Home Ownership FAQs
Q: Why should I Rent Now and Buy Later when I could just save up deposit to buy my home?
A: If you choose to save up a deposit, you could be playing catch-up with property prices as house prices could rise faster than your savings.
(1) With our Rent Now, Buy Later model of home ownership, the purchase price of your home is fixed for the 3 or 4 years duration of your scheme, such that if the value of your home has increased by the time you get a mortgage to buy it, you will still pay the agreed purchase price, no matter how much the property appreciates.
(2) Every month you pay your rent on time and in full, you get a monthly credit of between 10% of the rent as an incentive to help you build up equity in your home. You could sell your right to buy your home to take out the equity and if the value of your home has appreciated, you could make a profit.
(3) The rent of your home is fixed, protecting you from rental increase for three to four years duration of the scheme.
Q: Do I need a mortgage to join your scheme?
A: You don’t need a mortgage to move into a sMighty Home, under our Assisted Home Ownership Scheme.
However, you will need a mortgage to complete on the purchase of your home. (We are Appointed Mortgage Introducer, so our qualified mortgage brokers can help you if you want)
Q: What if I can’t get a mortgage at the end of the scheme?
A: You have up to four years to buy your home, however, if you are unable to get a mortgage at the end of your scheme, you could:
1. Sell your right to buy your home, thereby releasing the equity you have built up over the years and if your home has increased in the value you could make a profit.
2. Walk away from the house without any penalty or fees. If you do this, you will lose your down payment and monthly credit you have accrued.
Q: Why should I use your company?
A: We Treat Customers Fairly: We work strictly according to the guidelines set out below:
– We will always be clear and not misleading when communicating with clients.
– We will never coarse, manipulate, deceive or chase you up to accept our free, no-obligation offer.
– Our Home Ownership offer will always be in writing.
We Make Things Simple:
Our Home Ownership Scheme has been designed to be simple, stress-free and straight forward, so that first time home buyers have the opportunity of getting on the property ladder sooner than they normally would.
Free Redress Scheme:
We are a member of Property Redress Scheme (PRS), one of the three government approved ombudsman schemes that provide free, independent service for resolving disputes between property managers and their customers. As tenant, you can access this scheme free of charge if we fail to resolve a complaint to your satisfaction. The decision made by the redress scheme is binding on us, regardless of the outcome.
Client Money Account:
Our tenants pay rent directly into our designated Client money account with Lloyds Bank, from which we pay our landlords as and when due. Landlords and tenants would be pleased to know that money in this account is ring fenced and cannot be accessed by the bank or any creditor. We are not a member of a client money protection scheme, membership of which is optional.
Q: What Upfront fees do I have to pay?
A: To move into a sMighty Assisted Ownership Home, you will be required to pay the following fees upfront:
(1) £345 non refundable Managing Agency Fee – Paid to reserve a property after viewing it and you decide to make an application to buy it. The fee covers the costs of vetting applications, obtaining references, credit checks and administration of the scheme.
(2) First month rent – Payable before you move into your new home.
(3) Down payment – £750 non-refundable down payment that goes 100% towards the purchase price.
Q: What are the different schemes you have?
A: Starter Home – Down payment of a minimum of 1% of the purchase price or £1,500 (whichever is higher)
2.5% Home – Down payment of 2.5% of purchase price
Rapid Equity Home – Down payment of minimum of 3% of purchase price
Q: Is the down payment refundable?
A: Down payment is not refundable. Just as deposit paid to exchange contract with a seller in traditional home purchase is non refundable, in the same way down payment are non-refundable in a rent to buy home purchase.
Q: When can I buy my Home?
A: You can buy your home between 2 and 4 years after you move into your home. You simply need to give two months notice of your intention in writing.
Q: Can I sell my home?
A: Yes you can. This is one of the benefits of our Assisted Home Ownership scheme. You can sell your right to buy your home and can make a profit if the value of your home has appreciated.
Q: What if sMighty Home stops trading before the house is purchased?
A: In the unlikely event that we stop trading or acting as managing agent to the seller before you buy your home, you will not suffer any loss whatsoever. The only thing that would change is that you would be dealing directly with the seller instead of sMighty Home. If you keep up your monthly payment in full and on time, you can exercise your right to purchase your home within the agreed period. (Your lawyer will make sure the legal paperwork clearly states this)
Q: Do I need a solicitor?
A: Yes, you do. As with any property transaction, you will need a solicitor to make sure your interest is protected and complete legal formalities on your behalf.
Q: Can sellers refuse to sell at the end of the scheme or change purchase price?
A: No. Sellers are legally bound to sell the house at the fixed price.They cannot back out, change their mind or revise the price.
Q: Who is responsible for the Insurance?
A: The landlord is responsible for the building insurance, however, you need to take out contents insurance for your own possessions.
Q: What If I can no longer afford monthly payments?
A: If you get into any financial difficulties, it is very important that you contact us as soon as possible to agree a new payment plan. Just like with mortgage or tenancy, your home is at risk if you do not keep up monthly payments.
Late or missed monthly payment is a breach of your Assisted Home Ownership Scheme agreement.
If you are late in making your monthly payment by 14 days, three times in a twelve month period, you will lose the right to purchase your home, the down payment and you could be served quit notice.
We recommend you take out an Accident, Sickness & Unemployment (ASU) Warranty to protect yourself against loss of income. (Please ask for more details)