Property Information

Applying For Low Cost Home Ownership Properties

Who is eligible to apply for one of the Fixed Equity Sale properties?

Falcon's aim is to sell our Fixed Equity Sale Properties to people who have a strong local connection to the village in which we are building. These will be people who have funds or who would qualify for a mortgage, but cannot afford to pay open market prices in their village for the type of property they need.

We try to build homes that will meet the needs of the community for a long period. To some extent it is not always possible to do this as communities and peoples needs are always changing. We would not want to build too many homes and then have to sell them to people without a local connection. We try to match the size of the property sold to an applicants household. We would not normally wish to sell a two-bedroom house to a family with a son and daughter, nor a three-bedroom house to a single person. However, we welcome applications from single people and childless couples who may be offered a two-bedroom house.

Normally people are able to obtain a mortgage of three times their income. If a couple or a husband and wife are earning then their joint incomes can be used. For example, if a couple have a joint income of £25,000 then they will be able to get a mortgage for £75,000.

Falcon Rural Fixed Equity Ownership - What is it?

Rather than rent a home, Falcon is offering people the opportunity of getting a foot on the home ownership ladder in villages. We simply build houses and sell them at cost rather than making profit. We are able to do this because we either build on land not usually available for housing which is much cheaper than normal, or we are offered very cheap land by a developer as part of a larger development where the planning permission has made affordable housing a condition.

Where we sell a house to an applicant Falcon will always keep a share of the ownership. This does not mean we can get someone else to live in the house as well, as you would live in it as if you owned it completely. You would only actually share the ownership with Falcon.

How does it work?

Most people have heard of 'Shared Ownership' – our model is a form of this but differs from the usual model in the following ways :

  • We do not charge a monthly rent on the share that we own. We see no reason for doing this as we will have recovered our costs in the initial sale. The only rent payable for this type of ownership is a yearly amount of £250.00. The only other charge that you may have to pay would be a nominal service charge and this is only where Falcon remains liable to provide a service for you i.e. the houses are linked to a communal sewage treatment plant, you would be charged a service charge towards its upkeep and maintenance.
  • You would not be able to buy any greater share of the property over time. This is usually referred to as staircasing. This is because we want to keep the property affordable in the future, for other local people.
  • We would not be involved in any way in normal circumstances in you living in the property, it is only when you decide you want to sell the property that we would be involved.

The size of the share you can purchase will depend on the open market value of the property, but this would normally be in the region of 50-60%. Once established the size of the share would be fixed. The share would be sold to you on a long lease. Falcon would retain the remaining share as the Freeholder.

 

Example :

House valued at £140,000

A 50% share to be sold would be £70,000

Remaining 50% share would be held by Falcon.

 

Five years later you want to sell the property and the house is then valued at £200,000, the sale price would then be £100,000
(i.e. you sell your 50% share of £200,000 = £100,000) Falcon continues to hold the other 50%.

 

The only condition on your sale is that the new buyer is approved by Falcon, i.e. that they fit our local connection criteria and unable to buy their own home on the open market.

The above example assumes that house prices will continue to rise, but if they fell, say in this example to £130,000 your share would only be worth £65,000. This would be true for any one who owns a house.

What are the costs involved?

House buying is fairly complicated and you will need to involve people to help with your purchase. These people will all charge a fee. There are also other costs to be remembered :

  • Valuation fee : Any bank or building society will wish to carry out a valuation of the house before offering a mortgage. Typically this will cost about £250.
  • Solicitors fees : If you buy a house you will have to instruct a solicitor. They will check the 'Title' of the house to ensure everything is in order, check the rights of any other parties and deal with the sale contract.
  • Stamp duty : There is no stamp duty payable on Falcon Homes while the price is below £125,000. However, please be sure to check this with your Solicitor as the legislation regarding stamp duty changes frequently.
  • Removal costs : Of course you will have to arrange to move to the new property.
  • Services : In your new home you will have to arrange for your telephone, water, electricity, gas etc. to be connected.
  • Mortgage payments : You will have to make monthly payments to your mortgage provider. The amount will depend on the type and size of the mortgage. Your lender will provide these details before you have to commit yourself to buying the property. Falcon can give you details of the building societies that will lend on this form of home ownership. Not all building societies will lend so it is important to seek our advice early.
  • Ground rent : As a leaseholder the law states that you have to pay a ground rent. This is in the region of £250 per year. This payment will be used by Falcon Rural Housing to insure the Building under our Insurance Policy. This means you will only have to insure the Contents yourself – see below.
  • Buildings Insurance : This will be provided by Falcon by using the Ground Rent payable.
  • Contents Insurance : This is not always covered by the building insurance policy but you are strongly advised to get cover.
  • Services : Obviously you will be responsible for water, sewage, gas, electricity, telephone bills and Television licensing costs.
  • Council Tax : Again this is to be paid by the occupier as in any home.
  • Service Charges : You may be charged a service charge by Falcon Rural Housing for any services we provide pertaining to your home. This would usually be a service charge towards any cutting of communal grass or hedges within the boundary that are not your responsibility, or in some cases for the upkeep and maintenance of a sewage treatment plant. Please ask Falcon for details of any service charges that may be applied to any particular scheme.

What is the procedure for buying a Falcon Home?

  1. Complete an application form (either from Parish Need Survey direct from us or from the District Council).
  2. Falcon will contact you and arrange an interview if you are eligible.
  3. An offer will be made or not (You will be informed if you were unsuccessful).
  4. If successful you apply to a building society for a mortgage.
  5. You appoint your solicitors. Solicitor will deal with the following
    Lease agreement (standard Falcon Lease).
    Contract of sale.
    Deed of Trust.
    Mortgage Deed.
    Report on the title of the property.
    Transfer of money.
  6. Building society values the property, checks income references and offers mortgage.
  7. Contracts are exchanged with 5% deposit (in some instances a 100% mortgage may be available.
  8. On completion of the house (if new) sale completes.
  9. Move in and celebrate!

How do I sell my house later?

Selling a Falcon home is slightly more complicated than selling an ordinary house. This is because Falcon will expect the house to be sold to someone who has a strong local connection. We will keep a short waiting list of potential purchasers, so if you decide to sell you should contact us first. However, you are free to instruct an Estate agent to act on your behalf, and market the property, as long as they are aware of the selling restrictions. We are happy to meet the Agent to explain matters.

The following procedure must be applied:

  1. You inform Falcon of the wish to sell.
  2. A valuation is carried out at your expense.
  3. Both you and Falcon looks to find a buyer.
  4. If no buyer found you may use an estate agent.
  5. Buyer found and solicitors instructed to act for each party.
  6. If however no buyer is found locally, the search widens and eventually you could sell to anyone, even if they do not have a local connection.

Do I keep any profit from the sale?

Using the example referred to earlier in this leaflet, if the house had increased in value by £60,000 and your share is 50% then your profit would be £30,000. This could then be used towards the down payment of your next home.

WARNING

Falcon cannot guarantee that house prices will always increase. If the housing market ceases to rise and even if prices fall, there may be no profit if you wish to sell, and you may possibly even make a loss.

Can I buy further shares in my house at a later date?

No. Some forms of Shared Ownership do allow you to buy more of a percentage share, but Falcon’s model does not. This is because the more of a share that is sold, the more expensive the house becomes to future buyers and we wish to ensure that the properties remain affordable for local people in perpetuity.

Who will repair the property?

You would be entirely responsible for the upkeep of the property as would any owner-occupier.

Can I carry out alterations or improvements to the property?

No alterations or improvements can be made to the property without Falcon's written consent. This is again because we do not want the value of the property to increase too far.

Can I take in a lodger?

Your home must be used as your main home for you and your family. You may take in a lodger, but must not sub-let any part of the property, unless there are very exceptional circumstances and you have the authority to do so in writing from Falcon Rural Housing. Should this situation arise you should discuss the matter with Falcon at your earliest opportunity.

Will I have any contact with Falcon should I buy?

Falcon will not normally contact you following a sale, although you will automatically receive our newsletter. We will also contact you on a periodic basis if you purchase a property that is eligible for a service charge.

If you have any issues you would wish to talk to us about once you have moved in i.e. for advice on whether you can make an improvement to your home, whether they are large or small issues, or if you would just like some general housing advice, please do not hesitate to contact us as we have an expert team of housing professionals who are available for advice and assistance to you at no charge. For example if you get into difficulties with your mortgage please let us know. We may be able to provide advice that may help you.

How do I apply?

Falcon Rural Housing always carries out a Housing Needs Survey of a village before agreeing whether or not to develop a housing scheme there. This is normally done with the Parish Council and usually with the help of Rural Housing Enablers (employed by local Community Councils) who actually conduct the surveys. If you wish to be considered for a house then you must fill in a survey form and return it. Alternatively, if you know that a housing scheme is being discussed in your village, apply to your local District/Borough Council to be referred to their preferred home purchasing application holders and please, most importantly, contact Falcon Rural Housing direct.

What next?

If you are interested or would like any further information regarding Falcon’s Fixed Equity Purchase Scheme please contact us at:

Falcon Rural Housing,
Falcon House,
3a South Street,
Wellington,
Somerset,
TA21 8NR

Telephone : 01823 667343

Or e-mail us at:

sam@falconhousing.co.uk

or

steve@falconhousing.co.uk

Related Links

Our Properties

Proposed New Developments

Property Vacancies

Applying for Rented Properties