On Friday 17th May 2024 Homes England updated section 6, headed Affordability Guidance in the Shared Ownership chapter of the Capital Funding Guide (CFG). The CFG contains the rules and procedures for all our Investment Partners (providers) delivering grant funded affordable housing. Section 6 in this chapter explains our expectations and requirements concerning applicant affordability, the financial assessment process to arrive at the share they can afford to purchase and the role of the provider and independent financial advisor in making this decision.
The overarching principles in our updated guidance have not altered and continue to feature:
The requirement that applicants are prioritised and dealt with on a first come, first served basis.
The applicant’s assessment should be provided free of any charge to them.
Shared ownership homes should be sold across a range of equity shares.
The provider must ensure that the share level being purchased is suitable for the applicant’s affordability, needs, and circumstances as determined by a regulated, qualified mortgage or financial advisor, and be able to evidence this. Providers should follow the advice provided by the advisor in respect of all mortgage and financial matters.
The updated guidance makes some important changes:
The Homes England’s affordability calculator will be withdrawn on 31 July 2024 along with our advisory guidance regarding the minimum 25% and maximum 45% net mortgageable household income thresholds. Advisors will determine the suitable proportion or amount of an applicant’s income that can be spent on housing costs.
More transparency by providers publishing their first come, first served policy (a requirement) and other policies that they may have.
Introduction of a new affordability methodology which more closely aligns with mortgage lender methodology.
The use of an advisor sign-off sheet and provision of a budget planner to confirm affordability and evidence the outcome. This will become a fundamental Homes England Compliance Audit requirement
To allow providers time to prepare for these changes and be compliant the updated guidance will go live after 31st July 2024.
What’s next?
Please use this forum to create debate amongst members and we will bring these questions to our next monthly update with Homes England listed below:
Save the date: Conversation with Homes England webinar 17th July 2024
Please register your interest/attendance by clicking here
Thanks
Andy & The NSG Team