Home Reach is a new nationwide shared ownership model that delivers up to 90% of open market value (OMV) at the point of sale on Section 106 and open market properties.
Home Reach greatly simplifies affordable housing development while enhancing the value of Section 106 properties and leaving the on-site sales process in Developer's hands.
Additionally, shared ownership’s ability to access wider buyer markets allows developers to bring more properties to market whilst maintaining OMVs, increasing sales rates and the speed of delivery and cash receipts.
Using Home Reach, developers build and sell new shared ownership homes with shares between 25% and 75% (at the then OMV) and simultaneously sell the landlord's position in the shared ownership leases to heylo housing at a pre-agreed price via a framework of contracts designed to operate across multiple developments for 3 to 5 years.
The sale of the initial share and the simultaneous sale of the landlord’s interest will typically deliver 80% of OMV for developers based on a 50% initial customer share. The minimum 25% initial customer share will deliver 70% of OMV, but Home Reach can deliver up to 90% of OMV if the initial share purchased by a customer is the maximum 75%.
Home Reach's ability to enhance value from S106 properties improves site viability whilst supporting affordable home ownership delivery. In the current climate any amendments to S106 that increase the level of shared ownership using the Home Reach model will enhance or unblock developments and sustain wider housing delivery.
How does it work?
Home Reach uses a simple and efficient framework agreement that operates for 3 to 5 years to allow developers to create and sell occupied shared ownership properties on their own terms.
The sale of the customer share and the sale to heylo of the property and landlord's interest is simultaneous with heylo paying 60% of the OMV of the landlords share of the property (by reference to the sale price to the customer).
The Home Reach framework agreement between heylo and the developer is designed to be reusable and operate across multiple developments. The agreement includes template sale and purchase agreements and sets out the process for the creation of eligible properties to ensure contractual certainty of purchase (which is especially important in respect of S106 properties). The framework agreement also specifies the price and payments terms for the sale to heylo by reference to the actual sale price to customers (which, like the specification of the properties, is entirely determined by the developer).
Once executed, the key features of the Home Reach operational process are:
• Development identification and contractual certainty established well in advance
• Creation of a 125-year lease for Home Reach shared ownership properties (in essentially the HCA standard form)
• Fixed % pricing of OMV for properties based on the future sales price paid at sales completion
Home Reach Summary
Benefits for buyers
• Flexibility of ownership level (25% - 75% initial sale)
• More affordable than private rent
• Get on the housing ladder
• Ability to increase ownership over time
Benefits for developers
• Increased value from shared ownership
• Wider buyer markets driving enhanced value and sales rates
• Framework agreement delivers certainty and fixes pricing
• Simple single counter-party with repeatable contracts