Help to Buy Affordable New Build 2019: administrative procedures for agents

Annex B

Authority to Proceed Letter

Help to Buy (Scotland) Affordable New Build Scheme Form of Authority to Proceed

To be completed and issued by the Administering Agent to the purchaser and copies sent to the purchaser's solicitor, the home builder and Scottish Government's solicitors.

When it is issued to the purchaser's solicitor, the Administering Agents should also send to the purchaser's solicitor the Standing Instructions to Solicitors (duly completed by the Administering Agent with the details of the transaction).

The Standing Instructions to Solicitors are provided in Annex C in a separate Word document and must not be amended other than to complete any blanks with applicable information.

If a purchaser intends to benefit from a developer "cash-back" incentive, which will be paid to the purchaser on completion, the cash back should not be treated as part of the cash contribution figure. The Administering Agent should complete the paragraph on the Authority to Proceed informing the purchaser's solicitor that the purchaser intends to recover money at completion. For avoidance of doubt cash back payments are incentives and should also be confirmed as compliant with Help to Buy (Scotland) Affordable New Build Scheme rules by the purchaser's solicitor.

If Option B at the end of this letter is not applicable please delete.

Form of Authority to Proceed

Date: [•]
To: [Purchaser – Name/Address]
CC: [Purchaser's solicitor – Name/Address]
CC: Home builder: [Name/Address]
CC: Scottish Government Solicitors: Harper Macleod

Scheme: Help to Buy (Scotland) Affordable New Build Scheme
Property: [•]
Named Purchaser: [•]
Anticipated Completion Date (as advised by home builder)[•]

Option A

Thank you for returning your application to the Help to Buy (Scotland) Affordable New Build Scheme. We are pleased to tell you that your application has been approved and that Scottish Ministers will take an equity stake in respect of the Property on the following terms:-

Full Details Of Named Purchaser: [•]
Full Details Of Property Address [•]
Full Details Of Purchaser's Solicitor [•]
Full Purchase Price: £[•]
Scottish Ministers Contribution £[•]

Full Purchase Price Less Scottish Ministers Contribution (i.e. the amount met by the Purchaser after deducting the amount provided by Scottish Ministers from the Full Purchase Price and excluding any mortgage fees of the Qualifying Lender) £[•]

Scottish Ministers Contribution Percentage (for example if the full purchase price is £150,000 and the Scottish Ministers Contribution is £22,500 then the contribution percentage would be 15%) [•]

Mortgage Amount (if applicable): £[•]

Requisite Amount Of Cash Savings To Be Invested By Buyer (which will exclude any cashback incentive provided to the Buyer): £[•]

Cashback Provided by Home Builder (to be paid to the Buyer on completion: £[•]

Total Amount Of Incentives Provided By The Home Builder (as set out in the Council of Mortgage Lenders Disclosure of Incentives Form and which must not exceed 5% of the full purchase price: £[•]

Buyer's Property to be Sold Prior to Purchase:

Guidance for the Buyer

You should have read the Help to Buy (Scotland) Affordable New Build Scheme Buyer's Guide issued to you when you reserved your Property. (If required, a further copy of the guide is available on our website – insert link). You should ensure that you have read this Guide before continuing with your purchase.

If you wish to proceed with your Help to Buy (Scotland) Affordable New Build Scheme home purchase on the above terms you must now take the following steps:-

Step 1

You should by now have seen an independent financial advisor (IFA) and be getting ready to submit a mortgage application. It is very important that you seek independent advice about your mortgage. The mortgage must be from a qualifying lender.

Qualifying lending institutions include mortgage lenders who are authorised under the Financial Services and Markets Act 2000, and who have permission to enter into regulated mortgage contracts.

This is likely to include most banks and building societies. The Financial Conduct Authority keeps a register of authorised persons on its website. The register can be found at http://www.fsa.gov.uk/register/home.do. Please discuss with your independent financial advisor if you have any doubts as to whether a lender falls within this definition.

The mortgage offer you should receive must be equal to the Mortgage Amount noted on the front of this form and should be for a repayment mortgage. Interest-only mortgages will not be approved for Help to Buy (Scotland) Affordable New Build Scheme assisted purchases.

In addition to your mortgage funding, you have also told us that you will be making a cash contribution towards the purchase price of the house, as set out above.

Please Be Advised That Your Home May Be Repossessed If You Do Not Keep Up Repayments On A Mortgage Or Any Other Debts Secured On It.

Step 2

<insert name of Administering Agent> has assessed the Application Form completed by you [and the home builder] and has prepared this Authority to Proceed based on the information you have provided. This Authority to Proceed is only valid for three months from the date of issue as set out above and you must ensure that your solicitors conclude missives on your behalf with the home builder's solicitors to purchase the home within this three months timeframe.

This Authority to Proceed is valid for 3 months and you are expected to conclude missives within this period of time. If you have not concluded missives within three months, your application to the scheme will no longer be eligible and it will be cancelled with immediate effect. Settlement of your property purchase must take place within 9 months of the date of this Authority to Proceed Letter. Failure to do so could result in your transaction no longer being eligible to receive assistance.

Upon Receipt Of This Authority To Proceed, You Must As Soon As Possible Contact Your Independent Financial Advisor And Your Lender So That A Full Mortgage Offer Can Be Made On Your Selected Property.

Step 3

Your solicitor will advise you on the Help to Buy (Scotland) Affordable New Build Scheme and will explain the legal documentation that you are required to enter into with Scottish Ministers.

You must agree to sign a Minute of Agreement, a Ranking Agreement, and Standard Security. Your solicitor will contact you to explain and arrange this.

Once your mortgage offer and valuation has been received, your solicitor will negotiate and conclude missives with the home builder's solicitor. After conclusion of missives you will be legally committed to purchasing the property.

You will also be advised of the date for completion so that you can plan your move. It is also important that you arrange buildings insurance cover for your new home from the date of completion.

If you currently own a property you must ensure that this is sold before the completion date of your purchase of your Help to Buy (Scotland) Affordable New Build Scheme property.

Step 4

Your solicitor will finalise your home loan from your lender, including preparing and having you sign a first-ranking standard security over your home, to secure the mortgage. Your solicitor will also make arrangements with you to ensure that your deposit contribution will be available in time for completion of the purchase.

Step 5

At completion, your lender will provide its funds and the Scottish Government will provide its contribution, so that your solicitor can pay the purchase price to the home builder. You will then be able to move in on a date agreed with the Home builder.

Your application will be treated as withdrawn if missives are not concluded on your behalf within three months after the date of this Authority to Proceed letter. If you are unsure of how to proceed, please contact [insert name of Administering Agent] at [insert contact address/telephone number].

You are advised to make sure you have read the Help to Buy (Scotland) Affordable New Build Scheme Buyers Guide that explains how the scheme operates.

Please note:-

The Authority to Proceed ceases to have effect if missives are not concluded for the purchase of the property within 3 months of the date of this letter.

If your transaction does not complete within 9 months from the date of the issue of this Authority to Proceed Letter you may no longer be eligible to receive assistance.

The Authority to Proceed is conditional on your Solicitor receiving a mortgage valuation, or if your lender does not supply a copy of the valuation, a mortgage offer showing the valuation figure, in each case confirming that the Property is valued at no less than the Full Purchase Price.

Or

Option B

Thank you for returning your application to the Help to Buy (Scotland) Affordable New Build Scheme

We regret to inform you that on this occasion your application to the scheme has not been successful.

[The rules of the scheme state that a person must be able to afford a minimum of 85% of the purchase price of a home. After assessing your application to the scheme, you have been assessed as only being able to purchase <>% and therefore your application is not eligible to proceed.]

Yours sincerely

For and on behalf of