Can I buy an affordable house in Cornwall?
Rising house prices mean more people could be considering buying an affordable house in Cornwall. Jane Stewart, Chartered Legal Executive and Head of Coodes Solicitors’ Affordable Housing team, outlines the process.
In recent months, we have heard so much about unprecedented demand for property in Cornwall. House prices have risen during the pandemic and there are fewer private rental properties available. This could be why our affordable housing team is so busy dealing with enquiries from people hoping to get onto the property ladder.
Before you start searching for an affordable property, it is a good idea to do some research. This will help you work out if you are eligible for an affordable home and what you need to do to access any Government schemes.
What is an affordable home?
First of all, it’s helpful to understand what constitutes an affordable home. It means a property that is being sold for less than its market value. It is usually offered as part of a scheme run by the Government or council. Many are aimed at first time buyers and some are specific to people with a local connection to the area.
Am I eligible for an affordable property?
The eligibility for affordable housing varies across different schemes. Broadly speaking, however, people are eligible for an affordable property if the household income is less than £80,000 a year and they cannot afford to rent or buy a suitable home on the private market.
Most schemes are either open to first-time buyers or people who have previously owned a home but cannot now afford to buy a property. Home owners may also be eligible in specific circumstances, such as being unable to buy a property following the breakdown of a relationship.
Before going on the waiting list to access a scheme through Cornwall Council (or any local Council), you will also need to prove that you have had a connection with the local area usually for at least five years. The specific details of eligibility will be included in the Section 106 agreement that the developer has signed up to.
In addition, you will need to have a mortgage in principle. Most lenders require a deposit of 10 to 15 percent of the property value.
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What affordable home schemes are available in Cornwall?
There are a few different schemes available if you want to buy an affordable property in Cornwall. It is important to get financial and legal advice before you take steps to access any of these schemes. Not all schemes are aimed at new build properties. Many Shared Ownership and discounted properties will be resales.
A popular option at the moment is to buy an affordable home through a shared ownership scheme. This means you buy a share of the property – usually between 25 and 75 percent – and pay rent on the rest. You may then want to increase the proportion of the home you purchase over time until eventually you will own 100% and the freehold will be transferred to you. This is called staircasing.
To buy through shared ownership you need to meet the following criteria:
- Your household income must not exceed £80,000 a year.
- You can demonstrate that you cannot afford to buy a property that is suitable for your needs.
You must also fit into one of the following categories:
- You’re a first time buyer.
- You have previously owned a property but cannot now afford to buy one.
- You are a homeowner but cannot afford a new home that meets your needs.
- You already have a home under shared ownership and want to move.
If the home is in a designated protected area (DPA) there will be additional requirements. A DPA is an area designated by the Secretary of State which is predominantly rural and where social housing needs to be retained. In these areas, a Housing Association will either restrict staircasing to 80% or the lease will contain an obligation by the shared owner to sell the property back to the Housing Association. The Housing Association cannot refuse to take it back (this is called a Mandatory Buy Back clause). These measures ensure that the property will be permanently retained as an affordable property
Help to Buy Equity Loan scheme
If you are a first time buyer, you may be able to use a Help to Buy Equity Loan to buy an affordable home. The Help to Buy Equity Loan scheme recently changed and a new scheme launched in April, which will run until 2023.
The Help to Buy Equity Loan scheme can be a good way of getting onto the property ladder. There are certain criteria you need to meet, including a cap on the value of properties you can purchase through the scheme. This means that in Cornwall you cannot buy a home priced at more than £349,000.
Section 106 Discounted Market Sale
In Cornwall, many developers need to provide a certain number of affordable homes to meet planning criteria. They then sell these homes at a discount through a scheme called the Section 106 Discounted Market Sale.
The aim of the scheme is to provide local people with affordable housing. Therefore, alongside other criteria, you will need to demonstrate that you have a connection to the town or local parish. This could mean you have lived there for a certain number of years or that you work in the town or parish. You could also qualify if you have family in the local area who you need to support.
Affordable housing is important here in Cornwall. That’s why we have a specialist Affordable Housing team of conveyancers with expertise in this particular area of property law. We are familiar with all of the affordable housing schemes so we can offer the most up to date advice.