance, so that applicants are not at an undue financial risk of being unable to sustain their homes by requiring a minimum surplus income that an applicant should have at the end of the month.
8.2.2 One Manchester will require shared ownership applicants to have a standard minimum of 10% of their net mortgageable income remaining after all deductions and a stress tested rent.
8.2.3 Applicants who wish to purchase a 25% or less share of the property are required to have a minimum surplus income of 20% of their net mortgageable income remaining after all deductions and a stress tested rent.
8.2.4 Where applicable, service charges will also be stress-tested.
8.2.5 It is expected that the applicant’s expenditure will be realistic for the household composition.
8.2.6 All income used for the assessments must be considered sustainable.
8.3 Minimum Deposit
8.3.1 A minimum deposit of 5% of the total cost of the share being purchased will be required
8.3.2 .
8.3.3 Evidence of the source of the funds used to determine eligibility will also be required.
8.4 Adverse Credit
8.4.1 One Manchester reserve the right to reject applicants based on, but not limited to the following factors.
- Any rent arrears/missed mortgage payments in the last 12 months
- Any unsecured arrears
- Any CCJ’s or defaults in the last 36 months.
- All CCJs or defaults registered more than three years ago and not satisfied prior to mortgage application.
- The CCJs or defaults in aggregate amount to less than £300, regardless of date of registration, and were satisfied prior to mortgage application.
- IVA or bankruptcies which have not been discharged over three years ago and still have residual debt.
- Any previous property repossession.
8.5 Financial Assessments & Mortgages
8.5.1 All assessments must be undertaken by a qualified and experienced OM appointed mortgage advisor following OM’s affordability criteria.
8.5.2 Applicants are not required to use the mortgage advisor who undertakes the affordability assessment and can choose the most suitable mortgage provider for their circumstances.
8.5.3 One Manchester will approve mortgage offers to ensure compliance with the Mortgagee Protection Clause.
8.5.4 In circumstances where applicants can only obtain a mortgage at a rate that is 2% above that of an equivalent product of a mainstream lender, OM will seek further advice to ensure the higher interest rate is affordable and sustainable.
8.5.5 If higher than average arrangement fees are to be added to the mortgage, OM may refuse the offer or require that the fees are not added to the loan.
8.6 Cash Buyers
8.6.1 It is expected that most purchases will be funded through a combination of savings and mortgage.
8.6.2 One Manchester will consider cash applications if an applicant is unable to obtain a mortgage but has sufficient funds to buy a share outright and meets the standard shared ownership criteria.
8.6.3 Cash buyers will still be subject to an affordability assessment by OM’s appointed mortgage advisor.
8.7 One Manchester will seek to ensure any arrangements are affordable and sustainable.
8.8 Property offers will not be made if OM would be exposed unduly to financial or regulatory risk.
8.9 The ultimate responsibility for a decision on whether to accept an application rests with OM.
9. SALES PROGRESSION
9.1 One Manchester will ensure customers are fully informed and provided documentation prior reservation, so the prospective buyer fully understands the shared ownership tenure, their decision to purchase and responsibilities.
9.2 Following reservation, the sale progression will be handled by the legal representatives of the customer and OM.
9.3 Completion dates will be agreed by solicitors.
9.4 Homes will be sold on the appropriate lease required by Homes England.
9.5 Upon completion the home will be managed in line with the requirements set out in the lease.
9.6 Shared owner customers may increase the percentage share of the equity that they own at any time during the term of the Shared Ownership lease. This process is known as staircasing. Details of the staircasing requirements are set out in the lease.
10. THE LEASE
10.1 The Government approved model leases must form the basis of all leases granted by OM to ensure acceptance by lenders so the purchaser can obtain a mortgage. All variants of the model leases, covering houses and flats, are given in the Capital Funding Guide: Shared Ownership.
10.2 The Government introduced a new shared ownership model in 2021, the new model applies to shared ownership homes funded under the Affordable Homes Programme (AHP) 2021-2026. The new model introduced some key changes, including:
• Homes under the new shared ownership model lease will have a minimum lease length term of 990 years.
• The new shared ownership model lease allows customers to buy from as little as a 10% initial share, up to a maximum of 75%.
• Once a customer has bought a shared ownership home under the new shared ownership model lease, they will have the option to buy more shares from as little as 1% each year. This is known as the new model lease 1% Staircasing.
• 10-year repairs procedure to offer support with non-structural repairs.
10.3 The following clauses known as fundamental clauses, are mandatory for all leases:
o Alienation Provisions (sales procedures, part or full, subletting)
o Mortgage Protection Clause
o Rent Review
o Staircasing Provision
o Right of First Refusal (final staircasing pre-emption Right)
o Designated Protected Areas only – Protected Area Provision
o Service Charge Clause – only where charged.
11. REPAIRS
11.1 Grant Funded 2016-21 - Shared owners of houses and flats have full repairing responsibility after the defects liability period has lapsed.
11.2 Grant Funded 2021–26 - Shared owners can claim up to £500.00 per year in the first 10 years for the cost of some essential repairs. This is the Initial Repairs Period.
12. RESPONSIBILITIES
12.1 The Sales & Commercial Manager will be responsible for the review and update of this document.
12.2 The Director of Customers and Sales & Commercial Manager will be responsible for monitoring the implementation of this policy.
13. EQUALITY IMPACT ASSESSMENT
13.1 An Equality Impact Assessment (EIA) has been completed and assessed.
13.2 The EIA found that
13.2.1 First Come, First Service application process can directly and indirectly discriminate against people with disability, age or have communication barriers such as English not being their first language.
13.2.2 OM will ensure reasonable alternative application methods are considered upon request, while ensuring fairness of allocation.
13.2.3 An eligibility and affordability assessment can directly and indirectly discriminate against people with disability, pregnancy and maternity, people close to retirement or households on low incomes.
13.2.4 Requirements in the Capital Funding Guide require OM to defer affordability assessments to an independent party. OM will be guided by their assessment to not expose customers to undue financial risk.
14. MONITORING AND REVIEW
14.1 Compliance with this policy shall be monitored by the Sales & Commercial Manager.
14.2 This policy shall be reviewed every 3 years or if further government changes impact this policy.
14.3 The Director of Operations is responsible for interpreting this policy where the provisions are unclear or there is ambiguity. Any interpretation will automatically become incorporated into the policy.
14.4 The Officer or Officers operating the policy in practice are responsible for implementing the policy and interpreting the policy giving the words of the policy their common everyday meaning.
15. CONTACT PERSON
15.1 The Sales & Commercial Manager has responsibility for the effective delivery of this policy.
16. ASSOCIATED POLICIES AND DOCUMENTS
16.1 Internal Documents:
- Sales Process and Supporting Documents
- Staircasing Process and Supporting Documents
- Assignment Procedure
- Tenancy Fraud Policy
- Repairs Policy
- Anti-Social Behaviour Policy
- Complaints Policy
- GDPR Policy
16.2 External Documents:
- Homes England Capital Funding Guide.
- Shared Ownership Council Code of Good Practice.