A house which had been designated for a first-time buyer being listed for rent has led to calls to change the way the system works.
The switch to selling the house on the open market was perfectly lawful and sound under the current rules around first time buyer homes.
Built by Haven Homes, the Meadows contains 24 affordable homes, made up of 16 two-bed houses and eight three-beds.
ProSearch Limited advertised the two-bed mid-terraced house for rent at £1,100pcm. This drew the ire of residents who said it was a first-time buyer home and should’t be listed for rent.
The company, rightly, denied this was the case, saying ‘this is not a first-time buyers’ property’.
However, while the house was not now an affordable home, it had been designated as one when Haven Homes built it.
Joanne, who contacted our sister website gef.im about the issue, said: ‘I find it very unfair when there are people desperate to own their own home. I was very close to being allocated one of these houses and even had the mortgage in principle for it, (twice) because they raised the price?’
The price on the homes was increased by the government’s scheme, which, due to some potential buyers being further along with the process of buying their home, only raised the price on nine of the affordable homes in the estate, with the cost of the as-yet unsold houses rising by £18,000.
When the matter was raised by Jason Moorhouse, MHK for Arbory, Castletown and Malew, in the Keys back in May, the then Infrastructure Minister Chris Thomas MHK, said that the department does not consult with applicants of the first-time buyers register about selling prices, or first-time buyer properties, as the prices are set out in the Shared Equity Purchase Assistance Scheme.
This specific house in Castletown had been earmarked as an affordable home and a buyer was selected. However, they then pulled out of the sale.
Dave Lewis, managing director of Haven Homes, explained: ‘Under the terms of Section 13 Planning Agreements regarding Affordable Housing, there are very specific timeframes by which (a) the department is to allocate a buyer (known as a nominee) to the developer and (b) the nominee is to complete the purchase of the offered home.
‘If either the department are unable to offer a nominee within the timescale or an offered nominee withdraws or fails to complete within the timescale, then the dwelling ceases to be an affordable home and the developer is able to dispose of the property to an open market purchaser.’
If this occurs, the developer, in this instance Haven Homes, is entitled to sell the house on the open market and is then required to pay a commuted sum to the Department of Infrastructure, which is generally calculated to be the difference between the capped selling price of an affordable home and the open market going rate.
A DoI spokesperson said: ‘The DoI works with developers to allocate properties to first time buyers. This is undertaken through a planning agreement which contains legal conditions, including a period for allocation – in this case 18 weeks. A property may be sold on the open market if a qualifying purchaser has not been brought forward during this time.
‘A nominee for the two-bedroom home in question was unfortunately unable to proceed with the purchase.
‘While efforts were made to match up another first-time buyer in the remaining time, the process overall took longer than the period stated in the Planning Agreement.
‘The developer chose to sell the property on the open market and will be required to pay a commuted sum to the department in compliance with the legal agreement.’
However, Mr Moorhouse has said the entire handling of the situation has been ‘appalling’ and ‘completely immoral’ and said that a new buyer should have been given time to progress with their mortgage application.
He said that at the end of July, a new buyer was approaching being ready, but that with no extension to the deadline set down in the planning agreement, they were ‘left distraught’ when they were told on August 1 that they wouldn’t be able to complete.
Mr Moorhouse said: ‘From my perspective the key learning point is: if there is a final date issued by the house builder, the prospective purchaser MUST be made aware of that fact. Unless that information is given, there is the risk that this awful situation will be repeated.
‘All first-time buyers entering this process should now ask, what is the end date which the house builder has stipulated? Without that information there is the risk that more dreams will be smashed.’