affordable housing scheme new build

clur84

Hello

I was just wondering if anyone has bought a new build through a local council affordable housing scheme and how they have found the process/experience?

We are currently waiting to hear a decision from the council on our application to reserve a new build plot. We have a mortgage decision in principle and 10% deposit saved and waiting.

lee111s

If you have a 10% deposit why not go for a regular new build and have full ownership with no restrictions.

kingstreet

90% newbuild and a S106 affordable housing case?

There will be very few lenders in the pool for this one.

MrsElliot

We bought in 2015. Our new build was an affordable house, slight faff getting approved by the Council through forms etc but generally the process was straightforward we got ours at 70% of market value but obvs if we ever come to sell we will only get back 70% of market value as per s106 - which we are fine with.

Our original mortgage was for a standard built old house which allowed us to get a decision in principle but when that fell through due to survey issues we were able to use the DIP as proof for the council we could get funds but we had to switch mortgage lenders when we actually came to apply for a mortgage as our lender didn't lend on affordable housing.

We went through our original mortgage broker who found a good deal from the Halifax (we had 15% deposit to begin with but by the time everything was sorted we managed to scrape together a 20% deposit).

clur84

Sorry should have made myself clear, It's not a help to buy scheme it is like Mrs Elliot mentions above. Providing you meet certain criteria they sell you the house for a discount. Its is so people who wouldn't normally be able to afford the full property price but live, work and have connections to the local area can have the opportunity to buy in the area and stay local.

Thank you Mrs Elliot that's really helpful, I can't seem to find a lot of information about the scheme or others that have used it previously. Our broker did mention that not all lenders are willing to provide a mortgage in these cases but there are certainly some that do.

Were there any hidden costs associated with the scheme, it all seems like a too good to be true offer. Our land is leasehold so we know we have a £300 fee to pay each year and soliciter fees etc

kingstreet

Yes, it's affordable housing subject to a S106 agreement which the bulk of the lending market will run from due to the re-sale restrictions.

Then you add that it's newbuild and 90% and you have the recipe for potentially two lenders, with one running once it sees the S106 agreement and the other not lending more than 80% on newbuilds but which might accept the S106 restrictions.

MrsElliot

As far as I know there were no hidden costs with the scheme, it was just we had an extra bit of paper to sign regarding the s106 (the few affordable housing lenders out there prefer a slightly higher LTV but if you have a DIP you should be fine). The solicitors dragged their heels a bit regarding exchange/completion which was well out of the 30 day reservation/exchange completion deadline the developer wanted! but these were due to mineral/mining rights and road adoption queries- I have made previous forum posts about that frustration!! but the price the solicitor quoted was the price we paid for their services.

Once you get approval, you get a letter from the council with the plot number you want to reserve and then just pay the reservation fee to the developer. We have some sort of annual management charge but as of yet haven't had a bill and no one has been round to enforce it and a friend who has a 'normal price' house on the estate is also supposed to pay the charge and their house was completed 2 years before ours and they haven't yet. It might come into effect once the estate is completed (this charge is for the maintenance of the grassy/parkland areas of the estate).

I don't think there are any hidden issues, with our particular scheme if you sell the property you have to notify the council and get 2 valuations. Once the current value (70%) is agreed they send the particulars to qualifying applicants on their waiting list who get first chance to buy the house before it goes on the open market with s106 conditions - If buyers are interested they again have to get approval from the council (like we did!). Due to lender restrictions there may be a limited supply of buyers for affordable housing properties but all the affordable housing on our estate has sold quite quickly so there definitely is a market for it.

Newbie78

We have just been and completed on a shared ownership property


The process was quite slow in terms on the mortgage process ( compared to other banks) but only had one or 2 lenders who offer mortgages on shared ownership


We love the new build too

kingstreet

Newbie78 wrote: »

We have just been and completed on a shared ownership property


The process was quite slow in terms on the mortgage process ( compared to other banks) but only had one or 2 lenders who offer mortgages on shared ownership


We love the new build too

There are a lot more than two lenders for shared ownership, but adding newbuild and a small deposit to the mix sees that list reduced dramatically.

firsttimemover

Yes, I bought a new build apartment on this scheme back in 2009, and sold it 5 years later. It was bought and sold with a 15% discount, and IMO it was a lot more straightforward than shared ownership as there is no rent to pay, no loans to pay back, you simply have to sell it on with the same discount you received, so it's just like buying normally, you just get more for your money!

I also had 10% deposit which meant I was restricted to mortgage provider, (it was Halifax at the time too - this was my only option but this could have been down to other factors too, so imagine there are other lenders out there for different circumstances). This was at quite a high rate at the time, but it gave a step onto the property ladder in a better property/location that would otherwise have been affordable and we were able to sell and generate a healthy deposit for our dream house.

My only apprehension at the time was how it would be sold, as there wasn't much info at the time. I didn't really know what to expect when selling but I have to say, there didn't really seem to be a huge amount of red tape - it still went on the open market, could be priced at what I wanted, just the final sale figure had to be approved as "reasonable" by the council, which it was, and the Estate Agent dealt with that side of things.

When it came to selling, although not restricted, I went with a big chain estate agents as they had experience in selling these properties (there seem to be more around now, but back then most agents hadn't a clue what I was talking about!) which cost a little more, but again, a small price to pay!

We actually sold to a cash buyer within a couple of weeks (council were happy with this as they base their criteria on income rather than what deposit/cash you have) and it all seemed pretty straight forward from the buyer's side too.

Hope that helps and happy to share my experience and answer any other questions you may have if I can!

Newbie78

kingstreet wrote: »

There are a lot more than two lenders for shared ownership, but adding newbuild and a small deposit to the mix sees that list reduced dramatically.

Oh our MA lied to us then