The First Homes Scheme: Another Route to Affordable Housing

 

 

Launched in June 2021, the First Homes scheme's first units entering the market through an early delivery project in the West Midlands with local authorities required to take First Homes into account from 28 June 2021.

First Homes, which will be considered to meet the definition of ‘affordable housing’ and, as the Government’s ‘preferred’ discounted market tenure, should account for at least 25% of all affordable housing units delivered by developers. Paragraph 65 of the NPPF seeks for 10% of homes in major developments to be for affordable ownership, and First Homes fall into this category. The minimum requirement of 25% of all affordable homes to be First Homes will need to be written into Local Plans and Neighbourhood Plans, although any local or neighbourhood plan that progressed to the publication stage (or further) by 28th June 2021 will not have to include a policy relating to First Homes until a subsequent update.

The key details of the scheme from a developer perspective are:

a) Discount on market value must be a minimum of 30%, up to a maximum of 50% depending on local circumstances
b) Sold to people meeting the criteria (either keyworkers or local residents)
c) Restriction registered on the title to ensure the discount/limitations in perpetuity, secured by s106 agreement
d) Post-discount price of no more than £250,000 outside of London (or £420,000 in Greater London) – although local authorities can set lower caps if evidenced

What does this mean?

Firstly, the First Homes scheme may result in a reduction in the overall number of residences accessible for shared ownership. The proportion of social rent specified in local affordable housing policy is preserved, although First Homes will now push it to second place. It appears that First Homes is focusing on subsuming shared ownership as a tenure. This will, of course, have an impact on some homeowners and registered providers. Many local governments' affordable housing plans are split roughly 70/30 between social/affordable rent and shared ownership, with the latter now dropping to third place.

Next, there's the problem of value and how it will affect units that are offered for social/affordable rent. To reach the £250,000 cap (excluding London), local authorities are likely to need to use a higher discount percentage in higher-value areas of the country.

For example, average house prices in Broxbourne, at the time of writing, are around £370k. Applying a straight 30% discount to this puts the price around £259k – which is therefore above the threshold. Higher discount requirements will therefore be unavoidable in some areas.

When combined with the overall priority given to First Homes, smaller developments could lose a substantial amount of value, and thus viability, as First Homes will be prioritised over social/affordable rent apartments, affecting the ability to supply this tenure. As a result, a potentially unintended consequence will be a further decline of the affordable/social rent stock.

But there are also benefits from a development viability perspective. These are discounted market housing, rather than a form that will require liaison with registered providers, and the price discount will be a known quantity at the application stage. This reduces uncertainty compared with other tenures, and simplifies the negotiation process. It will also potentially improve the viability of some developments, as first homes units are, in most areas, likely to generate better income than shared ownership units.

Whether you have a site going through planning currently or are in the formative stages of design, if you have any questions about First Homes and the implications for your plan, we can help discuss your options and their impact on viability.

 

 

 

 

 

 

 

 

 

 

 

 

Learn the difference between a conveyancer from a solicitor. Keep on reading this guide to help you through the process of transferring your property.

10 February 2022

Should You Use a Conveyancer or a Solicitor in Real Estate?

A solicitor and a conveyancer will both guide you through the process of transferring property, whether you’re buying or selling real estate. You’ll need either one as soon as you’ve agreed to an offer, and they should oversee the transfer of legal ownership. However, how can you decide which of the two is right for your case?

Conveyancer vs Solicitor

Solicitors and conveyancers are fully regulated, insured and capable of transferring the legal ownership of a real estate you are buying or selling. Both operate to almost identical conveyancing practices and procedures when it comes to handling your property transactions. 

However, there are stark differences between the two, and you’ll likely see a difference in the cost of their services as well. As you choose between the two, here are some things to keep in mind:

• A conveyancer is a specialist property lawyer who focuses on residential property. That means they work on progressing transactions like your case every day.

• A solicitor is a qualified lawyer with extensive training in many aspects of the law. That means they can offer full legal services, including divorce proceedings. They’re more likely to offer you advice out of the usual scope of the process but remain relevant to your case. That, too, means they are pricier.

• Having a solicitor as opposed to a conveyancer to overtake your transfer of real estate ownership is going to cost more.

• Mortgage lenders usually only allow conveyancers or solicitors within their panel. They commonly pay the lender for the privilege of being the point people for such services.

• If you don’t use a conveyancer or solicitor on the lender’s panel, you’ll have to pay for the bank’s representation fees. That fee usually varies from bank to bank but averages at £200.

When to Use a Solicitor Instead of a Conveyancer

If you are dealing with complicated transactions, you’ll be better off with a qualified solicitor than a conveyancer. That is because they can perform more than just conveyancing. For instance, a solicitor can properly handle a boundary dispute or sellers getting divorced because they have knowledge beyond property conveyancing law. 

You can expect the matter to be addressed as best as possible. On the other hand, you can expect a conveyancer to handle your transaction of legal ownership transfer from beginning to end.

The Pros and Cons of Having a Solicitor 

As stated above, solicitors are more expensive than conveyancers, but they do bring something more to the table. Solicitors can handle more complex cases with urgent deadlines, but they sometimes work in small practices and have trouble providing continuity of service when they go on holiday.

Some solicitors may also insist on seeing you in person to confirm you are who you claim to be. That can be inconvenient, but it’s a safety measure they do. 

Conclusion

Choosing which to let overtake your legal transfer of ownership can depend on the complexity of your case. If it’s a straightforward transaction, you can make do with a conveyancer. However, if it involves complex matters, you may want to seek a solicitor instead. Most solicitors are highly specialised in their field, while others do conveyancing part-time.

New Help to Buy scheme set to be introduced from April 2021

 

 

Launched in 2013, the government’s Help to Buy equity loan scheme has enabled thousands of people to purchase a new build home with only a small deposit, with up to 20% of the property sale price covered by a government loan, or 40% in London. To date, over 270,000 homes have been purchased using the scheme, including over 24,000 properties in the capital.

The current scheme allows both first-time buyers and homeowners to benefit, however from April 2021 it will be changing. The launch of the new scheme will result in just first-time buyers being able to apply for the loan, which must be used towards buying a new-build home. The new scheme will also introduce regional price limits.

Do the changes limit the amount of money I can borrow?

First-time buyers will still be able to borrow up to 20% (40% in London) of the cost of a newly built home. The buyer will have to pay a minimum of 5% deposit for the home and then use a help to buy mortgage to fund the remaining cost of the property. The loan is interest-free for the first five years and then interest fees will be added in the years after that period.

What are the regional price limits?

Another new change in the scheme involves the introduction of regional price caps. This means that homes eligible for the scheme will have to be priced below the maximum amounts for each region.

Region	Price cap for Help to Buy homes April 2021 to March 2023
North East	£186,100
North West	£224,400
Yorkshire and The Humber	£228,100
East Midlands	£261,900
West Midlands	£255,600
East of England	£407,000
London	£600,000
South East	£437,000
South West	£349,000

 

Residential Conveyancing: Tips for Ensuring a Quick Process

 

One misconception about the real estate industry is that if both parties find the buyer’s proposal amenable, the title transfer should be quick and easy. Ideally, that would be the case. However, many stumbling blocks can prevent smooth transactions, from potential issues revealed during residential conveyancing searches to either party being slow to respond to requests for information. Here are tips to ensure that your conveyancing proceeds without a hitch.

Know How Much You Can Borrow before Buying

Before you make an offer, you should already know how much you can borrow. Once you have an accepted offer, it will be easy to go through the following steps. Applying for a mortgage comes with complications of its own, so if you can get one in advance, it would make the conveyancing process faster. Having a mortgage secured before buying will also show sellers that you’re serious about coming to an agreement.

Hire an Estate Agent instead of Going Independent

It can be tempting to attempt to purchase your house alone, especially if you’re thinking about how much money you could save. However, good estate agents are worth what you pay—they are efficient and have industry knowledge that will see you through unforeseen situations.

Double-Check Everything You Fill Out

The residential conveyancing process will involve plenty of document exchanges, and the quicker you respond to requests for information, the sooner the solicitors will move to the next stages. However, you have to be sure what you’re writing down is accurate—submit complete forms and be careful to fill them out as accurately as possible. Correcting mistakes will use up time and make the conveyancing even longer.

Hire a Conveyancing Solicitor

Getting a conveyancer is one of the best ways you can ensure that the transaction goes well. If you’re a first-time buyer, having an expert to guide you will help remove the uncertainty of the process. A conveyancer can help you understand aspects about the sale which are unclear to you, and they can take the lead on unfamiliar things. Even if you do a lot of reading, nothing beats having first-hand knowledge of something, and a conveyancing expert would have plenty of experience in transferring properties.

The conveyancer is also crucial in helping speed up the process. They will be aware of red flags and alert you about these—they can even suggest possible ways forward. A good conveyancer will put your needs above everything and keep you updated throughout the conveyancing process. Many of them make it a point to ensure that first-time buyers have a painless, hassle-free experience, so if you have plenty of other commitments or responsibilities, getting a solicitor for the transfer will be a great help.

Conclusion

Whether you’re buying or selling property, you’d need to instruct a conveyancing solicitor to carry out relevant legal processes. Transferring home or land ownership is no walk in the park, even for people who quickly reached an agreement about the sale. Having a solicitor enables you to speed up the process and handle all transactions with confidence and ease.