Buying a house in the UK has got easier for people with financial constraints. Now, to own a house, a buyer needs to pay just a small portion of the total price; housing and equity loans take care of the rest. Depending on the paying ability, a buyer can also partly buy a house and have the option of fully buying the house later. Government-backed shared equity schemes (also known as HomeBuy and FirstBuy) have made it possible for the aspiring buyer.

About Shared Equity Scheme

The scheme intends to help people who are unable to pay the initial amount which is needed to secure a housing loan. Basically, the lender fully or partly extends the initial amount (also known as equity loan) and claims a share of the future market value of the house. For example, if the loan amount constitutes 15 percent of the current house value, the lender is entitled to 15 percent of the future market value of the house. The borrower needs to pay a small amount to be eligible for the scheme.

About Shared Ownership Scheme

The scheme allows a buyer to partly buy a house from a housing association, with the option of acquiring the remaining shares later. The buyer needs to pay a rent on the remaining shares of the house. The percentage of initial ownership depends on the agreement between the buyer and the housing association. The housing association determines the rent for the remaining shares of the house.

Difference between Shared Equity and Shared Ownership Schemes

The shared equity scheme enables the buyer to fully buy a property while under the shared ownership scheme; the buyer acquires only a portion of the property initially and pays a rent on the remaining property shares.

Advantages of Shared Equity Scheme

The scheme is financially convenient for a buyer. First, a buyer needs to pay just a small amount to buy a house. Second, since the scheme primarily intends to aid buying of houses and not flats, a buyer is not usually required to pay service charges. Last, a buyer is usually able to secure a good mortgage rate.

Disadvantages of Shared Equity Scheme

Practically, it may not be easy for a buyer to avail of the scheme. First, the scheme is available only on selected properties. So, it might be difficult to find a property. Second, the buyer may need to pay stamp duty tax on the property. So, financially, the scheme may not be all that comfortable. Last, to be eligible for the scheme, you need to have a certain level of income.

Governmental Initiatives

Specifically, two government-backed schemes (known as HomeBuy and FirstBuy) make it easier for people to own houses. Under both schemes, an aspiring buyer can secure a mortgage for a house by taking an equity loan. The buyer, hence, needs to pay only a small amount to buy a house.

The schemes, though governed by good intentions, may not be sustainable. The scheme assumes the buyer to be financially solvent which may not be the right assumption always.

First time buyer mortgages

Another bank offering to first time buyers attractive deals is The Co-operative, with products such as 3 year fixed rate and lifetime tracker.

Rates correct on 30th March 2012

However, to make the most of your remortgage, it is worth considering the savings and costs.

Like any financial transaction, a remortgage usually has both pros and cons. Below are a few remortgage tips to bear in mind when you are evaluating your remortgage options.

There are a great variety of different remortgages on the UK mortgage lending market. These can include fixed-rate remortgages, capped rates, trackers, cashback mortgages and flexible loans, as well as many more. To the uninformed, these mortgage loans can be perplexing, particularly as each has both pros and cons. The lender you choose for your remortgage should explain fully the remortgage advantages and disadvantages of each loan product. If they do not, consider taking independent financial advice.

When remortgaging, stay aware of your new lender’s standard variable rate. Whether you are getting a fixed, tracker, capped or other remortgage, when it expires you will have to pay the standard variable rate offered by the lender. Compare your lender’s standard variable rate with those of other lenders to assess how competitive they really are.

Stay as flexible as possible with your remortgage. Many mortgage lenders apply hefty early repayment charges (designed to encourage borrowers not to remortgage) to some of their loans. Often, these charges can be really expensive, equating to several months of mortgage payments. Before choosing a remortgage, therefore, check how much your current early repayment charges are and how much those applied to your new loan will be.

Make sure you compare arrangement fees for your remortgage. Many mortgage lenders do not charge a fee for remortgaging, however, these costs can be made up in other ways such as charging for the legal fees and valuation. Some loans include extremely high arrangement fees.

You can remortgage as often as you want, but bear in mind the cost of early repayment charges and arrangement fees. However, evaluating how competitive your mortgage loan is every year, and working out if remortgaging could save you money, could result in lower interest repayments over the life of a loan.

Please see our guide to the remortgage process for more information.

We can only attribute these figures to the end of stamp duty holiday. By numbers, the amount of deals approved in March was 60,000, an amount not seen since the start of the credit crunch, back in 2008.

First time buyers buying before the 24^th of March deadline were able to avoid the 1% charge on the price of property, to be precise on houses worth between £125,000 and £250,000 – equating to a saving of between £1,250 and £2,500.

This data goes also in line with other figures released on the same period that the number of enquiries and transactions has risen considerably in the months preceding the end on the payment holiday.

To add up, the levy announced in the budget by the means of a charge on multi million pound homes could had also inflated these figures.

David Brown, commercial director of LSL Property Services commented:”The Chancellor’s surprise announcement of the 7% super-rate of stamp duty for properties worth more than £2 million meant many high-value transactions were also rushed through on budget day.”

Although a relatively busy month, the average house price in England and Wales only increased minimally, up by 0.2% in February to £221,543.

Mr Brown also added: “March’s modest price increase indicates that, although transaction numbers rose rapidly last month, the bulk of the activity was for properties below the £250,000 threshold.”

This move is expected to give mobile banking and payments a shot in the arm since Android is the fastest growing handset brand in the UK. Previously the technology was only available on selected Samsung products which have not been as popular in the UK. Android is fast catching iPhone up in terms of what it can offer in apps and usability.  The technology used is known as ‘near field communications’.

So where can you spend? Chains like Subway, McDonalds, Pret a Manger are just some of the 70,000 outlets that will accept the new technology. By 2013 there are estimated to be over 130,000 places in the UK where this technology is accepted. If convenience and security can be achieved together, does this spell the end of the credit card? It’s not hard to imagine a day when we might compare credit cards to an old-fashioned bag of coins.

Mobile banking is likely to be spurred on by products like Barclays PingIt, which has stated that its users will be protected against fraud by its own guarantee. Users of the Orange service will have their handset linked to their ‘Quicktap’ account which can be pre-loaded with £100. A YouGov study claims that 42% of people are keen to use their handsets for mobile banking.

Orange are very optimistic about being on the leading edge of a new trend in shopping. They are confident that the more widely available the service becomes across handsets and mainstream bank products, the more confident people will become about going shopping with their phones.

The scheme is only available to borrowers who have managed to raise a 5-to-10 percent deposit and only applies to new-build homes in England purchased for under £500,000 or less. The developer and lender must both be signed up to the scheme, and the purchaser must be buying the home as their main residence. The scheme doesn’t apply to Shared Ownership or other Affordable Housing purchases.

However, a number of lenders and developers are already offering mortgage products that come under the scheme. Barclays, Nationwide and NatWest have joined forces with developers Barratt, Bellway, Bovis, Linden Homes, Persimmon, Redrow and Taylor Wimpey. A spokesperson for Barratt Homes said 20,000 people had already registered for more information about the scheme. Mortgage products are currently available with fixed rates between four and six percent.

Shadow housing minister Jack Dromey told the BBC: “There are questions to answer about this scheme. Why has the number of major lenders participating in the scheme fallen from seven to three and the number of builders from 25 to seven compared with when this scheme was originally announced?

“Reports have also suggested that few, if any, mortgage products will be available straight away and that the interest rates might not be attractive to would-be buyers.”

But Mark Harris, chief executive of mortgage broker SPF Private Clients, told the Guardian that the products are “not bad”, though he warns: “Borrowers should consider whether a two-year fix is a good bet in the current low interest rate environment when rates are not expected to rise for a couple of years. Because borrowers will only have a small deposit, if property prices do fall further over the next couple of years it could be difficult for them to remortgage again in two years’ time when their LTV may have risen above 95%.”

Other critics, like first-time buyer pressure group PricedOut, point out that this scheme exists mainly for the benefit of the construction industry and the mortgage lenders. Their chief concern is that the New Buy scheme will continue to inflate house prices, whereas market pressure suggests that developers should drop the price of properties.

Some expert mortgage brokers suggest that, rather than taking up the scheme, buyers may be better off waiting for the inevitable market correction.

First time home buyers should be prepared to deal with the long-term mortgage debt and responsibility of owning a home. The good news is that many people have begun to take this seriously. That is what has needed to happen for the market to come back to a sense of normality. The decade leading up to the housing crash was by no means normal. It was a fire that was fuelled by greed and illegal incitement.

Market trends around the UK are mixed. In some areas, housing values are rising but in general they are declining, giving the market an overall mixed rating. This is good news for those consumers still looking for a home. In many areas, it is still a buyers market, and if you can qualify for a home, than the bargaining power is certainly on your side of the table.

Advice for potential home buyers is really to shop the market. Look at the trends in data for home values across several market areas. Those buyers who know the market will likely come out much farther ahead than those that buy based on aesthetics. There are great deals out there and those are exposed by looking at the trends in home prices over the last 20-30 years. Every house is a steal if you compare today’s price to the high prices before 2008. If the house sold for ₤300,000 in  2007 and is now has a market price of ₤150,000, then yes it certainly does look like a bargain. It may not be the bargain that is presented, especially if similar homes in the area are selling for less. Do the homework.

For those people who are unable to buy a home at the present time, the best course of action is to invest in your own savings accounts.  Save as many pounds as possible, because every pound saved brings you that much closer to qualifying. Sit down with a mortgage broker and make a financial plan. Explain your desire to buy a home and find out specifically what the requirements are. Those requirements are your plan of action. If you think back, how many people who were under 25 have been able to buy a home? Not that many, except through the housing bubble, were able to purchase a home. The encouragement that I see, is that time passes, and if you work hard and save your pounds then you can make that dream into a reality.

The housing market may be mixed right now in the UK, but expect the market to straighten itself out over time.

Details are emerging of the Government’s New Build Guarantee Scheme, launching next month, which aims to help 100,000 buyers currently priced out of home ownership because of the big deposits required by mortgage lenders. Housing minister Grant Shapps has confirmed that new-build properties (houses and flats) valued up to £500,000 will be available, a higher threshold than expected and welcome news for first-time buyers in the capital, where prices are higher. Buyers will have access to 95 per cent mortgages and therefore will need only a five per cent deposit to get on the ladder. A Government-backed indemnity fund will cover lenders against any losses in the event of repossession. Shapps says it is a “manageable risk”. A central administrator will create “silos” of funds that apply between lenders and developers. Participating lenders include Barclays, HSBC, Lloyds, Nationwide, Santander, Yorkshire and Clydesdale Banks, though there are no details yet on the type of loans or the rates. The scheme will operate through leading house builders, who will start to market homes next month.
The scheme is likely to be of use to a wider pool of buyers than the Government’s FirstBuy initiative, which provides interest-free top-up loans of up to 20 per cent of the purchase price.
FirstBuy has a limited allocation of money and only about 1,000 new homes in London are available. Many of these homes are for sale through Barratt, at developments in east and west London. Visit barratthomes.co.uk or call 0844 556 6166. At Kingsland Basin, which is emerging as a hub for creatives priced out of Clerkenwell, a £65 million project is bringing 207 new homes, a health centre, cafe, shops and offices in a restored listed building.
The apartment blocks are a modern architectural take on traditional wharves and warehouses, and many of the homes have generous-size terraces and glass-fronted balconies.
London & Quadrant housing association has launched a new phase called Canal Wharf. One bedroom flats are priced from £250,000. Visit kingslandwharves.co.uk or call 0844 406 9299.

Further west along the Regent’s Canal, close to Angel is Reflections a new 14-storey tower, where 50 shared-ownership apartments are on offer. Prices start at £94,000 for the minimum 35 per cent share (full price £270,000). Contact sales@family mosaic.co.uk or call 020 70891315.
Kingsway Square is a redevelopment of a listed Victorian college close to Battersea Park. Studio apartments are priced at £245,000 (£61,250 for a 25 per cent share). Call Genesis on 0845 600 4663.
Highbury Gardens, in Islington, was judged “best place to live” in the Mayor’s London Planning Awards and praised for its elegant and green design.
The development has neoclassical architecture, while a landscaped court- yard is a sanctuary beyond the main entrance on busy Holloway Road. Some homes also overlook Highbury Fields. Southern Housing Group is selling 39 shared-ownership flats, with prices starting at £68,750 for the minimum 25 per cent share. Call 020 7409 8756.

Article originally published on the Evening Standard on 15/02/2012

Typical examples of situations raised are related to service charges, insuring the property, services provided in the building, extending the lease, if you were to buy the freehold how much you will pay.

Regarding charges, the tribunal can decide if the amount you have to pay for repairing the property and force the owner of the freehold to refund you any payment and was judged as overcharged. These problems can easily escalate to a court, if you see yourself in this kind of situation you can refer to a directory of services where you can obtain legal advice.

One of the powers of the Leasehold Valuation Tribunal is to change an unclear lease in relation to insurance, building repairs and service charges.

Applying to the Leasehold Valuation Tribunal

An application form can be downloaded from the Leasehold Advisory Service or directly in your local tribunal.

Leasehold Valuation Tribunal Decisions

Freeholder usually abides to the decision proclaimed by the tribunal. If this doesn’t happen you can still apply to a court to enforce the decision. In this scenario a solicitor may be needed to formalise the appeal.

The Procedure

After submitting the application and coming to the actual hearing, you will need as much documents as evidence and the tribunal will decide based on this and the information provided by the freeholder. The tribunal will make questions and both parts will have the chance of being heard along any witnesses. A written decision takes several weeks to arrive on the post meaning that anything will be decided on the day of the hearing. The whole procedure can take twelve months because some of these institutions have a backlog of processes in waiting.

The Lands Court

In Scotland The Land Court deals with cases involving agriculture and is mainly concerned in matters involving landlords and tenants. Most disputes about rights to land (for example, disputes over ownership or succession) are dealt with by the ordinary courts: the Sheriff Court or the Court of Session.

Shared ownership involves part of the home being owned by the people living in it, and the remainder being owned by another party. It is used to help people get on the property ladder when they cannot afford the full value of a home. Many schemes are specifically for newly-built properties, for first time buyers, for council or housing association tenants or for workers in key occupations.

Mortgage repayments are made for the proportion owned by the purchaser, while rent payments are also made to the owner of the remainder of the property, usually a housing association.

The best known system of shared ownership is provided via the United Kingdom government initiative HomeBuy, also known as First Steps in London. Households with earnings of less than GBP 60,000 per annum are eligible to be considered. Purchases must be made via designated HomeBuy agents.

HomeBuy’s shared ownership scheme is for newly-built homes only, and involves the purchaser buying between 25% and 75% of the home.

Social HomeBuy allows council and housing association tenants to buy their rental property under a shared ownership scheme.

Shared ownership schemes are sometimes known as joint venture schemes in Scotland and as co-ownership schemes in Northern Ireland. In Northern Ireland at least 50% of the property must be bought by the purchaser.

The purchaser may gradually increase their stake as their financial circumstances improve, known as staircasing.

Shared equity

Shared equity is similar in some ways to shared ownership. Here the purchaser is the legal owner of the entire property, however the amount of their mortgage and deposit combined will be less than the value of the home. The deficit is made up via a separate loan from another party, which takes an equity stake in the property and is entitled to a percentage of the proceeds when the home is sold.

Shared equity has its own version of the staircasing principle, which involves the purchaser paying off the additional loan over time and thus increasing their equity stake.

Most shared equity schemes involve the purchaser receiving assistance from the government.

There are two different systems of shared equity available via HomeBuy:

FirstBuy – first-time buyers purchasing newbuild properties provide a deposit of 5% of the property value, and are granted a 75% mortgage. The Homes and Communities Agency (HCA) and the builder provide a loan and take a stake of 10% each in the property. Priority will be given to council and housing association tenants and to members of the Armed Forces. FirstBuy was introduced in 2011 and will be available until March 31 2013.

HomeBuy Direct – the purchaser, who must be a first-time buyer or a council or housing association tenant, takes a mortgage for 70% of the property value, while the government and developer provide a loan for the remainder. As with FirstBuy, the loans are interest free for the first five years.

The Low Cost Initiative For First Time Buyers (LIFT) is a shared equity scheme operating in Scotland under which the purchaser, normally a first-time buyer, takes an equity stake, usually between 60% and 80%. The remaining equity is purchased by a Registered Social Landlord using a grant from the Scottish Government.

HomeBuy Ownership and New Build Ownership are shared equity schemes in Wales. The first involves a council or housing association tenant taking a 70% mortgage, and the second involves a first-time buyer taking a mortgage for between 50% and 70% of the property value.

FirstBuy NI operates in Northern Ireland under similar terms to FirstBuy.

Shared equity schemes without government assistance are also available. In one respect these are similar to FirstBuy, involving a 75% mortgage and a 5% deposit. However, here the difference is funded by one or more investors, and after a fixed term of five to ten years, the purchaser is required to purchase the remaining stake from the investors at market value.

Pamela Chimbonda, who writes for the money blog Fiscal Muses, produced this content on behalf of first time buyer mortgage providers Ulster Bank.