Allocations policy – shared ownership
Shared ownership allocations policy
Date approved: August 2024
Review date: August 2025
Please be aware that this full policy may include acronyms or technical jargon used internally within Raven. If you have any questions, please contact us.
1. Purpose of the policy
1.1. This policy sets out how Raven will allocate shared ownership properties for first tranche sales. Resale allocations will follow the same principle as this policy, but will take into account any relevant lease terms such as nomination periods. The policy aims to ensure all customers are aware of the process prior to expending any costs.
1.2. Raven are required to comply with the requirements of Homes England’s Capital Funding Guide (CFG) on all Homes England funded properties. In order to deliver a consistent fair service we will adopt the same approach with all Shared Ownership sale activity. Where we may vary this will be on Regeneration projects and where this is the case the allocation approach will be approved as part of the Project approval.
1.3. Raven does not develop properties in London Boroughs at present, however if this changes any reference to Homes England should be read as Greater London Authority (GLA) and may require a supplementary approval if the GLA holds different guidance.
2. Scope of the policy
2.1. This policy will cover the allocation of Shared Ownership properties, including elements of allocation such as:
- First Come First Served
- Affordability, including Surplus Monthly Income
- Adverse Credit
- Walkaway
3. Detailed policy content
3.1. The demand for shared ownership outweighs supply, as a result it is essential that we are clear in how we allocate and offer our shared ownership homes to prospective eligible customers. This process will follow the same approach set out in the CFG.
3.2. Eligibility
3.2.1. We will be guided by the CFG with regards to eligibility, in particular section 3. Key elements of the current eligibility are set out below, this is not an exhaustive list and is subject to change, these are general guidelines and can, in exceptional, circumstances be waivered on approval from Homes England:
- Gross Household income totalling less than £80,000 per annum; and
- Not owning a property at present. This includes second homes, holiday homes and homes in negative equity. A connected sale completing at the same time as a Shared Ownership property is acceptable.
3.2.2. We, in collaboration with our appointed IFA, will conduct an assessment of individual applicants to:
- ensure that they meet all eligibility criteria;
- assess what share they can afford; and
- ensure that their purchase is affordable and sustainable.
3.2.3. Raven will make the final decision on all applicants, taking into account the scope of this policy, the CGF and other policies, regulations and law which may impact our decision.
3.3. First Come First Served and Priority
3.3.1. In line with regulatory guidance, we must allocate homes on a first come first served (FCFS) basis. Our FCFS approach is based upon the first applicant for a specific plot to have passed the initial affordability assessment with our appointed IFA, applicants are sent over to our IFA in order of date and time that a fully completed application form was received, and only once we have confirmed local connection as set out in 3.3.2 has been satisfied. We also operate a plot to applicant ratio of 2:1. This is done to ensure a number of potential customers are not inconvenienced unnecessarily with potential abortive costs and time. This 2:1 ratio is implemented from the point we send a potential applicant to our appointed IFA for initial assessment. We will be transparent with applicants when this ratio is applied and when an applicant is placed in second place. If any timescales for response set out by Raven and/or the IFA are not met, we reserve the right to immediately end the application process and return to the list of applicants who have expressed interest.
3.3.2. Prior to sending over to the IFA we will determine if any Local Connection Criteria set by the Local Authority (LA) or Section 106 agreement, has been met. Occasionally this will require approval from the LA. We will be clear regarding any Connection Criteria in marketing literature used for each site or individual resale.
3.3.3. The CFG sets out that qualifying Armed Forces personnel will be prioritised on certain sites. We will comply with this approach and review on a site by site basis.
3.4. Affordability, including Surplus Monthly Income
3.4.1. Under the updated Capital Funding Guide, the way in which applicants are assessed as meeting the affordability criteria has significantly changed. This is now directly led by our appointed IFA, with final approval by Raven.
3.4.2. Affordability assessment is key to making Shared Ownership a success for our customers. Raven are committed to making shared ownership affordable for the long term. In order to ensure that applicants can manage any unforeseen costs, such as car breakdowns or significant increases in inflation which impacts on the annual rent increase, we have set a minimum requirement of a minimum 10% of monthly net income to be surplus on the budget planner undertaken during the second stage of assessment by the IFA. This 10% is based on feedback from the current High Street mortgage market requirements. During the initial assessment the IFA’s will work off a minimum Debt to income ratio of 50%. Both of these percentages are inline with the current high-street lenders and other Registered Providers. The method for calculating the 10% surplus income is set out below:
- (A) Gross income
- (B) Less gross deductions (tax, National Insurance, student loan, etc)
- (C) Less known commitments (loans, credit cards, childcare, etc)
- (D) Less housing costs of the Shared Ownership purchase (rent and service charges)
- (A – B – C – D) = income available to support a mortgage, other essential expenditure (identified through a budget planner) and to meet our surplus income requirements, this must be a minimum of 10% of net income (A – B)
3.5. Selling at a discount
3.5.1. Where property prices are very high compared with local incomes Raven may sell at a discount below the RICS valuation. This would only be considered in exceptional circumstances and must be approved by Head of Sales and Director of Homes with an assessment of the impact on project viability before seeing approval from Homes England. Where this is done the value of the share sold is discounted, not the entire value of the property.
3.5.1. Where property prices are very high compared with local incomes Raven may sell at a discount below the RICS valuation. This would only be considered in exceptional circumstances and must be approved by Head of Sales and Director of homes with an assessment of the impact on project viability before seeing approval from Homes England. Where this is done the value of the share sold is discounted, not the entire value of the property.
3.6. Adverse Credit
3.6.1. We understand that applicants have experienced circumstances beyond their control in the past which may have resulted in an adverse credit rating. Some of the reasons for this are listed below, with the approach we will take. In all situations we will seek guidance from our appointed IFA as to how the mortgage lenders see each situation from a mortgage-ability perspective. This list is not an exhaustive list, and we retain the right to refuse an applicant if there are adequate grounds to consider a refusal.
| Missed mortgage/rent arrears | If this has happened in the last 12 months, it won’t usually be accepted. That said, we may consider the situation through an Individual Assessment. |
| Unsecured arrears | We’ll carry out and Individual Assessment |
| County Court Judgements or registered defaults | None in the last 36 months. Plus, they must be satisfied prior to the mortgage application.
|
| Individual voluntary arrangement (IVA) | IVA/bankrupts who have been discharged over three years ago and who have no residual debt may be accepted subject to Individual Assessment. |
| Repossessions | Not acceptable. |
3.7. Selling Raven Homes to staff and board members
3.7.1. Members of staff and Board members meeting the criteria set out within this policy may purchase a Raven shared ownership property. Written approval must be provided by the Director of Homes or the Chief Executive before an allocation is made.
3.8. Walkaway
3.8.1. Raven retain the right to reject an application on the grounds of non-disclosure of key information which would render an application to be non-complaint with the CFG and other policies at Raven referred to within this policy. A reason for rejection more specific than ‘a breach of Raven’s policies and/or the Capital Funding Guide’ will not be given.
4. Applicability
4.1. This policy applies to all new first-tranche and resale shared ownership activity after the date of approval, this includes both grant funded and non-grant funded properties.
5. Definitions
Capital Funding Guide (CFG) – the capital funding guide set out by Homes England (https://www.gov.uk/guidance/capital-funding-guide ).
First Come First Served – The basis on which we assess applicants, as set out in section 3.3 of this policy.
First Tranche – The first sale of a new-build shared ownership property
Homes England – The government’s housing and regeneration agency (https://www.gov.uk/government/organisations/homes-england ).
Independent Financial Adviser – An Independent Financial Advisor who will assess applicants for Shared Ownership sales. As a minimum they will:
- Be regulated and qualified to give mortgage advice
- Have a good working knowledge of Shared Ownership
- Have access to a suitable range of Shared Ownership mortgage lenders in order to give an accurate assessment of mortgage availability
- Have read and understood section 3 of the CFG and this section 6B on ‘Applicant eligibility’ and ‘Affordability guidance’
- Have read and understood our policies which apply to the assessment of an applicant’s eligibility and affordability.
Resale – the sale of an existing shared ownership property.
6. Related policies and references for more information
6.1. This policy has been written in line with the current Homes England Capital Funding guide (as amended 17th May 2024). In addition, several other Raven policies are also considered :
- BRD18 – Anti-Money Laundering (AML) Policy
- DP01 – Data Protection Policy
- BRD01 – Probity Policy
- BRD16 – Fraud and Bribery Policy
7. Implementation procedures
7.1. Publicising the Policy
a. The policy will be publicised on Raven’s website, Raven Homes’ website as well as being posted on Workplace.
b. Staff training for the policy
c. The Sales team, along with the Home Ownership team leader have been involved in the drafting of this updated policy and are familiar with the terms of the Capital Funding Guide. Regular discussions will take place in team meetings and 1-2-1s to ensure the policy continues to remain implemented.
7.2. Updating the Policy.
d. The policy will be reviewed regularly, with the policy being updated every 3 years or sooner if legislation (CFG) or other policy changes impact the validity of this policy.
8. Policy impact
8.1. This policy, as a result of changes to the Capital Funding Guide, will provide greater accessibility to shared ownership for all eligible potential customers. With a streamlined process for approval as a result of our appointed IFA carrying out both stages of the assessment process and ‘pack approval’.