Shared Equity is a scheme to help people on low incomes who wish to own their home but cannot afford to pay the full price for a house. Fyne Initiatives develop new Shared Equity properties for sale on a ‘shared equity’ basis. This means that Fyne Initiatives will keep a stake in the property, making it more affordable to the buyer. The Shared Equity buyer will pay for a majority share in the property (normally between 60% and 80% – but in some circumstances 51%) and will own the property outright. When the house is sold, both the Shared Equity owner and Fyne Initiatives will receive their percentage share of the property value.
The Scottish Government is committed to helping people meet their aspirations to become home owners. Shared Equity is one way to do this. The scheme is financed by The Scottish Government. They will provide grants to Fyne Initiatives to help them build new homes, which will be more affordable than typical property prices in the area because purchasers will only be buying a partial 'stake' in the property.
Shared Equity applicants will have to state all sources of finance. A household's income will be considered to be the total of:
gross earnings, per single person or couple, as appropriate;
any other income, comprising sickness benefit, unemployment benefit, bank interest, superannuation or pension from previous employment, social security benefit, working families tax credit, widow's pension and shareholder's profits;
Personal contributions may comprise savings, gifts or any other contributions by the applicant.
The definition of savings that we use includes: cash, premium bonds, stocks and shares, unit trusts, bank or building society accounts and fixed term investments; the surrender value of any life assurance or endowment policies; property; redundancy payments; pension lump sum payments.
It does not include: personal possessions; business assets; tax rebates; personal pension schemes; retirement annuity contracts and annuity surrender values; any capital sum awarded for the purpose of support or care costs.
We will include savings held by all prospective applicants. A Shared Equity purchaser may retain £5,000 of any savings held. Above this amount, 90 per cent of the balance will be treated as a contribution towards the Shared Equity equity stake.
Shared Equity will mainly help first-time buyers, but it can help others too. A disabled person who owns a house which isn't suitable for their needs could be helped to move to a more suitable house. The type of people that Shared Equity will prioritise will vary locally but may include, for example: people who cannot afford to purchase on the open market but have an identifiable need to stay in the local area; local families unable to purchase a home; people living in or applying for Local Authority or Housing Association property.
Fyne Initiatives will always retain a 20% "Golden Share" of the property. This means that you can only ever own up to 80% of the property. When the property is sold on, Fyne Initiatives will receive at least 20% of the selling price.
It is the responsibility of the purchaser to ensure the upkeep of the property. Although a purchaser will own only a percentage stake in the property the purchaser is fully liable for costs of all repairs and maintenance.
The purchaser is entitled to increase his/her share in the property to a maximum of 80%, two years after the date that missives of sale have been concluded. At the time of increasing the share, an independent valuer, will determine the value of the property.
If owners increase their share in the property they must meet all associated costs, including those of Fyne Initiatives.
It is not possible to reduce an owner's share in the property under any circumstances. This is important and means that you should be as confident as possible that you can meet your mortgage payments each time you increase your stake.
An independent valuer will value the property, Fyne Initiatives will either buy back your share or arrange for another first time buyer to purchase your share, both options will be at the market rate. If any of these options are not available you would then sell your property on the open market, with Fyne Initiatives receiving their share of the value.
To register your interest in our Shared Equity properties, please contact Kathryn Armstrong, Housing Team Leader on 0345 607 7117 or karmstrong@fynehomes.co.uk
