Selling Guide – Redeeming a Help to Buy Equity Loan

If you are planning to sell a property purchased under the Help to Buy Scheme, there are a number of steps you must take prior even to marketing the property. When you purchased the property, as well granting a mortgage (legal charge) to your Bank or Building Society, you will have also granted a charge to the Homes and Communities Agency (HCA) to repay a percentage of the sale proceeds. It is anticipated that you will be required to repay the same contribution percentage of the eventual sale proceeds i.e. where 20% of the initial purchase price was contributed, 20% of the final sale price will need to be repaid.

Prior to marketing the Property (and prior to formally instructing an Estate Agent)

In order to establish the figure payable to the HCA you are required to serve written Notice to the Homes and Communities Agency (HCA) of your intention to sell.  Within 14 days you must apply to the appointed Valuer to assess the market value. The Valuer must be an independent qualified valuer appointed by agreement between both parties. Please see the section below “obtain a valuation”

The Valuation must then be provided to the HCA within 5 working days of you receiving it. The valuation will remain valid for 3 months.

In certain circumstances, should there be a reduction in the value of the property, you could remain responsible to repay  the entire sum of the original percentage contribution/loan and therefore be liable for payment of any shortfall. There may be provision for a shortfall to be written off, but this is not guaranteed.

If you and the HCA do not agree on the market value at any proposed repayment stage or at the end of the term, a further Valuer will be appointed by the Royal Institute of the Chartered Surveyors.

Obtain a valuation

To produce a redemption figure, a valuation must firstly be carried out by a RICS Certified Surveyor. Once this report has been created, it must then be sent to the HCA Customer Service Team

Post: Help to Buy customer services, PO Box 5262, Lancing, BN99 9HE

Email: customerservices@myhelptobuyloan.co.uk

Importantly, the RICS valuation will only be valid for 3 months. If redemption (completion of your sale) does not take place within the 3 months, Target must be provided with a Desktop Valuation, i.e. without physical examination, re-confirming the property value.

If the transaction is not completed within 6 months from the date of the original valuation, a new, full, valuation must be obtained.

Valuation requirements

It is up to the Seller to obtain and fund the valuation, and the appointed RICS surveyor must ensure he and the valuation fulfils the following requirements:

• Must be independent to an estate agent
• Must be on headed paper, signed by the surveyor and addressed to Homes England
• At least 3 comparable properties and sale prices must be provided, which are like for like and within a 2 mile radius of the property
• Must not be related to client
• The interior of the property must be inspected
• Must be a full valuation report
• Bank or mortgage purpose valuations are not acceptable
• The date of inspection must be on the report

A report that does not meet the above requirements will need to be amended and rectified!

Desktop valuation requirements

As noted above, if the transaction does not complete within 3 months of the report, a Desktop Valuation may be submitted, but it must follow the below stipulations:

• It must be from the same individual surveyor who originally inspected
• Must be sent to Target within 2 weeks of the original valuation expiring
• Must make reference to the original report and confirm it is a Desktop Valuation
• The valuer must provide a minimum of 6 comparable properties and sale prices within the last year if the property has changed in value
• The report must have a new date on it signed by the valuer
• It must be on headed paper and provided in PDF format

Once a report has been successfully submitted to Target, you will receive an estimated repayment quote. All arrears must be cleared.

Redeeming your Help to Buy Equity Loan

Once you have sold your house and will need to ensure your chosen legal advisor is aware of and has full details of your Help To Buy Loan as they too will need to take procedural steps to pay this off on your behalf.

HCA will require a completed Repay Form, together with their current fee  with their fee.

The forms can be downloaded at:

Help_to_Buy_Equity_Loan_repayment_application_form_.docx

Target will then send a redemption letter, along with a guidance pack and a legal undertaking copy, which must be submitted by your conveyancer 15 business days prior to completion.

HCA issues an Authority to Complete (ATC)

Within 5 days from receipt of the undertaking, the ATC will be issued, allowing you

to complete the transaction.

Checklist and timetable for redeeming Help to Buy Equity Loan

1. Obtain acceptable valuation – begins the 3 month window
2. Ensure valuation meets requirements
3. If in doubt of meeting 3 month deadline, commission the desktop valuation and submit this within 2 weeks of original 3 month window expiring
4. You now have a final 3 months to complete the transaction, or else you will need to repeat the process.
5. Submit valuation to Target, and if accepted, you’ll receive the repayment quote
6. You may then complete the correct Loan Redemption Form – return this with their fee (£200 as at 16.11.24).
7. Your solicitor (details of which you will have given on the Loan Redemption Form) will be sent a redemption letter, a guidance pack and the draft solicitors undertaking.
8. Your conveyancer will provide the undertaking at least 15 business days before completion
9. If completion is more than 1 week late, your conveyancer will need to submit a new undertaking (another 15 business days) and confirm the new redemption figure
10. After 5 days from submitting the undertaking, you’ll and your conveyancer will receive the ATC, which is the Authority to Complete – only with this may you complete the transaction