Auldearn – Rent to Buy Scheme 1

Rent to Buy Scheme (RTBS) – Information Brochure, Auldearn

(under construction)

Auldearn – 47, 48, 49 & 50 Montrose Avenue, Auldearn, IV12 5TT

An exciting opportunity to rent, then buy an affordable home in the popular village

of Auldearn. Three homes are detached, with 3 bedrooms and 1 has 2 bedrooms

with attic trusses, to allow future extension into the loft if required.

The homes all have a lounge/kitchen, bathroom, garden and off-street parking.

Please read on to find out how the Rent to Buy Scheme may help you.

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The Rent to Buy Scheme (RTBS)

The Highlands Small Communities Housing Trust has been working with The Scottish

Government and the Highland Council to bring forward a second phase of this

innovative housing scheme which will provide many new homes in various rural

communities. The project is being managed by The Highlands Small Communities

Housing Trust (HSCHT), a registered Scottish Charity (SCO 27544).

HSCHT, September 2015

(This document is based on Scottish Government, New Supply Shared Equity Scheme Information

Brochure. Crown Copyright 2012, which has been adapted by HSCHT to explain the RTBS in detail)

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Contents

1. What is the Rent to Buy Scheme (RTBS) and how does it operate?

2. Who is it for?

3. What are the benefits?

4. How do I know if I am eligible?

5. The new homes

6. Are there any special conditions?

7. Do I have to pay any fees?

8. Mortgage Finance

9. What else do I need to know?

10. How do I apply?

11. What happens if my circumstances change?

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1. What is the Rent to Buy Scheme and how does it operate?

The Rent to Buy Scheme (RTBS) aims to help people who wish to become home

owners by allowing them to rent a home for 5 years whilst saving up for a deposit.

The RTBS aims to help people who are on modest incomes to become home

owners in rural communities by returning a cash-back “loyalty” sum to the tenant at

the end of their 5 year rental period if they purchase the property (at a price fixed

now). This sum is used for the deposit required to secure a traditional mortgage. The

tenant then becomes the owner!

If you can afford to rent a home but do not have access to sufficient savings for a

deposit to purchase a new home just now, the RTBS may be able to assist you.

2. Who is it for?

The Rent to Buy Scheme aims to help mainly, but not exclusively, first time buyers

who wish to own a home, such as people living in social housing; private rented

housing; or with relatives. But it can help others too. For example, it may be able to

help you if you are looking for a new home after a significant change in your

household circumstances. If you currently own your home or part-own a property

you will need to sell your interest in that property to make you eligible for the RTBS.

HSCHT has the right to allocate the homes in accordance with availability and

eligibility. We are expecting to receive a lot of applications for the scheme.

To qualify for a Highlands Small Communities Housing Trust (HSCHT) home, we

prioritise those who are either,

(i) living in the area where the homes are located,

(ii) have immediate family there,

(iii) work in the area,

(iv) or have a need to live there.

(v) Those currently living out with the area who can add social

and economic benefit by moving to the area.

(vi) Those who can release a social rented home

We will also look at your finances to check that you can afford to proceed with the

scheme and that you are unable to compete on the open market in your area.

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3. What are the benefits?

There are numerous benefits with the RTBS and some of these are highlighted

below.

The Scottish Short Assured Tenancy Agreement allows you to rent your home

on a 6 monthly basis for up to 5 years. The rents are set at the Scottish

Government recognised Local Housing Allowance. This is typically less than

the market rent and is reviewed annually.

The End User Agreement means that you have the right and the option to

purchase the home at the end of the rental period.

A reservation fee is payable to secure your allocation.

The house price is set now. This means that if house prices increase during the

rental period, you will not have to pay any more. (Although it is unlikely,

please be aware that house prices could fall and you will still have to pay the

agreed price for the home if you choose to purchase it).

The homes are provided at typically 20% discount from the market values for

homes in each area.

Please see the examples below of how much you could potentially save with the

RTBS.

Example based on a house with a market value of £175,000.

Please note that the above example is for illustrative purposes only. It shows the potential benefits and savings and whilst they

can be added together in certain cases, it is unlikely that every benefit and/or saving would apply to each applicant.

4. How do I know if I’m eligible?

Example 1 (based on a 5 year rental period)

Discounted price of the new home now (typically 20% discount)

£140,000

Cash back amount IF you purchase £ 8,750

Amount of funding still required after cash back £131,250

Benefits of fixing the house price now is:

If a house costing £140,000 now rose by 1% in value per year over 5

years, it would cost £147,141. As HSCHT are able to fix the house

prices now this could potentially save £7,141.

Benefit of renting for 5 years is:

If you bought the home now for £140,000 and had a capital and

interest repayment mortgage you could potentially save on interest

by joining the RTBS.

Benefit of renting with RTBS:

If you paid the market rent for the home (e.g. £650 per month), this

could potentially save £5,400 over the 5 years at a reduced rent of

£560 per month.

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We will assess all applications to ensure that applicants can afford the monthly

rental payments and that they are likely to secure a mortgage for the home in 5

years’ time, based on their current circumstances.

The home must be your permanent residence and the home you are allocated

should be suitable for your current housing needs, where your finances permit. We

would refer you to paragraph 8 with regard to mortgage finance.

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5. The homes.

HSCHT are pleased to be working with local contractors, James MacQueen

Building Contractors Ltd. http://www.skyebuilder.co.uk/

3 homes:

3 double bedrooms - Selling Price £145,000

(Typical discount 25% of market value)

Cash back £8,750

Monthly rent £560.00

1 home:

2 double bedrooms and attic trusses to allow future extension

Selling Price £135,000 (Typical discount 25% of market value)

Cash back £7,750

Monthly rent £475.00

All homes:

Detached homes with gardens and off street parking

Purchasers Equity share 75% (*Rural Housing Burden applies, see over)

Reservation Fee £500.00

November/December 2015 (to be confirmed)

The homes:

Heating and hot water is provided by a Worcester Greenstar Gas Boiler with Purmo

Radiators. EPC =

The kitchen units have been selected from Howden’s Greenwich White Smooth

range (or similar). Wall units, worktops and wall cupboards are provided as per

plan. There is no hob/cooker provided. No other appliances are provided.

The bathroom will have a bath with bath/shower mixer taps and a curtain pole for

a shower curtain. The wash hand basin and the W.C. will be Lublin Range suites (or

similar) and the bath is Roca Carla Steel.

The walls and ceilings will be plaster and finished with 2 coats of Timeless White

paint.

The floors will be concrete overlaid with latex self-levelling screed and no floor

coverings are included.

The windows and external doors are made by Nordan N.Tech.

The exterior of the home will have partial larch cladding, which has not to be

painted and it will gradually lighten with age.

The gardens will be grassed.

While we believe the above to be correct at the time of printing, please note that the above

specification may be altered by HSCHT or the contractors prior to handover.

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6. Are there any special conditions?

Yes. There is a *Rural Housing Burden attached to the Title of the home. This is a

means of protecting the original discount offered on the home.

If you buy the home, you will have full title to the property. Although, as the home

sale price is discounted the title has a Rural Housing Burden attached which means

that the HSCHT holds a pre-emption right. Whilst you can pass the home onto your

children, if you decide to sell it there is a right of pre-emption which gives HSCHT the

option to buy it back for the previously agreed equity share. Please see an

example below for your information. Full details will be provided to successful

applicants.

Alternatively, Julie could consider transferring the home to her daughter.

Example 2 (Year 2025)

Julie and her daughter have purchased a home through the RTBS.

Julie has been offered a new job in Yorkshire and has decided to

move.

Typical open market house value in 2015 (100%) £175,000

Original discounted house purchase price (80%) £140,000

Equity share 80%

House price increase over 10 years 10%

Open market house price value in 2025 (100%) £192,500

Amount HSCHT can buy back the home for (80%) £154,000

Increase for Julie (£154,000 minus £140,000) £ 14,000

(Plus any capital amounts she has repaid & less legal fees)

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7. Do I have to pay any fees?

Successful applicants will have to pay a non-refundable Reservation Fee of £500 to

secure their allocation. As this fee is non-refundable, we would strongly

recommend that you speak to your bank or financial adviser to discuss the

affordability and availability of a mortgage.

Whilst it may be advisable to engage a solicitor now, when the home is purchased

applicants are required to appoint a solicitor to act on their behalf to complete the

work involved in buying a home. The solicitor’s fees are the responsibility of the

purchaser. HSCHT’s solicitor will deal with its interest in the scheme.

When you take out your mortgage, there may be arrangement fees or valuation

fees which you need to pay to the lender at the time.

8. Mortgage Finance

While HSCHT will conduct a financial assessment to make sure that the house is not

sold to someone who is unlikely to be able to afford the rent, we cannot and do

not carry out any kind of mortgage assessment or arrangement. It is the

responsibility of the purchaser to ensure that they have the appropriate finances in

place to fully fund the purchase. HSCHT can give some advice as to the banks that

we commonly work with and are familiar with the Rural Housing Burden model.

However, HSCHT cannot be held responsible for Banks changes of policy and for

mortgage products which were available at the outset of the scheme being

subsequently withdrawn. As already stated, we strongly recommend that you take

financial advice before entering into any commitment under this scheme in order

to be satisfied that the appropriate mortgage products will be available to allow

you to complete any purchase.

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9. What else do I need to know?

Please be aware that if you are not able to purchase the home as agreed the

tenancy agreement will end and you will have to move out of the home.

We have consulted with Murchison Law, Inverness for the appropriate legal advice

regarding the Rent to Buy Scheme. They will be happy to speak directly to your

solicitor if required. You can contact Murchison Law on 01463 709 992.

HSCHT will provide anonymous statistics to the Scottish Government as requested

by them. This will include information on applicant’s income but not personal

details.

Please note that the cash back sum is provided only if you purchase the home.

(This is because the purpose of the cash back incentive is to provide the cash

deposit lenders typically require.)

The property is available to rent for up to 5 years only as HSCHT has to repay the

development funding provided by the Scottish Government from the house sales.

In some cases, the rental term may be less than 5 years, depending on the

completion of the homes.

Prior to allocating the homes HSCHT will appraise applicant’s financial situation and

assess their ability to pay the rent and the mortgage.

HSCHT has a valid standard Consumer Credit Licence (633499) and is a registered

Scottish Charity no. SCO 27544 and a Company Limited by Guarantee (SC-182862).

Our Memorandum and Articles of Association allows us to provide assistance,

including grants and financial help to people who need affordable housing.

HSCHT’s Landlord Registration number is 131303/270/23030.

HSCHT has taken care to ensure the accuracy of this brochure, it cannot be held

responsible for any errors or omissions.

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10. How do I apply?

To apply for the Rent to Buy Scheme please contact Morven Taylor at HSCHT

E: morven.taylor@hscht.co.uk

T: 01463 233 549

The process is outlined below:

1. Complete HSCHT’s application form.

2. Provide HSCHT with the supporting documents listed on the enclosed form to

prove that you can fully fund your rental payments and in due course, your

mortgage. Please return the form and documents by the specified date

otherwise your application may not be considered.

3. HSCHT will assess the applications and allocate the homes according to the

allocations policy. All applicants will receive a letter to let them know if they

have been successful or not.

4. Successful applicants will be sent a letter and a reservation form, which they

need to return to HSCHT with the reservation fee.

5. HSCHT will instruct their solicitor to provide successful applicants with the short

assured tenancy agreement, the end user agreement and other associated

paperwork for the home. You will be required to sign up to the RTBS at this

point, and whilst not essential you are advised to take advice from your own

solicitor on all aspects of the scheme.

6. You will be kept up to date as to when the home will be ready for

occupation.

7. If you have paid a reservation fee and decide not to continue with the rent

to buy scheme, the fee will be retained by HSCHT and the home re-

allocated.

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11. What happens if my circumstances change?

If your circumstances change for any reason then HSCHT will make every effort to

work with you before and during your tenancy to address any concerns or

difficulties which you may have. At the outset of the process we assess the risks and

you would be unlikely to be offered a home if HSCHT did not think it was affordable

for you.

Below are some examples of what may happen if your circumstances change.

Example 4

Tommy and Rachel are renting a home and they have to move

away to Peebles to help look after Rachel’s Mother. They have been

renting their home for 3 years through the RTBS and they give HSCHT

2 months notice to end their tenancy.

In this case, they are not eligible for a cash back payment as they

were not able to buy the home. But, they did get the chance to rent

a home for 3 years at an affordable rent.

HSCHT will then advertise for a new tenant to take on the home.

Example 3

Davie and Lynn are renting a home under the RTBS at £560 per

month.

Unfortunately, Davie lost his job and the family were unable to pay

the rent. They were worried about becoming behind with their rental

payments.

They contacted HSCHT and were advised to make a claim for

housing benefit. They could claim housing benefit up to the rental

amount, and they were able to keep up to date with their

payments.

Before the purchase date Davie managed to secure a new job and

continued with the RTBS as planned.

(In the event that Davie’s unemployment had continued into year 5

and due to receiving benefit payments they were unable to secure

a mortgage, they would have had to move out of the home. HSCHT

would assist where reasonably practical to help to find them suitable

alternative housing by liaising with key housing partners).

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12. House Plans

3 bedroom homes: (nos 47,48 & 49)

Kitchen plan

Please note: no appliances are provided

Indicative room sizes (metres)

Room sizes Square metres

Bedroom 1 10.7 Bedroom 2 10.3 Bedroom 3 10.9

Lounge/diner 31.4 Bathroom 4.2

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2 bedroom home with attic trusses: (no 50)

Kitchen Plan

Please note: no appliances are provided

Indicative room sizes (metres)

Room sizes Square metres

Bedroom 1 11 Bedroom 2 10.9

Lounge/diner 27.2 Bathroom 4.8

Please note that these sizes should not be used for measuring floorings. Allocated tenants will be provided with an opportunity to measure the home shortly before moving in.

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Location plan

Nos. 47, 48, 49 & 50 Montrose Avenue are being provided through the Rent to Buy

Scheme.

No 50 (below) has 2 bedrooms with attic trusses and no’s 47, 48 and 49 each have

3 bedrooms.

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Please contact us if you have any questions or would like more information, we’ll be

pleased to help you.

HSCHT 2015

info@hscht.co.uk www.hscht.co.uk

7 Ardross Terrace

Inverness

IV3 5NQ

01463 233 549

/HSCHT

@HSCHT