Key Worker Housing Scheme
Last Updated: 22/07/2024
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A key worker housing scheme is a highly important way in which workers in certain eligible organisations can access their local housing market for a reduced outlay.
Housing schemes for key workers used to centre on various Government housing initiatives and are normally run by housing associations.
NB The Government has discontinued its direct involvement with Key Worker Housing Initiatives.
It is down to individual housing associations as to whether or not they offer these schemes, which key workers they are targeted at and what the exact eligibility criteria are.
These schemes, where they exist, generally run along the lines of shared ownership purchases but where priority is given to a particular type of key worker/types of key workers and this is purely down to the housing association involved.
We therefore recommend that you do an online search of the housing associations which have a presence in the area you work in or are looking to work in and ask each one directly about the existence of any such schemes.
Once you've applied and have been accepted to join such a scheme, we would be delighted to help you complete on your purchase and our property lawyers are vastly experienced in carrying out shared ownership transactions, with all the accompanying eligibility conditions and deadlines.
Key workers are defined as workers who provide an essential service to a community and who should, therefore, be able to live in close proximity to their places of work.
Key worker housing schemes are organised by various housing associations for eligible key workers whose jobs are in the following organisations: NHS, Police, Prison Service, Education, Probation Service, Local Authority, Fire Fighting, Ministry of Defence (MOD), Environmental Health, Highways Agency.
NB Click for information about the Starter Home Initiative (or see below).
Key Worker Housing Eligibility
For each organisation, there are specific criteria which are used to establish key worker housing eligibility, but there are some conditions common to all schemes. These are:
- Household income must not exceed £60,000 per year;
- Employees must have at least 5 years to server before reaching retirement;
- Applicants have to prove they can't buy a suitable home within practical travelling distance of their work without financial help;
- Applicants must have UK or EU/EEA citizenship or have indefinite leave to remain in the UK (NB people without indefinite leave to remain MAY be able to qualify if they can prove they can get a mortgage, afford the repayments and sustain their ownership);
- Applicants must be able to prove they have savings of or access to at least £4,000 in order to cover property purchasing cost;
- Applicants must be in permanent employment (NB some temporary workers with at least 6 months remaining on their contract but with likelihood of contract renewal may be considered);
- Applicants who already own a property must sell it; and
- Applicants must have a good credit history.
What Government housing initiatives can key workers access?
Different housing associations make use of different Government housing initiatives to help key workers in their housing schemes. They may offer any of the following:
- Starter Home Initiative - this scheme's aim is to make 100,000 new build homes available to first time buyers under the age of 40 with a discount of a least 20% of the property value. Please see below for more details.
- Help to Buy Equity Loan Scheme - this scheme, mainly aimed at first time buyers, helps buyers purchase properties with a deposit as low as 5% by offering them a Government loan to pay the rest of what would have been the deposit. The Government loan itself is interest- and payment-free for 5 years. Only eligible for new homes. Click for more information about the Equity Loan Scheme
- New Buy - The Government and building firms contribute to an indemnity fund set aside to reimburse lenders in part if the latter lose money because of a buyer's arrears and/or repossession. Lenders offer 5% deposits to buyers to buy new homes.
- Right to Buy - tenants of council or social housing can buy the house they live in at a large discount from the market rate as long as they've lived in them for a minimum of 3 years. However, the Government are planning policy changes to increase the minimum to ten years. The discount increases the longer the tenant has lived in the property. Click for more information about Right to Buy
- Shared Ownership - a buyer buys a minimum 25% share in a property with the remainder being owned by a housing association and which the buyer must pay rent to the housing association on. The buyer has the option to buy more shares over time and reduce the rent they must pay as they do so. Click for more information about Shared Ownership
Key worker scheme conveyancing – experience is a MUST
Housing schemes for key workers, in making use of the Government initiatives described, invariably require non-standard conveyancing because of the more complex nature of the contracts involved.
Because of this, a solicitor has additional work to do and often, more parties to engage with.
For this reason, it is always worth instructing an experienced solicitor who has knowledge of the particular Government initiative involved to carry out the conveyancing.
There are, for example, strict deadlines to adhere to in shared ownership conveyancing: if the process takes any longer than 3 months, the applicant will have to fork out for a new valuation for a property.
As always, getting a fixed fee conveyancing solicitors quote is recommended. The greater complexity of the conveyancing which accompanies the Government housing initiatives mentioned leaves open the chance that a house purchase might take considerably longer than for one on the open market.
This means that fees can quickly spiral out of control.
Starter Home Initiative
The Starter Home Initiative, announced at the time by Prime Minister David Cameron in December 2014, is aimed at making 100,000 new build homes available for first time buyers only, under the age of 40, with a discount of at least 20% of the property value.
The Government has incentivised developers to produce the new build properties by relaxing levies and charges that come with acquiring planning to build on certain land sites.
According to the Government's own figures, charges within Section 106 of the Town and Country Planning Act 1990 can normally add an extra £15,000 onto the price of building each home on the sites specified, thus putting off would-be developers.
The planned homes are not allowed to be re-sold at market value for a fixed period of time, which prevents people buying them cheaply so that they can then sell them on at full price for a profit.
Registration for the scheme began at the start of 2015 and is available online only.
If you are interested, click to Register on the Starter Home Initiative website (scroll down the page for the form to fill in).
Key worker? Need experienced conveyancing solicitors? Ours are expert in ALL Government housing initiatives. Call 0333 344 3234.
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Written by:
Andrew Boast
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Reviewed by:
Caragh Bailey
Caragh has written extensively for SAM with expertise on sale and purchase conveyancing, the Help to Buy redemption process, equity transfers and deeds, leasehold reform, RICS home surveys, shared ownership, and independent legal advice for specialist mortgage products and ownership structures.
