Hackney Regeneration Estates
Leaseholder and Freeholder Options Document April 2012
Foreword Councillor Karen Alcock Deputy Mayor London Borough of Hackney Hackney Regeneration Estates Leaseholder and Freeholder Options Pack Hackney Council made a pledge to residents that despite the economic climate we would uphold our commitment to the regeneration of the borough's estates, to improve the quality of residents’ homes. The Council has developed this range of options to enable leaseholders and freeholders to remain on the estates where they live, if they wish, recognising that they are a key part of the community. I hope you will consider which may be appropriate for your circumstances, and discuss this with Council officers.
Cllr Karen Alcock Deputy Mayor of Hackney
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Table of Contents Item
1. Introduction…………………………………………………………4 2. The Repurchasing Process - A Step By Step Guide…………..5 2.1 Consultation and initial contact 2.2 Valuing your Home 2.3 Entitlement to compensation 3. Your New Home Options………………………………………….11 3.1 New Home Options – General 3.2 Options for leaseholders/freeholders in financial difficulties and in need of support and assistance 3.3 Options for leaseholders and freeholders assessed as vulnerable and in need of support and assistance 3.4 Temporary Housing Option for Leaseholders and Freeholders 3.5 Example Cases Appendices Appendix 1. Glossary………………………………………….22 Appendix 2. Items to note……………………………………..24 Appendix 3. Useful Contacts and links……………….……26
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1. Introduction The Options available to Leaseholders and Freeholders on Hackney Regeneration Estates This booklet is designed for Leaseholders and Freeholders in Hackney who own properties on estates which have been designated by Hackney Council as ‘regeneration’ estates. This is a special status which has been given to an estate because a large amount of work is required on the buildings. This will often include complete demolition of selected blocks. For other blocks it might mean very extensive refurbishment which requires all residents to move out while the work is undertaken. On a number of the regeneration estates leaseholders and freeholders make up a significant part of the community. The Council has that a policy should be in place which encourages leaseholders and freeholders to remain rather than one which encourages them to leave. Thus helping the Estate Regeneration Programme fulfil one its principal aims of retaining the existing community. In many cases, Hackney Council will need to purchase your leasehold or freehold property before work can proceed. This process is often referred to as a ‘buy-back’ because it involves Hackney Council buying back property which the Council itself sold several years ago. This handbook sets out the way in which Hackney Council will go about repurchasing your property and the many options which are available to help you find a new home. These options are especially important for older people, who may find that their financial resources are very limited. For many people, having to move out of the family home will be very unwelcome news. The Council understands this, and this handbook is designed to reassure you about the ways in which the Council will be able to help you find a satisfactory replacement home. Please be assured that Hackney Council and Hackney Homes (which manages Hackney Council’s properties) are both committed to making your move as easy and as stress-free as possible. Further information will be issued as the regeneration of your estate proceeds. In the meantime, a member of the Hackney Homes regeneration team for your estate will have been appointed to answer all your questions and give you advice as to which of the Options listed in this Handbook could apply to you.
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2. The repurchasing process - a step by step guide
This document is for resident leaseholders and freeholders on Hackney Regeneration Estates that are in negotiation with the Council to agree a buy-back. This chapter details how this process will work from start to finish, and the service levels Hackney Homes will provide.
2.1 Consultation and initial contact Consultation Process and Public Meetings Before the regeneration begins and before residents’ homes can be repurchased, a comprehensive information sharing process will be undertaken. Residents of individual blocks or streets will be informed of a meeting to discuss the regeneration process, and advise on the aims and objectives of the regeneration process. This will include a session explaining how leaseholders and freeholders will be affected. Officers will fully explain the options available for leaseholders and freeholders, and the assistance and support that can be provided by the Council. Officers from the Council or Hackney Homes will also explain the next steps such as the process to secure the necessary Council approval to commence the repurchase of leasehold and freehold interests. When will my Home be repurchased? The redevelopment of estates is organised on a phased basis. This means that blocks are decanted and cleared in accordance with a programme, which is agreed (wherever possible) at the beginning of the scheme. This will be fully explained to leaseholders and freeholders during the consultation process. Starting negotiations At the commencement of the phase within which your property is included, each leaseholder or freeholder will be assigned a named caseworker who will be responsible for your rehousing. The officer is there to provide you with all the assistance, support and advice that you need. The Council in partnership with Hackney Homes will always try to negotiate a settlement with leaseholders and freeholders without the need for Compulsory Purchase Order.
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Interview Each leaseholder and freeholder will be invited for a private one-to-one meeting with an allocated officer to discuss your case and to answer any concerns that you may have about the process. The aim of the interview is to give clear information about what leaseholders and freeholders can expect when asked to move from their home. Both the Council and Hackney Homes are determined that all residents are treated fairly and equally, have confidence in the rehousing process, and receive a high level of service from members of the organisation. At this point you should advise your named officer whether you are a resident or nonresident leaseholder/freeholder. If you are a non-resident leaseholder/freeholder, it is important to note that the Council is under no formal obligation to re-house either your tenant or any other occupant in the property, and repurchase will only be concluded on a property that is vacant and where a vacant possession can be completed.
2.2 Valuing your Home If your property is included within the next phase of development which is about to commence, a Council surveyor will arrange to visit you and carry out the valuation of your property. Following this visit, the surveyor will then send you written notification of the open market value of your property, and how much Homeloss and Disturbance Payments you are entitled to. If you disagree with the Council’s valuation of your home, you are encouraged to obtain your own valuation completed by an independent chartered surveyor or valuer. This will then involve a negotiation between your valuer and the Council’s surveyor. If you decide to obtain your own valuation, there will be costs attached. The Council will pay up to 2% of the property value to cover these costs, which is what independent chartered surveyors usually charge. You can find an independent chartered surveyor by contacting the Royal Institute of Chartered Surveyors (RICS). Their web site is www.rics.org and their telephone number is 0870 333 1600. The factors taken into account to reach a valuation on a property’s market value The valuation is carried out by a qualified valuer or a chartered surveyor. The valuer considers the following matters in assessing the market price of the property: •
The internal condition
Any internal improvements to the property such as new bathrooms and kitchens
The location of the property and amenities within the area such as transport links, shops and services
The housing market in the immediate area, including recent sale prices
Open Market Value The Council’s offer will be at open market value. This is what the Council surveyors perceive to be the true market value of your home. The market value will be based 6 This means in terms of the value of a on the fundamental principle of equivalence. Hackney Regeneration Estates: Options Document property in a regeneration area, that Leaseholder the ownerand ofFreeholder the property should not be better or
The housing market in the immediate area, including recent sale prices
Open Market Value The Council’s offer will be at open market value. This is what the Council surveyors perceive to be the true market value of your home. The market value will be based on the fundamental principle of equivalence. This means in terms of the value of a property in a regeneration area, that the owner of the property should not be better or worse off than before the regeneration proposals. The valuation is valid for a 3 month period from the date of the Valuation Letter. What is the definition of Market Value? The definition of a fair market value, as described by Government, is the price at which the property would change hands between a willing buyer and a willing seller. This means that neither the buyer or seller are under any compulsion to buy or to sell, and both have reasonable knowledge of the relevant facts. What should I do if I disagree with the Council’s valuation? As mentioned in the valuation process, the Council encourage you to obtain detailed advice and a valuation from an independent chartered surveyor. The Council will cover these costs up to a reasonable amount. The surveyor will be able to confirm if the Council’s valuation is reasonable or not. If your valuer does not agree with the Council’s valuation, there may be a negotiation between the two surveyors. If they cannot agree upon a valuation, leaseholders and freeholders can appeal to the Lands Tribunal. The Lands Tribunal is an independent judicial body set up by the Government to resolve disputes concerning land issues. The tribunal has the powers of a court of law, and if an appeal is necessary the decision lies with the Court of Appeal. Cases are usually heard by a single member, but in certain circumstances they may be heard by two or even three members. The decision of the Lands Tribunal and, if necessary, the Court of Appeal is final. The value agreed by the tribunal is the value you would receive for your home, and this could be higher or lower than what the Council was offering. Leaseholders and freeholders should be aware that the Lands Tribunal determines who should pay the costs for the tribunal. This cost can be charged to you personally in some cases. Leaseholders and freeholders are strongly advised to seek legal advice before taking this course of action (see appendix 3 – Useful contacts and links or speak to your ITLA)
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2.3 Entitlement to compensation As Hackney Council wants to buy your property, it is important that you do not have to incur any costs because of the process. This section details what you as a leaseholder or freeholder are entitled to from the Council in terms of compensation. Homeloss Payment A Homeloss Payment is additional compensation that you are entitled to if you are forced to leave your home in certain circumstances, such as a regeneration scheme. This payment is in addition to the payment of the market value for your home. It is designed to compensate for the inconvenience, stress and upset caused by the move. To claim Homeloss, you must have lived in your property as your sole and principal home for at least one year. In calculating a homeloss payment, resident leaseholders and freeholders are entitled to receive 10% of the market value of their home, with a minimum payment of £4,700 and a maximum payment of £47,000. Non-resident leaseholders and freeholders who let their property are entitled to 7.5% of the market value to a maximum of £75,0001. In both cases you must have owned the property for at least a year. If you have owned your property for less than a year, you are only entitled to the minimum level payment. If there is no Compulsory Purchase Order (CPO) in place on your property, then the Homeloss payment is considered discretionary, as the council is offering it to you, despite not obliged by law to do so. How do I receive a Homeloss Payment? When Hackney Council completes the valuation of your home, you will receive a valuation letter that clearly sets out the market value of your home. The Council will detail the level of Homeloss Payment that you are entitled to on top of the market value. For example, a flat valued at £200,000 would receive a homeloss payment of £20,000. You will need to provide sufficient proof that you have lived in the property for at least a year - for example mortgage statements, Council Tax, bank statements and a utility bill. One of the proofs of residency must be a utility bill for electricity or gas, or you can use your electoral roll card or electoral roll letter as proof of ID. The Homeloss Payment is paid at the same time as the market value payment that you receive for your property when the Council completes the re purchase.
As at 15 September 2009. The Homeloss Compensation figure is reviewed annually for both resident and non-resident cases by the Communities and Local Government Department, which is the Government Department with responsibility for Housing Policy. This is up-rated if necessary.
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Disturbance Payments Disturbance Payments are another additional payment that leaseholders and freeholders are entitled to, which compensate you for certain costs because of the regeneration. How do Disturbance Payments Work? Leaseholders and freeholders can claim back the cost of items listed below as Disturbance Payments, plus the cost of your advice from legal and valuation advisors. The Disturbance Payment can be paid in two ways: Either 1. A one off payment of £5,000 without the need for Hackney Homes to review the receipts and invoices for the costs you incur. The payment is made at the same time as you receive the market value for your home, and the Homeloss Compensation. Or 2. Leaseholders and freeholders can provide the receipts for costs associated with moving home to the Regeneration Team, who will reimburse them. It is important to get a receipt or pro-forma invoice from the companies that you use to carry out the work; we strongly recommend that you use reputable companies which provide genuine receipts and invoices that feature:* •
Preferably VAT Registered and VAT Number
On company headed paper
Company registration details
Description of services provided
*If you require help in making upfront payments please contact your case officer, who may be able to assist you with financial support.
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Disturbance costs that you can claim from the Council** • Removal costs • Redirecting mail (for 1 year only) • Carpet alterations • Curtain alterations • Disconnection + reconnection of appliances • Disconnection and reconnection of services • Special adaptations of the replacement premises • Moveable fixtures and fittings • Incidental costs of acquiring new property • Special adaptations to replacement properties • Replacement carpets and curtains- However these are only permitted if you can demonstrate that your existing furnishings do not fit your new home, or cannot be modified to fit your new home. This is subject to written approval from your case officer.
• Other expenses as considered appropriate Legal / Surveyor Costs •
Surveyor’s fees arising from the acquisition of a replacement property
Survey fee and costs in connection with transfer of an existing mortgage or raising a new one
Solicitor costs for buy-back
Solicitor costs for new property
Stamp Duty on your new property (up to the agreed value of your repurchased property)
Mortgage redemption fees
Mortgage arrangement fees
Please note that if your property is being repurchased by the Council, you are not required to provide a Home Information Pack (HIP).
**If you are unsure about any Disturbance Payments or invoices you receive from suppliers, we strongly recommend that you speak to your Case Officer before you make any payment or commitment to a company. When choosing this option, government guidance is that the claimant shall justify his or her claim. The individual needs to prove that they should be compensated rather than expecting the Council to pay.
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3. Your new home options Many leaseholders or freeholders will wish to make their own arrangements when they have agreed a valuation for their existing property. This is an open market purchase – people who do not need the support of the Council to find a new home. However, the Council through Hackney Homes may be able to offer you options which could allow you to stay on the estate in one of the new-build homes. The below section 1 details these options that will typically be available to leaseholders and freeholders, depending on their circumstances and the funding of the project, as mentioned above. These options would usually be offered to leaseholders/freeholders at the point where your property is required for the next phase of redevelopment. Sections 2 and 3 cover the New Home Options with some additional and/or tailoring options, which may be available to leaseholders and freeholders who require extra assistance and support. If you believe you are a leaseholder or freeholder who requires extra assistance and support, you can apply to the Council’s discretionary support and assistance package; your case officer will explain how you can do this. While Hackney will make every effort to ensure that all of the options listed below are available on all regeneration schemes, this is dependent on each scheme’s funding and business plan. Leaseholders and freeholders/freeholders will need to check with their case officer to find out about the options available for your scheme. Please note that the where the additional rehousing options involve a swap to a new-build property, this option will only be available on properties being built on your estate.
3.1 New Home Options – General A. Open Market Purchase B. Leasehold Swap C. Leasehold Swap with Shared Equity D. Shared Ownership A: Open Market Purchase This option is the straightforward buy-back of the leasehold or freehold property for the agreed open market value. When leaseholders or freeholders accept the valuation and Homeloss and Disturbance Payment, the individual will then make their own arrangements to find a suitable new home
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B: Leasehold Swap A Leasehold Swap is when the Council will replace your present property with a newbuild property on the same estate of a similar value. We will swap your remaining lease to the new property. We will carry out a full valuation process on you’re your current and new-build properties, and work out a detailed arrangement if there is any cost deficit or excess. Key information for this option includes: • • • • • • • • • •
The leaseholder/freeholder’s existing property is valued by the Council The leaseholder/freeholder then selects a property of a similar size from those currently under construction on the estate. The new-build property is then valued by the Council and agreed with the buyer At the point of sale the open market value of the existing property is agreed by both parties It is expected that in most cases the leaseholder/freeholder’s current mortgage will be transferred to the new property Leaseholder/freeholder is notified of estimated annual service charge Annual service charge will be payable at the required level for the block/ estate Planned maintenance to be charged as per terms and conditions of the lease The length and terms of the lease will replicate your existing terms of lease. Leaseholders/freeholders will have the normal rights and responsibilities of a full owner-occupier.
C: Leasehold Swap with Shared Equity Leasehold Swap with Shared Equity (know henceforth as ‘Shared Equity’) is when the Council exchanges the remaining lease on your current home for a proportion of a lease on a new-build home of a similar size (or smaller) on the estate, and offers to buy the remaining proportion of the equity. In these instances where there is a shortfall between the sale price of your current property and the purchase price of your new one, the Council will consider allowing the swap to proceed but on a part ownership basis between the Council and yourself. This arrangement is known as shared equity, as the council shares the ownership of the property, and therefore the equity of the property, with you. The equity stake that you cannot afford to purchase outright is then owned by the Council, and is repayable at a future date under the following circumstances: •
When the property is sold or disposed of;
A change in ownership occurs or the lease is assigned to another person or persons;
The property is inherited by any person or persons other than the leaseholder/freeholder’s spouse.
Key information for this option includes: •
The open market value of the leaseholder/freeholder’s existing property is valued according to the process outlined above from page 5. 12
Hackney Regeneration Estates: then Leaseholder and Freeholder Optionsof Document The leaseholder/freeholder selects a property a similar size (or
The property is inherited by any person or persons other than the leaseholder/freeholder’s spouse.
Key information for this option includes: •
The open market value of the leaseholder/freeholder’s existing property is valued according to the process outlined above from page 5.
The leaseholder/freeholder then selects a property of a similar size (or smaller) from those currently under construction on the estate.
The new-build property is then valued by the Council and agreed with the buyer
If a difference in value occurs, Shared Equity can be offered on this portion of the property value
The minimum stake a leaseholder/freeholder –would normally have to purchase to qualify for an equity stake is 75%2, although there is potential for you to include extra savings in your equity and purchase a greater share
You will only be able to move to a property which is the same size as the one you currently own or smaller, determined by the number of bedrooms. For example if you currently own a 2 bedroom property, you will only be offered another 2 bedroom property. You may however choose to move to a smaller home, so you can own a greater share for the same investment
The leaseholder/freeholder is expected to include 100% of the equity from their existing home including Homeloss into the new home*
The property is jointly owned by the leaseholder/freeholder and the London Borough of Hackney, and the percentage of the property owned by each party is recorded on the lease
The leaseholder/freeholder does not have to pay any rent on the proportion of the property owned by the Council.
The leaseholder/freeholder can increase the proportion of the property they own up to full ownership of the lease3
At the point-of-sale the open market value of the property is agreed by both parties
The value of the property is then split according to ownership
It is expected that in most cases the leaseholder/freeholder’s current mortgage will be transferred to the new property (please see appendix 2 for further note on mortgage transfers)
The Council reserves the right to, in some circumstances, vary the equity stake required depending on the circumstances of the leaseholder. 3 This is known as ‘Staircasing’ - your lease will contain details of when and how you can staircase, and the level of purchase required on each occasion (where applicable).
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Planned maintenance will be charged as per terms and conditions of the Shared Equity lease
The leaseholder/freeholder will have the normal rights and responsibilities of a full owner-occupier
The annual service charge will be payable at the required level for the block/ estate
The length of the lease will replicate your existing lease.
The leaseholder/freeholder is not allowed to let or sub-let the property without first obtaining the permission of Council. This is because this option is only offered to those who will live in the property as their only or principal home.
If you intend to use your new property as an investment and rent it out at market rents either at the time of purchase or a later date, the Council would require you to purchase 100% of the equity of the new property as in option B.
All requests for a shared equity arrangement would be subject to a financial appraisal by Council officers.
Succession of the equity stake can only take place one time and will normally be limited to the leaseholder/freeholder’s spouse or a person living with them as their husband or wife (including civil partnerships), providing that they have occupied the home as their only or principal home at the time of the leaseholder/freeholder’s death. or someone who has inherited the property under the rules of succession,
*When the Council assesses a leaseholder/freeholder's level of need it will usually take into account all proceeds from the sale of the property, including the home loss payment. However if you can display a reasonable need for a proportion of the money to be used in relation to the cost of moving home, this amount may be excluded.
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D: Shared Ownership The Shared Ownership option involves a leaseholder/freeholder purchasing a percentage of a new-build home on the regeneration estate, and paying rent on the remaining portion owned by the Council. Hackney Council will value your existing property and agree its open market value with you. This agreed amount will then be converted into a percentage of the open market value of the new-build replacement home you are moving to. You will have the same rights and responsibilities as a full leaseholder but you will pay rent on the proportion of the property that you do not own. After an initial settling in period, you will have the right to purchase additional shares in the property right up to full ownership. If you increase the proportion of the property you own, the amount of rent you pay decreases. Shared Ownership is usually a leaseholder arrangement. Key information for this option includes: •
The Shared Ownership scheme is a part-buy part-rent scheme
Leaseholders will typically pay between 2.5% and 2.75% per annum rental element on the proportion of the property that they do not own (please refer to chart below)
Leaseholders will have to pay an annual service charge
Leaseholders will have to pay 100% of the Service Charge for the home whatever their percentage share may be
Shared Ownership leaseholders have the normal rights and responsibilities of a full owner-occupier
The leaseholder/freeholder is not allowed to let or sub-let the property without first obtaining the permission of Council. In instances where the leaseholder wishes to sublet, it is likely that the rent paid on the proportion not owned by the leaseholder would be payable at the market rate.
Leaseholders have the right to increase the percentage of the property they own up to full ownership of the property
Major works / planned maintenance costs are charged in accordance with the lease
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Worked example of a Shared Ownership scheme Interest on un-purchased equity share charged at 2.75% per annum Share Market Value % Share
£260,000.00 for 2 bed
£305,000.00 for 3 bed
Monthly Service charge
The above scheme is based on a scheme operated by a Housing Association in Hackney. The prices are based on the actual open market value of the properties in spring 2009. Hackney Council leaseholders and freeholders will be offered a similar scheme, but market values could change. This chart should only be used as an indication of likely costs. 100% of the service charge is chargeable to the resident irrespective of the % of equity owned.
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3.2 Options for leaseholders/freeholders in financial difficulties and in need of support and assistance It is recognised that some leaseholders/freeholders may have financial difficulties and would require some additional support and assistance in securing a suitable home. The financial position of the leaseholder/freeholder may preclude the household from being able to satisfy or meet all of the minimum purchase requirements of the various options. To qualify for the support options, we will ask for documents to be provided to confirm income and expenditure, although other documents may be required in certain circumstances. This checking is known as “verification” process. If it is decided that the household has financial difficulties and need support and assistance, the options listed below can be tailored to meet the needs of the leaseholder or freeholder. Leasehold Swap Leasehold Swap with Shared Equity Shared Ownership Renting in the Private Sector Option E. Renting in the Private Sector The Council has a list of accredited landlords in the private sector that will be made available for leaseholders and freeholders that wish to rent in the private sector rather than to purchase a home.
3.3 Options for leaseholders and freeholders assessed as vulnerable and in need of assistance and support The Council is also aware that there are leaseholders and freeholders that have complex needs which make them vulnerable. We will provide support to those leaseholders and freeholders with complex needs that are assessed as being vulnerable and assist them in securing alternative suitable homes through the option provided below. The council has a separate Vulnerable Leaseholder and Freeholder Policy in place to assist with the assessment of these cases. Your case officer will be able to provide further information on this process.
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Criteria for Vulnerability Assessment A Vulnerable Leasehold and Freeholder for the purpose of this policy is someone that is “less able to safeguard his or her personal welfare or the welfare of any children in the household, and will be in need of care and attention by reason of age, infirmity, or suffering from chronic illness or mental disorder, or substantially handicapped by being disabled”. Detailed consultations with be done with social services and relevant health practitioners to obtain the necessary information and documentation (e.g. care needs/packages) regarding the needs of the household to assess and determine vulnerability. If the outcome of the assessment is that the household is vulnerable, the leaseholder or freeholder must meet all of the following criteria to qualify for extra assistance and support: I. They must have been exclusively resident in their property for the previous two years II. The leaseholder / freeholder must not own any other leasehold or freehold interests in the UK or abroad III. The leaseholder / freeholder is deemed by the Council to be in financial hardship and as result will not be able to rent or buy in the private sector. Support option available: Option F: Apply for a social rented accommodation Under this option, leaseholders and freeholders can apply to the Council for rehousing. An assessment will be done as stipulated in the Council’s lettings policy document (How We Let Our Homes), which will take into account individual circumstances including the proceeds from the sale of the property and the homeloss payment. If the outcome of the assessment is that a leaseholder/freeholder qualifies for rehousing, appropriate priority will be awarded and the household will be placed in a band. The household will be able to bid for suitable vacant social rented properties in the borough using the Hackney Choices lettings system. The leaseholder/freeholder will not be able to remain in their existing property after it has been purchased by the Council.
3.4 Temporary Housing Option for Leaseholders and freeholders For the majority of those leaseholders and freeholders who decide to enter into either an equity swap or shared ownership arrangement, the phasing of the development is timed in such a manner, that you will most likely be able to move to your replacement home at the same time as you complete the sale on your current home.
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For a very small number of leaseholders and freeholders however, it may not always be possible for the Council to offer you an immediate move to a new-build replacement home. Unless you would be both prepared -and able- to arrange your own alternative temporary housing whilst your new home is being built, this would result in you not being able to take advantage of the full package of leaseholder/freeholder options. In order to ensure that the full options remain available to you, the Council is prepared to consider providing you with temporary housing in one of the existing void properties on the estate, until your new home is ready to move into. The offer of a temporary move to an existing void property on the estate would be contained within a formal legal agreement between yourself and the Council and subject to you accepting the following arrangements: -
The open market value of your current property would be agreed with you and funds to that value would be deposited by the Council into a unique account held on your behalf (an escrow account). The funds would only be released when you are ready to complete at a future date on your new-build replacement home.
If you are eligible for a Home loss payment, the full amount will also be paid into the Escrow Account when you move to the temporary accommodation.
If your current home has a mortgage, special arrangements will be made with your lender.
The value of the replacement home yet to be built will also be agreed with you at the time you move to temporary accommodation. This price will be fixed and not subject to any future market fluctuations.
The Escrow Account would not pay any interest to you but in return the Council will not charge you any rent or service charges.
To assist with the costs of the initial move, disturbance payments will be made to you.
You will occupy the temporary home during the whole period as your principal home.
It is intended that you will be granted a non-secure tenancy for the void property4.
We will seek to offer you a void property that will accommodate your housing needs.
This type of tenancy does not count as a formal allocation under Part 6 of the Housing Act 1996 so is not pursuant to the Lettings Policy.
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3.5 Example Cases The following examples have been developed in order to assist leaseholders and freeholders to assess the options that are available. Leaseholder 1 A retired leaseholder couple living in a three bedroom flat aged 70 who have paid off their mortgage. The couple have a small private pension and a state pension, and their income is £12,000 per year. The value of the property is £195,000. As the leaseholder has paid off the mortgage, all of the equity can be reinvested in a new home. The leaseholder would also receive the 10% Homeloss Payment of £19,500 and a Disturbance Payment of £5,000. An open market purchase would be possible, and they would be also be suitable for a Leasehold Swap with shared equity to a smaller new-build property. Leaseholder 2 A couple aged 35 with three children aged 5, 8, and 12, who live in a three bedroom flat. They have a mortgage of £70,000, with 19 years to run on the mortgage. They are unemployed and the mortgage is being paid by benefits. The property is valued at £250,000. The leaseholder would receive a Homeloss Payment of £25,000 and Disturbance Payment of £5,000. The leaseholder would be able to consider a Leasehold Swap with Shared Equity on a new-build 3 bed property. Leaseholder 3 A retired couple aged 73 in a one bedroom property. The couple have no mortgage, and their only income is the state pension. The property is valued at £160,000. As the couple have no mortgage on the property, all of the equity, £160,000 equity could be reinvested in a new property. The leaseholder would receive a £16,000 Homeloss Payment and a Disturbance Payment of £5,000. As the leaseholders own all of the equity within their property, either an open market purchase or leasehold swap is possible (if there is a new build property available on the estate for the value of their flat plus their savings and homeloss). Leaseholder 4 A 30 year old single man living in a two bedroom property, valued at £185,000. The leaseholder has an income of £26,000 per year, and has a mortgage of £100,000 with 20 years remaining.
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The leaseholder would receive 10% Homeloss Payment of £18,500, and a Disturbance Payment of £5,000. The leaseholder could make either an open market purchase or leasehold swap if he retained his existing level of mortgage loan. Leaseholder 5 A couple with the husband in work aged 52, and the wife not working. They have an income of £33,000 per year. They have two children, aged 8 and 10. They have borrowed extra money on their three bedroom property after taking out the original mortgage, and now owe £65,000 with 15 years left to run on the mortgage. The property is valued at £240,000. The leaseholder would receive a 10% Homeloss Payment of £24,000 and a Disturbance Payment of £5,000. The leaseholder would be suitable for a leasehold swap if they can continue with the existing mortgage arrangement. If this is not possible and the leaseholder can demonstrate that they cannot obtain a new mortgage, they will be considered for a Leasehold Swap with Shared Equity. Please note: the valuation of properties varies from estate to estate Thank you for taking the time to read this document. The Estate Regeneration Leaseholder and Freeholder Options Policy is an important document so please make sure you have read and understood it, and keep a copy somewhere safe so you can refer to it in future. If you have any queries about your options under this policy, or require further copies of the document then please contact the Council’s Housing Estate Regeneration Team via the switchboard 0208 356 5000 or your Independent Tenant and Leaseholder Advisor. If your leasehold property is required for regeneration then Council Officers will be in touch with you both by letter and in person in due course.
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Appendix 1. Glossary Non-resident leaseholder/ freeholder Cabinet: Compulsory Non-resident Purchase Order leaseholder/ (CPO): freeholder Confirmation of Cabinet: Order: Compulsory Purchase Order Court of Appeal: (CPO): Confirmation of Order: Communities & Local Government (CLG): Court of Appeal: Decent Homes Standard Communities & Local Government Disturbance (CLG): Payment: Decent Homes Standard Housing Association: Disturbance Payment:
A leaseholder/freeholder where the property in question is not their main residence and has not been for over 12 months from a given date. The Cabinet is the appointed body of Council that makes key decisions on policy issues such as regeneration and Compulsory Purchase Orders (CPO). A CPO allows certain bodies to obtain land or property for A leaseholder/freeholder where the property questionofis not purposes such as regeneration without theinconsent the their main residence and has not been for over 12 months owner. from a given date. Once the public inquiry has concluded the inspector will make The Cabinet is the appointed body of Council that makes key a judgment. The confirmed decision is published in one or decisions on policy issues such as regeneration and more of the local newspapers. If the process is agreed a copy Compulsory Purchase Orders (CPO). of the notice and a copy of the confirmed CPO must be A CPO allows certain bodies to obtain land or property for served on all people with interest in the land. purposes such as regeneration without the consent of the A court whose jurisdiction is to review decisions of lower owner. courts or Once the public inquiry has concluded the inspector will make agencies. a judgment. The confirmed department decision is responsible published inforone or The CLG is the Government more of the local newspapers. housing policy and legislation. If the process is agreed a copy of the notice and a copy of the confirmed CPO must be served on all people with interest in the land. A court whose jurisdiction is to review decisions of lower The Decent Homes Standard aims to provide a minimum courts or standard of housing conditions for all those who are housed agencies. in social rented homes – i.e. council housing and housing The CLG is the Government department responsible for association homes. housing policy and legislation. Disturbance Payment is made to compensate for reasonable expenses incurred in moving home during a regeneration process; for example, removal expenses, cost of altering soft The Decent Homes Standardmovable aims to provide furnishings, reconnecting fixturesa minimum and fittings, standard of housing conditions for all those who are housed telephone reconnection charges. in social rented homesor– Housing i.e. council housing and Housing associations Association’s in housing the United association homes. Kingdom are independent not-for-profit bodies that provide Disturbance Payment is made to compensate for reasonable low cost "social housing" for people in housing need. expenses incurred in moving home during a regeneration process; for example, removal expenses, cost of altering soft furnishings, reconnecting movable fixtures and fittings, telephone reconnection charges. Housing associations or Housing Association’s in the United Kingdom are independent not-for-profit bodies that provide low cost "social housing" for people in housing need.
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Homeloss Payment: Homeloss Payment is made in recognition of the personal distress and inconvenience suffered by people who are displaced from their homes as a result of compulsory purchase or under other qualifying circumstances. Land Registry: The body responsible for recording details of land ownership in England and Wales. Lands Tribunal: The tribunal has the statutory power to deal with various types of dispute involving land or property. Leasehold Swap: The Council will find the leaseholder a property of similar value and swap the remaining lease (mortgage and equity) to the new property. Open Market Value: Is the price that a good or service is offered at, or will fetch, in the Marketplace with a free and willing buyer and seller. Open Market Straightforward buy-back of the leasehold or freehold Purchase: property for the agreed market value. Relevant Date: Letter from government minister informing residents of whether a public enquiry will take place. The date of the letter is known as the ‘relevant date’. Resident A leaseholder for who the property in question is their primary Leaseholder residence and has been for at least 12 months from a given date. Statement of Case: Council serve a ‘Statement of Case’ on objectors and the appropriate government minister. This sets out the full particulars of the case to be put forward at the inquiry and justifies the reasons for making the CPO. Shared Ownership: The purchase of a share of a property, and payment of rent to the Council for the remainder. The purchaser’s monthly outgoings will include repayments on any mortgage you have taken out, plus rent on the part of the property retained by the Council, and service charge. Shared Equity: When the Council a housing association ooffers the option of buying a proportion of the value of the property and the leaseholder purchases the rest. R rent is not paid on the proportion of the property owned by the Council. The Council claims their portion of the property on disposal of the lease (e.g. sale). Tenancy The contractual terms and conditions between a tenant and Agreement: landlord
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Appendix 2: Items to note A 2.1 Value of the new-build homes The Council are committed to delivering high quality new homes on the regeneration estates, designed to high standards inside out and with much improved energy efficiency and insulation. As such, these properties tend to command a premium on the open market, when compared to the homes they are replacing. As such, it is more than likely that the new-build homes being delivered and potentially offered to you on your estate will be valued considerably higher than the existing homes of a comparable size. A 2.2 Mortgage transfer Please note that any existing mortgage you may have on your current property will need to be transferred to the new lease (depending on the value of your chosen new property) therefore you will have to notify your mortgage company. Your mortgageability may be impacted by any change in circumstances you might have experienced since you originally took out the loan. This could impact on your ability to raise the same level of mortgage as your existing one which needs to be considered when examining your future home options. A 2.3 Resident and Non-Resident Leaseholders and Freeholders These Leaseholder and Freeholder options are intended to allow leaseholders and freeholders the option to remain on their estate. As such, different options may be available to resident and non-resident leaseholders/freeholders depending on their circumstances. A definition of resident and non-resident leaseholders/freeholders can be found in the glossary. In general, a leaseholder will be considered resident if they have lived in the property for at least the last year as their sole or principle home. A 2.4 Claiming Housing Benefit on Shared Ownership Properties Anyone living in a Shared Ownership scheme (also called equity sharing) where they part buy and part rent the property is eligible for Housing Benefit on the rent subject to the resident meeting the eligibility criteria for the benefit. Housing Benefit will meet 100% of any eligible service charges. So if the service charge is something expected to be covered by Housing Benefit with a normal council tenancy, it would also be fully covered with shared ownership scheme. If the claimant owned 70% of the property Housing Benefit would still pay 100% of any eligible service charges it would not be apportioned. Housing Benefit can be claimed on shared ownership both where it is a private landlord, and a council or social landlord.
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A 2.5 Stamp Duty The Council will pay the cost of the stamp duty on your purchase of a new property to replace the one purchased by the Council. The amount of stamp duty paid by the Council will not exceed the cost of stamp duty on your (to the agreed value of your repurchased property) current property, at the rate at time of purchase. For example, a leaseholder who sold their interest to the council at the agreed price of £200,000 in April 2012; the stamp duty rate would be 1%5, therefore the value of stamp duty on that property would be £2,000. In this instance, if the leaseholder then purchased a replacement property that cost less than £200,000 with a 1% stamp duty rate, the council would reimburse the full cost of the leaseholder’s stamp duty. If the leaseholder purchased a property for more than the price of the original property, for example £230,000 with 1% stamp duty rate, then the Council would only reimburse the leaseholder up to the value of the stamp duty on the bought-back property. In this case the council would pay £2,000 of the stamp duty, and the leaseholder would have to pay for the excess of £300. A 2.6 Increasing your share of a Shared Equity or Shared Ownership Property at a later point If you wish and can afford to do so, you can buy further shares until you own the property outright; this is known as staircasing. Your leasehold agreement will detail how and when you will be able to purchase additional proportions of your property, and at what level. Something to bear in mind is that there are costs associated with staircasing each time you do it, so it is usually advised that leaseholders and freeholders do this in tranches (for example of over 10%); your lease agreement will specify the minimum size of share you can purchase each time you wish to staircase. A 2.7 Investing your homeloss payment as equity in your property in the leasehold swap, leasehold swap with shared equity, or shared ownership options. The Council’s initial financial assessment of your suitability for one of the leasehold swap, leasehold swap with shared equity, or shared ownership options takes into account the equity from the sale of your current property and your homeloss payment. However if you can display a reasonable need for a proportion of the money, to be used in relation to the cost of moving home, this amount may be excluded. This request will need to be made in writing to the Council, and you will need to speak to your case officer.
Stamp duty rate as of 25 March 2012
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Appendix 3 Useful Contacts and links Communities and Tel: 0303 444 0000 Local Government Website: http://www.communities.gov.uk/corporate/ CPO and Compensation (Homeloss and Disturbance) guidance from Communities and Local Government can be found here: http://www.communities.gov.uk/publications/planningandbuilding /compulsorypurchase Citizens Advice Bureau
Hackney Citizens Advice Bureau 300 Mare Street, Hackney, LONDON, E8 1HE Tel: 0844 499 1195 (Adviceline - limited hours) Fax: 020 8985 0462 Website: www.eastendcab.org.uk
The Leasehold Advisory Service (LEASE)
Maple House, 149 Tottenham Court Road, London W1T 7BN
Leasehold Advice Centre
Birch House, Guildford, Surrey GU6 7LS
Tel: 020 7383 9800 Website: http://www.lease-advice.org/ Email:
01483 268 434
Website: http://www.direct.gov.uk Link to information on Getting Legal Advice and Aid: http://www.direct.gov.uk/en/Governmentcitizensandrights/Gettin gLegalAdvice/Gettinglegaladviceandlegalaid/index.htm
The Royal Institution of Chartered Surveyors (RICS)
12 Great George Street, Parliament Square, London, SW1P 3AD
The Lands Tribunal
Procession House, 55 Ludgate Hill, London, EC4M 7JW
Tel: 020 7222 7000 Website: http://www.rics.org Tel: 020 7029 9780 Website: http://www.landstribunal.gov.uk
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Communications and Consultation, Room 82, Hackney Town Hall, Mare Street, Hackney E8 1EA