With the new ‘Help to Buy: Equity Loan scheme’ coming into effect on 1 April 2021, our new briefing note provides a detailed overview of the new programme and its changes, and discusses the important issues relating to the current programme.
You can read our full briefing note on the programmes here.
TWO IMPORTANT CHANGES – 10/12/2020
Homes England has published an updated version of the “Builder participation and registration guidance document” dated 10/12/2020 that includes two important changes to the previous version dated 29/09/2020. The updated document can be found here.
The changes are as follows:-
Part 2, Paragraph 2.11 – “Satisfaction of Planning Conditions”
- This has now been replaced in the 10/12/2020 updated version with Paragraphs 2.11 to 2.15.
- The original requirement was that “Developers must ensure that the evidence of discharge is supplied to the Eligible Purchaser’s conveyancers prior to legal completion.”
- The new requirement is that where evidence of discharge is not available prior to legal completion of the plot sale the Developer must complete a prescribed form Deed of Indemnity with the Help to Buy purchaser upon legal completion of the plot sale. The prescribed form Deed is set out at Appendix 5 of the updated “Builder participation and registration guidance document”.
- In summary the Deed provides that the Developer:-
- has applied to the local planning authority for confirmation that the relevant pre-commencement and pre-occupation planning conditions have been satisfied (where such conditions require the consent or approval of the local planning authority);
- is in the process of putting in place any infrastructure agreement required by any pre-commencement and pre-occupation planning conditions, having received the associated technical approvals; and
- the pre-commencement and pre-occupation planning conditions have been satisfied (or that they will be, when any consents or approvals awaited from a local planning authority are received and any required infrastructure agreement is entered into).
Part 2, Paragraph 2.14 – “Leasehold Houses”
- This has now been replaced in the 10/12/2020 updated version with Paragraph 2.18.
- The original requirement was that “Leasehold houses will not qualify for the Help to Buy: Equity Loan 2021 – 2023 programme unless (a) the house was constructed on inalienable freehold land only (being inalienable land owned by and registered to the National Trust or Crown Estate) and (b) the house has been disposed of to the Developer on a long leasehold basis from either the Crown Estate or the National Trust.”
- The new requirement is that as an alternative to the original requirement, the house must have been constructed or adapted on land which the Developer:
- does not own the freehold title; and
- acquired a long leasehold title on or before 21 December 2017; and
- the Developer’s long leasehold title to the house is registered at HM Land Registry with title absolute; and
- the plot sale solicitor must submit a prescribed form exemption certificate/undertaking (set out at Appendix 3 of the updated “Builder participation and registration guidance document”) to Homes England.
The exemption takes effect as soon as Homes England receives the exemption certificate/undertaking.
You should ensure that your procedures reflect these revised points so that units can be disposed of as soon as reasonably practicable. In particular, you should ensure that the release mechanism with lenders is agreed in advance and that the planners provide regular updates on planning progress so that information can be shared with purchaser’s solicitors.
If you want to discuss the impact of the changes on your scheme and potential solutions, please do not hesitate to contact Dan Moan or Dominic Bauers in our Real Estate & Projects team.