Everything You Need to Know About Using Home Reach

Posted 8 May 2019

Thinking about buying a new build home using Shared Ownership? If so, there’s an online resource out there that can help you to find the right home for you...

Credit: Finding the right Shared Ownership home

Home Reach is an online portal designed to help you find the right Shared Ownership home for you and your family. But what is Home Reach? How does it work? And who is eligible? Keep reading for answers to these questions and more.

What is Home Reach?

Home Reach was launched in 2014 and has grown to become one of the largest home ownership programmes in the UK.

Home Reach is part of heylo, who work in partnership with housebuilders to offer Shared Ownership – or ‘part rent, part buy’ options – on new build homes.

Using the Home Reach scheme, you buy a share of your chosen new build property and then pay a monthly rent on the part you don’t buy. Your income, outgoings and budget determine how much of a share of the property you can buy.

So, for example, you might decide to buy a bigger share of a lower priced home or a smaller share of a more expensive home.

At the outset you can buy up to 75% of a new build property. At that time, heylo becomes your landlord and grants you a 125-year lease. You’ll live in the home as if you own it outright.

You buy your share of the property either with your own savings or with a mortgage. If you decide to take out a mortgage, you’ll need to put down at least a 5% deposit. The higher your deposit, the lower your mortgage repayments are likely to be.

On the share you do not purchase, you will pay rent of 2.75% of the unsold value. You pay this monthly via direct debit. You can purchase more shares in your home in the future, until you own the whole property and stop paying rent altogether (see below).

The starting share you can buy varies across developments. Home Reach have more than 175 developments for you to choose from and, for more information on the shares available, the sales representatives at the development you would like to buy at will be able to guide you.

Am I eligible to buy a Home Reach home?

You are eligible to buy a new build property using Home Reach if:

the property is in England or Wales
your household income is less than £80,000 per year (or less than £90,000 in London)
you are a first-time buyer OR you used to own a home but you don’t currently
you can’t afford to buy outright
you have passed a financial assessment showing that you are able to buy the share you want and support the other monthly costs
the property will be your principal and only home.

You will also have to register with your local Help to Buy agent. A Help to Buy agent is usually an appointed provider that acts as a point of contact for people looking for Shared Ownership properties.

By registering with a Home to Buy agent, you will be notified about all the Shared Ownership developments available in your chosen area. You can register for a general area or a specific development.

Read: Everything you need to know about recent Help to Buy changes

What costs and fees will I pay?

There are various costs and fees that you’ll pay when buying a Home Reach property:

Rent on the share of the property you don’t buy, payable monthly by direct debit. This is charged at 2.75% and increases annually by RPI plus 0.5%
A reservation fee for the home you want to buy. This varies by development
A monthly admin fee to heylo for managing your lease, payable monthly by direct debit
An annual fee for buildings insurance. As your landlord, heylo take this out and recharge it to you annually
Any estate or service charges associated with your specific property, payable to the housebuilder directly.

When you complete on your purchase, you will also need to pay the rent and admin fee for the remaining days of the month in which you complete, and for the following month. This is not an additional admin or month’s rent; rather it is paid in advance to allow time for your direct debit to be set up. Your rent and admin fee will be collected via direct debit in your third month.

You may need to speak to your solicitor or the sales team at your chosen development to establish exactly how much some of these charges will be.

What are my rights and responsibilities when I have bought a Home Reach property?

Once you’ve completed on the purchase of your Home Reach property, you’ll be responsible for:

paying all the utility bills
repairs
redecoration of your property.

If you want to make structural changes to your home, you’ll need written permission from your landlords. If your alterations are approved by heylo, you’ll be responsible for these structural changes.

How do I buy a bigger share in my home?

You can increase the proportion of your home you own at any time after you complete the initial purchase. This process is known as ‘staircasing’.

Each time you buy an additional share you’ll need to budget for:

A valuation fee
Legal expenses (including Stamp Duty Land Tax where applicable)
Any fees payable to your mortgage lender.

When you buy a Shared Ownership property you’ll own it on a leasehold basis. This is because heylo is your landlord for the unsold share.

If you increase your share to the point where you own 100% of the property, where possible the freehold will be transferred to you and the Shared Ownership lease falls away.

What if I want to sell my home?

If you would like to sell your home, you should contact your landlord, and heylo will guide you through the process. There will also be information available to you in your lease document.