This is an information page and does not offer investment advice. Seek advice & do your own research regarding suitability of the HOLD scheme for your situation.
Why do so few people know about the HOLD scheme and what is it?
MySafeHome states that since 1999 they've helped 1,300 people own a home in this way. Personally, I think this number ought to be significantly higher, as it's an excellent route to security of tenure and the ability to set your home up as you want or need it without having to ask a landlord for permission all the time. So what's involved and what could the HOLD scheme offer you?
HOLD stands for "
Home Ownership for people with Long-term Disabilities." It is a Government shared-ownership scheme for people with long term disabilities who are on means tested benefits (usually a combination from Universal Credit, ESA, Housing Benefit, SMI Support or Pensions Credit), and who are unlikely to work again*, to get affordable and secure housing. (* The work thing here is in discussion because clearly it's not clever to disincentivise anyone who wants to work. People who operate the scheme are waiting for the government to be clear about the detail of their updates and can advise you accordingly.) For the most part, the detail is well thought through so that it works long-term. It is a national scheme, though there are nuanced differences in different parts of the country, as we'll see.
When you participate, you will be part owning, and part renting the property. The minimum to maximum share of the property that you can own is 25% - 75%. So the spread gives you quite a bit of flexibility. The part that you rent will be owned by a Registered Provider (RP) that is signed up to the scheme. Both you and the RP will receive government help to ensure that the scheme is affordable. As you'd expect, to receive government funding, there are rules and eligibility. (So for the RP, they can't charge high rents and their investment returns are capped adding to the affordability structure.)
If there is an RP signed up to the scheme in your area (there are gaps in the North of England), then you'll be able to choose a home from the open market. If there isn't a local RP, then you'll need to choose a property within a new build scheme that is already offering other types of shared ownership sales.
However, you can't just buy any home, because
the criteria (i.e. what you'll be allowed to buy) is set by the RP. This is because they will be responsible for maintaining the property and so they're not going to let you go out and buy something that's a wreck or that has a beautiful but expensive to maintain thatched roof, for example!
You'll need to work out what
your budget is. This is a conversation you'll have with
My Safe Home - who is the specialist mortgage broker that will guide you through the process and help you make this happen. They'll work out your budget with you based on how much deposit you have, what mortgage you can get and how much the RP will put towards the home. Exciting stuff, as it starts to become real!
You'll need to pay
a deposit for the part of the property that you are purchasing. This might be a tricky area, as you might have a care package and so no savings. Again, My Safe Home can talk you through all of this. You will be supported by people who really know this space and care about their clients. Quite often, deposit funds will either come from Bank of Mum & Dad or your Local Authority / NHS Trust. This can get a little technical about the hows and whys, but it's all been done before and the route will be specific to your situation and circumstances. Equally, you may have more funds that you can add to your deposit (and equity in your home), and this is totally possible.
Because the deposit is, to my mind, the only stumbling block of this whole scheme (lots of people don't have access to savings for a deposit) it's the part that I am focussing my efforts on with AccessiblePRS to create a model that will make this HOLD scheme accessible to everyone. We're having some fantastic conversations, and still have a little way to go. Next,
the mortgage. The mortgage MUST be affordable for you, and My Safe Home work with finance institutions to offer a mortgage that can be interest only payments, extended over your lifetime (so you really can have a secure, forever home) and with government assisted mortgage payment levels so that you know exactly what you're paying, with no nasty surprises or rate hikes - so you're protected from market volatility. The mortgage payments are supported by SMI (Support for Mortgage Interest - read more about SMI
here). SMI is a loan provided by DWP (Department for Work and Pensions) that’s repaid only when the property’s eventually sold. The sum payable cannot exceed the equity left in the property - which means that it only needs to be repaid if there's equity in the property, and not if there isn't, so you don't have a risk of negative equity.
For the share of your home that is owned by the RP, you must
pay rent and probably service charges. Rents are controlled and are set at an affordable level and rent and any service charges will be set at an affordable level - this is managed because the RP will have accessed grant funding and therefore their yields (what they can charge you) are capped. The rental proportion is covered by Housing Benefit. Service charges may be payable to mitigate the cost of repairs, which the RP will be managing - i.e. you pay a manageable amount and are protected against unexpected costs, like a new roof!
To recap, there are three financial elements: the deposit, the mortgage and the rent. And they're all set with fixed payments, through their lifetime, at levels to be affordable, and with long term predictability so you aren't caught out by whatever volatility is going on in the property and mortgage market.
The scheme has been worked out so that
care packages and means tested benefits are not impacted when you have equity in your home (which you will have if it's in your name and the deposit's been paid) until you sell - which you might never sell! At the point of sale, what happens depends on why you're selling and where you're moving onto.
Purchasing the property. When you've worked out all the financial elements with My Safe Home, understood the criteria from your RP, then you can go out to the market place (property portals and estate agents) and search for the home you want to live in. Once you find it, you let your RP know, and they will handle negotiating with the estate agents and managing the purchase process. So there's no scary unknown and you're supported all the way.
This scheme is
designed to give you choice about
where you live,
who you live with and the
type of property you live in - within the constraints of what's affordable and meets the RP's criteria of course. Not only that, you'll enjoy the chance to make adaptations and decorative changes to their property to meet all of your needs and make it really feel like home. If you need and are eligible for a Disabled Facilities Grant, you may be able to get help for any adaptations you need too.
And there may be tax benefits such as Support for Mortgage Interest (SMI) and a Lifetime ISA (LISA). My Safe Homes will explain all this in further detail.
There is an issue around
WORK, in that for the past number of years this wasn't allowed. That was challenged, change nearly happened and then didn't. Now government have announced changes to the "zero earnings rule" but My Safe Home and others are waiting to see the small print on this before they use it. That should arrive sometime this Spring (2023). Essentially there is an inequality between those on old style benefits (e.g. ESA) and those on new style benefits (e.g. Universal Credit). So if you're working full time or planning to return to work, check with My Safe Home when you speak to them, what this means for you and eligibility for this scheme.
