These days getting on and moving up the housing ladder can be difficult. Finding the deposit and then getting a mortgage can be a challenge - especially on discounted market sale properties, which is why 'Your Front Door' is here to help.

We know that home ownership means so much more than just bricks and mortar. It's your security, your space, your investment, your place to celebrate, your safe place in the world - home is where the heart is.

'Your Front Door', available from heylo housing, has been specifically created for discounted market sale properties, including starter homes, to make home ownership to more affordable and more accessible to people across the UK.

Let's see if it can help you...

 

How it works

Your Front Door is a new way to buy a home with just 10% cash deposit...

Just 10% deposit, no need for a mortgage and you're on the housing ladder as a 10% shared owner - with the right to buy a bigger share or buy outright at any time you like!

What is shared ownership?

First off, shared ownership doesn’t mean sharing your home with anyone! Created in the early 1970’s, shared ownership is designed to help people get onto the housing ladder in a more affordable way.

Who can buy?

Your Front Door is available to both first and second time buyers. If you have a sufficient cash deposit, ‘good credit’ and a household income below £80,000 (£90,000 in London) then you may be able to buy with Your Front Door.  Whilst you don’t require a mortgage, you will need to satisfy typical affordability criteria to enter into the Your Front Door lease.

What I could afford?

Scroll down to see an example of the deposits and discounts for various house prices and to find out more information about all the costs involved in the Your Front Door process. 

Use our quick calculator to get a feel for what discounted property value you could afford

Affordable Shared Ownership (Part-Buy Part-Rent)

Affordable, fixed monthly payments and no need for a mortgage means your household income goes further and you could afford to buy a more expensive home compared to buying with a traditional mortgage. Given that these monthly payments are also usually cheaper than private rents, why not save money AND get on the housing ladder? (Just check out the table below if you don't believe it...)

New build properties will be for sale at a stated deposit (set by the local planning authority) typically between 25% and 40%. To use the table below simply look at the most relevant full property value and read across depending on the discount level to identify your monthly leasing cost of a mortgage free 10% shared ownership.

Your Front Door payments are also linked to inflation (not interest rates) meaning they should more closely match your household income over the medium and long term. Plus you will be entitled to at least 75% of any value increase on the share you didn't buy which is additional value that you or your family will be able to access in the future. 

If you have a sufficient cash deposit, ‘good credit’ and your household income is below £80,000 (£90,000 in London) Your Front Door helps you get on or move up the housing ladder in an affordable way. (Just check out the indicative gross salary requirements for various property values for sale with different discounts in the table below...)

As with the table above, find the most relevant full property value and read across depending on the discount set by the local planning authority to find the indictaive annual gross salary requirement for a mortgage free 10% share of a Your Front Door property.

Your Front Door is only available on selected new build properties for sale at a discount to full market value. 


How does it work?

Assuming that you have been approved to buy with Your Front Door (contact us to find out how)...

Let's say you find a lovely, new 3 bedroom property for sale at a 25% discount to market value (because of an affordability restriction being imposed by the Local Authority as part of the planning permission for the development).

The property, which would normally be £200,000 is for sale at £150,000 and you agree to buy a 10% share with £15,000 in cash and enter into contracts, paying your 10% deposit.

On the day of completion heylo buys the whole property and at the same time sells you a 10% share via a 125 year plus shared ownership lease.

(The Local Authority will place a restriction on the title of the property to ensure that the original 25% discount is recovered if the property is sold outright but this does not affect your rights to buy a bigger share or buy the property outright - it simply determines who gets the money when you do.)

You pay an initial annual rent starting at 4.89% on the 90% funded by heylo (£135,000) - which is £6,602 per annum or £550 per month.

Each year the rent will be adjusted to reflect changes in inflation (Retail Price Index) plus 0.75% - meaning that rents are linked to inflation not interest rates. (As well as the rent you will also have to pay for building insurance and any service charges - which will be reviewed every year, clearly explained and notified well in advance.)


Being a Shared Owner with Your Front Door

When you buy Your Front Door, you become a leaseholder and owner occupier. Depending on the size of your cash deposit you can buy a 10%, 15%, 20% or 25% share or more (your initial share). 

The Your Front Door lease clearly sets out your shared ownership position, rights to fully occupy the property as if you owned it outright and the terms of the monthly payments, rent, on the share you do not buy (the unpurchased share). This rent starts at 4.89% and increases with the Retail Price Index (RPI) plus 0.75% each year. If RPI is zero or negative your rent will increase by 0.75%.

The lease also sets out how you can increase your ownership position, reducing the rent, at any time in the future if you wish. Alternatively, if you want to move you can just sell your property on the open market.

Providing you keep up the Your Front Door Home monthly payments, you and any others in your household are entitled to live in the property as if you owned it outright. As with any shared ownership lease your home and cash deposit may be at risk if you do not pay the amounts due under the lease.

Whilst Your Front Door may allow you to buy the home you always wanted, if at some point in the future you needed to move, then just like any other house purchase you would simply seek to sell the property on the open market. As with any home purchase, the cash invested to buy your share may be at risk if property values fall.

With Your Front Door you’re firmly on the housing ladder, enjoying the usual security and control associated with home ownership and long leasehold property.


Added Benefits

With Your Front Door you will also be entitled to a 75% share of any value increase on the unpurchased share.  

 

If you want to buy a bigger share and your property has increased in value your entitlement on the share will act as a discount.

Increased Value Entitlement in action...  If you bought a 10% share of a £200,000 property which is now worth £300,000 the 90% unpurchased share has increased in value from £180,000 to £270,000. With Your Front Door you are entitled to 75% of this £90,000 increase if you sell... that's £67,500 on top of the £30,000 value of your 10% share! 

About Shared Ownership

First off, shared ownership doesn’t mean sharing your home with anyone! Created in the early 1970’s, shared ownership was designed to help people get on and move up the housing ladder in a more affordable way.

Over the past 40 years, shared ownership has helped hundreds of thousands of people become home owners across England and Wales.

As the name suggests, you buy a share of the property and pay a rent on the part you don’t. You will own a share in a long leasehold property which means that you will be able to live in your home as if you bought it outright for your lifetime and be able to pass it on to your heirs if you wish – just like any other leasehold property.


How do I buy more?

The Your Front Door lease allows you to buy a bigger share of the property, using any increased value entitlement to act as a discount on the purchase price of the additional share. Alternatively, if you want to move you just sell your property on the open market. Assuming prices have risen you’ll get all the value increase on your share plus 75% of the increase on the unpurchased share owned by heylo too!


Who owns the share I don't buy?

heylo will own the share you do not buy and collect the Your Front Door monthly payments.  heylo is a joint venture  between a leading UK Local Authority, an investment manager regulated by the Financial Conduct Authority and a team of residential property specialists.

Who can buy?

Your Front Door is available to both first and second time buyers.

If you have a sufficient cash deposit, ‘good credit’ and a household income below £80,000 (£90,000 inside London) then you may be able to buy with Your Front Door. 

Whilst you don’t require a mortgage, you will need to satisfy typical affordability criteria to enter into the Your Front Door lease.

This will take into account your credit history, the cost of the Your Front Door rent on the home you wish to buy as well as any other financial commitments you may have.

Applicants will also need to satisfy the following basic criteria:

You will need to be in permanent employment, have pension income or similar.
You will be a British or EU citizen or have indefinite right to remain in the UK.
You will not have been bankrupt or have any outstanding bad credit such as CCJs

Ongoing monthly costs

Your Front Door makes buying your home more affordable but there are still costs to be aware of. In addition to these costs you’ll also need to think about the on-going costs of ownership like Council Tax and utility bills, but don’t worry, your IFA can help you budget for these. 

The Your Front Door lease will clearly specify all payments due – this will typically be the rent, buildings insurance and the annual lease management charge of £210.00 including  VAT (which increases annually with RPI). These amounts will be collected by Direct Debit in one amount each month – usually at the start of the month. (Of course, you will have to pay separately the other usual bills such as Council Tax, utilities and any other third party charges which may apply.) Each year the rent and management charge will be reviewed in accordance with the Your Front Door lease. The rent will increase by inflation, Retail Price Index, RPI, plus 0.75% each year. Unlike other ways to buy a home, payments due under the Your Front Door lease are not affected by changes in interest rates.

For example: If you purchased a 10% share of a £250,000 house then the Your Front Door rent due on the 90% unpurchased share would be £11,002.50 in the first year or £916.88 per month (remember there’s no mortgage to pay). If over the next 12 months RPI is 1.25% then your next year’s rent will increase by 2% to £11,222.55 or £935.21 per month.

Owning more... Here’s how it works

Imagine you purchased a 10% share of a home with a discounted value of £200,000 and would like to buy a further 30%. Since you moved in your property has increased in value and applying the discount the property is now worth £300,000. Buying a 30% share would be calculated as follows:

30% share of the increased property value would normally cost £90,000 (30% of £300,000) but with the Your Front Door value entitlement applied as a discount a 30% share would cost just £67,500.

Once you have purchased an additional share your rent would immediately reduce. In this case, as you are purchasing 30% of the remaining 90% your rent would reduce by 1/3rd.

How so?... Based on the original £200,000 property price a 30% share was worth £60,000. Given that the value of a 30% share has increased to £90,000 you would be entitled to 75% of the £30,000 value increase - which is applied as a discount. This means that you get £22,500 off the £90,000 share price paying just £67,500.


What are the up-front costs?

  • Professional Valuation

You will want to make sure your chosen property is worth what you are being asked to pay. The price of a Valuation will vary depending on the value of the property, however, typically they cost around £200 – £500, this is paid at the point of instruction. Please speak to the Your Front Door IFA for more information.

  • Your Front Door product fees

Your Front Door fees are fixed at £1,200. This covers the cost of your IFA affordability assessment, application processing and legal fees incurred on our behalf to purchase the property before we sell it to you on a Your Front Door lease. You will also be passed the costs of the searches (Local Authority, water drainage, environmental) carried out on your behalf which will usually be in the region of £450. This is customary work associated with home purchase and should reduce the work and charges of your own solicitor.

  • Legal fees

You will need a solicitor to act on your behalf. Our panel of solicitors offer a competitive fixed legal fee and will clearly state any other costs (“disbursements”) payable at point of purchase (“completion”). You can of course use a solicitor of your choice if you wish.

  • Deposit on exchange

When you exchange on the home of your choice you will need to pay a cash deposit of 10% of the property value. If you are buying a 10% share this deposit will be your purchase price. If you are buying more than a 10% share this deposit will form part of your purchase price. The remainder will be payable at completion via your solicitor.

  • Rent on completion

There will be rent payable monthly in advance on the part you do not own – starting at 4.89% per annum on the value of the unpurchased share.

When you complete your purchase, you will need to pay any rent, lease management fee and buildings insurance due between the time you complete and the end of that month PLUS the next full month. This will allow us time to set up your monthly Direct Debit.

  • Stamp duty land tax (“stamp duty”)

Property purchases and leases over 21 years with rent over certain values are subject to stamp duty land tax. Your solicitor will advise you of the current rate, the amount due on the property you wish to buy and how to pay it at completion. Typically, stamp duty payable under the Your Front Door lease is less than the amount that would be payable if you purchased the property outright.

Fill in the simple calculator below to find out what discounted property value you could afford

Own Your Home Affordability Indicator
Annual basic household income
Annual income from regular overtime, bonus, commission etc.
Total annual household income
Number of dependent children
Monthly loan or credit card payments
Other monthly payments - child care, pension, travel etc.
(exclude housing related costs such as rent or mortgage payments)
     
 
 
 

Get in touch today

 

If you would like to speak to someone about Your Front Door, simply email your contact deatils to info@heylohousing.com

Good luck with your property search!