3. Welcome to Home Reach
Home Reach is a nationwide shared ownership model
that delivers up to 90% of open market value at the point
of sale on Section 106 properties.
Home reach greatly simplifies affordable housing
development while enhancing the value of Section 106
properties and leaving the design, build, pricing and on-
site sales process in developers’ hands.
Home Reach from heylo
Home Reach is only available from heylo - a private
property company joint venture between a leading Local
Authority, an FCA-regulated investment manager, and a
team of affordable housing specialists.
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4. “Deliver up to 90% of open market value on Section 106
properties through Home Reach”
5. Home Reach - Summary
Home Reach delivers up to 90% of Open Market value (OMV) through the shared ownership sale of Section 106 (S106)
or open market properties by developers.
The process:
Using Home Reach, developers build and sell new shared ownership homes with shares between 25% and 75%
(at the then OMV) and simultaneously sell the landlord’s position in the shared ownership leases to heylo at a pre-
agreed price via a Home Reach standard form contract.
The sale of the initial share and the simultaneous sale of the landlord’s interest will typically deliver 80% of OMV for
developers but can deliver up to 90% if the initial share purchased by a customer is the maximum 75%.
Home Reach’s ability to enhance value from S106 properties improves site viability whilst supporting affordable home
ownership delivery. In the current climate any amendments to S106 that increase the level of shared ownership using
the Home Reach model will enhance or unblock developments and sustain wider housing delivery.
Benefits for developers
• Increased value from shared ownership
• Wider buyer markets driving enhanced value and sales rates
• Standard contract delivers certainty and fixes pricing
• Simple single counterparty with repeatable contracts
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6. “The Home Reach value process is
similar to a normal house sale”
7. Payment
These are the payments a developer would receive based on a 50% initial sale of a property with an OMV of £240,000:
One
BUYER EXCHANGE
Purchaser pays 10% deposit on
exchange of contracts for a
50% share
Two - A
BUYER COMPLETION
Balance of purchaser
monies for 50% share paid on
completion
Two - B
HEYLO COMPLETION
Simultaneous completion of
sale to heylo with payment
8 weeks following a monthly
completion notice
TOTAL CASH
RECEIVED BY
DEVELOPER
10% deposit: £12,000£240,000 Sell residual 50% share
@ 60% of OMV: £72,000
Total: £192,000
80% of OMV
Balance of 50% share:
£108,000
OMV
Home Reach – The Value Process
The Home Reach value process is similar to a normal house sale - buyers exchange and complete on the share they
buy, paying cash to the developer. There is a simultaneous transaction where the unpurchased share, the landlord’s
position in the Home Reach shared ownership lease, is sold to heylo housing with payment 8 weeks after a monthly
completion notice (this timeline is to allow heylo to access committed institutional funding on properties that all parties
know have legally completed and, given heylo’s activities with multiple developers, to ensure that no single failed
property sale impacts settlement on other completed units).
The sale of the initial share and the simultaneous sale of the landlord’s interest will typically deliver 80% of OMV for
developers but can deliver up to 90% if the initial share purchased by a customer is 75%.
The developer’s
sales team retains
control and
responsibility
for the sales on site.
Responsibility Flexibility
The developer can
sell between 25%
and 75% giving
flexibility to their
sales teams and
customers.
No expensive legal bills
for negotiating
contracts, our
framework agreements
are all ready to go.
Market ready
The developer
decides what
to build and the
asking price of the
properties.
Control
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9. Home Reach – Contractual Certainty
Home Reach uses simple and efficient standard form contracts to allow developers to build and sell occupied shared
ownership properties on their own terms with contractual and price certainty to deliver S106 requirements and early sales.
The sale of the property and landlord’s interest to heylo housing is simultaneous with the sale of the customer share. heylo
housing pays 60% of the OMV of the unpurchased share, by reference to the sale price to the customer, with settlement 8
weeks after a monthly sales notice.
The Home Reach contract between heylo housing and the developer is standardised for re-use across multiple
developments. The contract includes the template shared ownership lease to be used, based on the housing regulator’s
standard form, and sets out the process for the creation of eligible properties to ensure contractual certainty of purchase
(which is especially important in respect of S106 properties). The contract also specifies the price and payments terms for
the sale to heylo by reference to the actual sale price to customers (which, like the specification of the properties, is entirely
determined by the developer).
Once executed, the key features of the Home Reach operational process are:
• Contractual certainty established well in advance
• Creation of a 125-year lease for Home Reach shared ownership properties
• Fixed % pricing of OMV for properties based on the future sales price
Overview of the process
Contractual certainty
SELL SHARE
TO CUSTOMER
LANDLORD’S INTEREST
TO HEYLO HOUSING
80% of OMV
achieved
Simultaneous at completion
Sell 50% share
@ £120,000
£240,000 Sell residual 50% @ 60% of
landlord’s OMV = £72,000
Total £192,000
Open
Market
Value
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10. “The part buy, part rent affordability
benefit of shared ownership typically
enfranchises four times more buyers”
11. Home Reach – The Customer Journey
Sales Marketing
The part buy, part rent affordability benefit of shared ownership typically enfranchises four times more buyers for the
same property compared to a private outright sale - speeding up sales.
S106 agreements typically require shared ownership properties to be marketed to Help To Buy agent nominations for
an initial period. Across the UK, these Help To Buy agents have a constantly refreshing list of thousands of pre-approved
buyers; however, after this initial pre-launch period, while it will make sense to continue to liaise with a Help To Buy
agent, you are free to market these shared ownership properties to the general public, thereby significantly increasing
your buyer market and enhancing your sales rate.
Pre-Qualification of Buyers
All Home Reach applicants need to go through a pre-qualification process which is easily administered by the relevant
Help To Buy agent or our panel of selected Independent Financial Advisers (IFA). This simple process, which normally
takes a matter of days, verifies that applicants have an annual household income of under £80,000 (under £90,000
in London) and that they pass the Home Reach affordability assessment - this is based on the housing regulator’s
standard form and is not dissimilar to a standard mortgage lender affordability assessment.
Exchange and Completion
Once pre-qualified, everything will follow a familiar outright sales route - reservation, exchange, then completion. As
part of this sales process, the developer will need to collate a list of required information (see page 15) to ensure that
heylo can buy the shared ownership lease and customers can be effectively managed from day one. On completion,
buyers will pay one month’s rent and service charge (if applicable) in advance, so that direct debits can be set up in
good time.
Sale of the Shared Ownership Lease to heylo
The sale of the customer share and the sale to heylo of the property and landlord’s interest is simultaneous with heylo
paying 60% of the OMV of the landlords share of the property (by reference to the sale price of the property to the
customer) settled 8 weeks following a monthly sales notice.
Marketing and Sales Support
heylo has Home Reach marketing materials for use by developers which can also be incorporated into ‘own branded’
materials if desired. In addition, heylo can introduce developers to experienced sales agents operating across the
country, or support larger clients to develop in-house sales expertise through training and advice.
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12. What is shared ownership?
Shared ownership allows a customer
to buy part of a new home by
purchasing a minimum of a 25% share,
or a maximum of a 75% share, with the
help of savings and a mortgage. They
pay rent on the remaining share; this is
usually set at a maximum of 2.75%.
When they can afford to, they can
increase the share they own - this is
known as ‘staircasing’. The cost of this
additional share will be based on the
then current value of their home. They
can ‘staircase’ until they own outright
and by buying an additional share
they’ll reduce the amount of
rent they pay.
13. Home Reach - Accessing Pre-Approved Buyers
So who’s on the Help To Buy agents list?
All applicants on the Help To Buy list must meet certain criteria if they are to be considered. The benefit of this for the
developer is that customers marketed to during the initial Help To Buy process:
have been qualified to buy
have a sufficient deposit and savings for fees
typically do not have a chain or anything to sell
In essence, the Help To Buy agent does the job of your hoarding and marketing campaigns by delivering you a list of
buyers to contact about your scheme, except you know they are proceedable buyers.
Customers on the Help To Buy list need to...
• Have a gross household income of up to £80,000 per year (if applying for a one or two-bed property) or up to
£90,000 per year (if applying for a three-bed or larger family-size home in London)
• Be a British or EU/EEA citizen or have indefinite leave to remain. If a customer does not have indefinite leave to
remain they can still apply to buy, but must speak with an IFA to talk through their options on securing a mortgage
• Have a good credit history
• Have access to £4,000 to cover the costs of solicitor’s fees, mortgage arrangement fees and moving costs, etc
• Have additional funds for their deposit. The amount will depend on three things: (1) the cost of the share they buy
(2) their mortgage provider’s requirements and (3) their credit rating
• Be employed, self-employed or able to prove they can afford to maintain the costs of home ownership in
the long term
For most Home Reach properties across the UK, the household income required for customers to buy a share will be well
below the cap and all of the above criteria are widely accepted as standard, regardless of how they buy a property.
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14.
15. TYPICAL ROUTE TO MARKET
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Apply for local agent list
1 month before Completion
repeat agent list marketing
within cap
over cap
16. “Ensuring your buyers are managed efficiently from day one
is paramount to the success of Home Reach”
17. Home Reach – Required Information
Full satisfaction of the S106 and ensuring your buyers are managed efficiently from day one is paramount to the
success of Home Reach. The heylo team has extensive experience managing S106 shared ownership buyers. As part
of the Home Reach framework agreement, heylo requires client files to be set up prior to legal completion and cannot
purchase the property, without complete information.
The required information is...
• Name and contact details of the leaseholder
• Name of mortgagee (where applicable)
• Direct Debit mandate
• A copy of the completed lease
• Details of the affordability checks made
• Copies of any relevant side letters between the developer, its agents and the leaseholder that may impact any
calculations (such as rental cost or service charges) or the ongoing management of the shared ownership lease
• The head lease and, if available: the estate management contract, S106 of the Town and Country Planning Act
1990 provisions; and nomination agreement
• National House Building Council (NHBC) certificate (or equivalent)
• Snagging list and defects procedures
• A copy of all planning consents, building regulations approvals, and practical completion certificates relevant to
the property
• A privacy statement under which leaseholders have been alerted that the information contained in the documents
listed above will be shared with heylo and its agents
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18. “Achieve up to 90% of OMV for your S106
units with Home Reach.”
19. • 80% of total OMV achieved through sale to buyer and simultaneous sale to heylo (assuming initial 50% share)
• Buyer has benefit of ownership from day one and can buy more when able to do so
• Buyer is managed by heylo from the day of completion
• Developers have the benefit of a clean balance sheet at key reporting dates
• Developers can deliver more shared ownership properties without grant or reliance upon RP partners
• Developers can demonstrate enhanced sales activity across developments (eg. first phase sold)
• heylo does not use employers agents or require space and design standards
• Positive engagement with Local Authorities as shared ownership increases affordability over other tenures
• Enhanced receipts support more competitive land bids
Advantages of Home Reach and Next Steps
There are many advantages of selling via shared ownership, not least the ability to access wider buyer market, speed
up sales and improve margins. Your buyers have the security of ownership from the contractual leasehold agreement
put in place at purchase and will be looked after by heylo’s registered provider (RP) - who will deal with them on a day-
to-day basis regarding rent, service charges and ground rent collection. In the current environment we believe this will
prove to be a strong offering to both your potential buyers and your business.
Next Steps
We would be delighted to hear from you and invite you to contact heylo.
Home Reach is only available from heylo - a private property company joint venture between a leading Local
Authority, an FCA-regulated investment manager and a team of affordable housing specialists.
Please call 0203 744 0415 or email info@heylohousing.com
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