After sale shared equity procedures: guidance 2019

Annex 3: Increase in Equity Share

Annex 3(A) Letter/email to be sent to Shared Equity Owner within 3 months and on every fifth anniversary of completion of the purchase

Dear

Insert address of property (the "Property")

I am writing to you about the Property which you bought [number of years] ago with help from the Scottish Government's [Homestake Scheme/Open Market Shared Equity Scheme / New Supply Shared Equity Scheme/Help to Buy (Scotland) Scheme - Delete as appropriate]. <insert name of RSL> administers the scheme on behalf of Scottish Ministers.

You currently have a stake of [enter percentage] in the Property.

Increasing the size of your equity stake

In accordance with the current rules of the scheme, you can increase your equity stake in the Property by a minimum of 5 per cent at any time.

ALT 1 No Golden Share

You may increase your equity stake by more than 5 per cent and you may purchase up to 100 per cent. If you do increase your equity stake, you should be aware that you will responsible for the payment of all valuation and other legal costs and expenses.

ALT 2 Golden Share - NSSE

You may increase your equity stake by more than 5 per cent and you may purchase up to 80 per cent in total. If you do increase your equity stake, you should be aware that you will responsible for the payment of all valuation and other legal costs and expenses.

ALT 3 Golden Share - OMSE

You may increase your equity stake by more than 5 per cent and now you may purchase up to 90 per cent in total. If you do increase your equity stake, you should be aware that you will responsible for the payment of all valuation and other legal costs and expenses.

Before making any decision on the matter we strongly recommend that you take independent financial and legal advice and discuss the terms of this letter as well as all costs and implications of increasing your equity stake with your advisers before making any decision.

If, following such advice you decide that you want to increase your equity stake then you - or your advisers must contact us [registered social landlord to insert contact name and address] to inform us that this is what you want to do by completing the enclosed form, whereupon we will instruct a valuation of the Property (which you will be required to pay for) and we will write to you with details of the valuation within seven days of receiving it. We will also provide you with information on our administrative costs.

You will have a period of three months to increase your equity stake from the date that we provide you with a copy valuation of the Property.

Please note that nothing in this letter affects your existing legal rights in relation to the shared equity arrangements affecting the Property.

Should you or your advisers wish to discuss further please to not hesitate to contact ( insert ) at any time.

A copy of the Scottish Government's Shared Equity Scheme Privacy Notice can be viewed at /publications/shared-equity-schemes-privacy-notice/

This privacy notice illustrates how your personal information will be used by the Scottish Government in relation to the operation of its shared equity schemes and explains your rights under the General Data Protection Regulation (EU) 2016/679 and how to exercise these rights.

Shared Equity Officer
(If email insert details of address and telephone number etc)

Annex 3(B) increase of Equity Stake to less than 100% - No Golden Share - Email / Letter to Owner (See Guidance - Section 10, Corresponding with Owners)

Dear

Insert address of property (the "Property")

Proposed increase in equity stake

Thank you for your enquiry about increasing your equity stake which is currently (insert from records).

In order to proceed, I would be grateful if you could please complete the form overleaf and return to us. Please note that in order for us to deal with your request we will require to receive payment in advance of our reasonable administrative costs which in this case will be (£ insert) (inclusive of VAT at 20%.) Payment can be made either by telephoning details of your debit/credit card to us or providing us with a cheque for that amount made payable to (insert name of RSL) This is our administration fee and is not refundable

(If already paid by debit/card insert Thank you for your payment of £###.)

In order to progress this matter we will require a Valuation. In terms of the Agreement this could either be from the District Valuer or such other Valuer as we may agree.

[We have an arrangement with [insert nominated valuation firm] who will charge (£ ) plus VAT. Please discuss with your advisors and confirm how you wish to proceed.]

Insert if Golden Share

As you are aware there are Golden Share arrangements in respect of the Property which means that the maximum equity stake that you can purchase will be restricted and you should again discuss with your Solicitor and/or Financial Adviser.

Please note that we will not instruct a survey to be carried out of the Property unless we are paid in advance. If you decide to proceed, you will also be required to pay legal and registration fees and we advise you to discuss what these are likely to be with your legal adviser.

In order to enable the valuation to be carried out, the valuer will need access to the Property. Please provide us with daytime contact numbers to forward on to the surveyor for him/her to be able to contact you.

We will provide you with a copy of the Valuation in due course.

Please contact your solicitor and financial adviser and discuss the terms of this letter as well as all costs and implications of increasing your equity stake with them before making any decision.

If we can be of any further help, please do not hesitate to contact me.

A copy of the Scottish Government's Shared Equity Scheme Privacy Notice can be viewed at /publications/shared-equity-schemes-privacy-notice/

This privacy notice illustrates how your personal information will be used by the Scottish Government in relation to the operation of its shared equity schemes and explains your rights under the General Data Protection Regulation (EU) 2016/679 and how to exercise these rights.

Yours sincerely

Shared Equity Officer
(If email insert details of address and telephone number etc)

[Note to RSL - if this is a property which was purchased under the NSSE with Developers Scheme, the Developer's interest will have to be taken into account. Any increased equity stake will have to reduce the Developer's and Scottish Government's equity stakes in equal amounts.]

Annex 3(C) Proposed increase in equity share

Email to District Valuer/Agreed Valuer

Insert name of owners ( the "Owner")
Insert address of property (the "Property")
Proposed increase in Equity Share

The Owner has expressed an interest in increasing their equity share in the Property and as a result we will require a valuation of the Property in terms of the Shared Equity Agreement.

A copy of that Agreement is enclosed and we would draw your attention to the factors which a Valuer needs to take into account when valuing the Property, as well as the more general duty to have regard to such other matters as you consider appropriate.

[Insert if applicable.] [Please note that the Property is subject to a Golden Share.]

Please note that the Valuation is being instructed by ourselves / ourselves on behalf of Scottish Ministers and the Owner and you should accordingly address to both.

We look forward to receiving your Valuation as soon as possible. Please note that the target timescale for us to share the results of the valuation with the Owner is [X] weeks from today's date, which we trust will be achievable, but if you anticipate any difficulties in being able to provide the required valuation within that timescale, please call us to discuss..

Shared Equity Officer
(If email insert details of address and telephone number etc)

Annex 3(D) Letter/Email to owner following receipt of Valuation asking if they wish to proceed further (See Guidance - Section 10, Corresponding with Owners)

Dear

Insert address of property (the "Property")

Proposed increase in Equity Share

We have now received the Valuation Report from [insert selected valuers] / District Valuer (copy attached) ( or other) indicating a current market value of £( ) for the Property.

This means that if you wish to increase your equity share from [insert] to [insert] you will require to pay the sum of [£insert].

Please discuss this with your legal and financial advisers in order to enable you to decide if you wish to proceed further.

You should ask your solicitor for details of their fees as well as all outlays including all registration costs. If you are proposing to fund through a refinancing you should also request details of all costs and outlays arising from it.

If you decide to proceed, I would be grateful if you could please complete the enclosed form. (NB Form 3E) You must complete this transaction within 3 months of the date of the valuation.

Insert for increase to less than 100%

We shall also contact Scottish Ministers' solicitors, Harper Macleod, to arrange for the relevant documentation to be put in place in order to record the arrangement.

Insert for increase to 100%

We shall also contact Scottish Ministers' solicitors, Harper Macleod, to arrange for the Discharge of the Security in favour of [RSL/Scottish Ministers].

Meanwhile, if you or your advisers would wish any further information please do not hesitate to contact me.

A copy of the Scottish Government's Shared Equity Scheme Privacy Notice can be viewed at /publications/shared-equity-schemes-privacy-notice/

This privacy notice illustrates how your personal information will be used by the Scottish Government in relation to the operation of its shared equity schemes and explains your rights under the General Data Protection Regulation (EU) 2016/679 and how to exercise these rights.

Yours sincerely

Shared Equity Officer
(If email insert details of address and telephone number etc)

[Note to RSL - if this is a property which was purchased under the NSSE with Developers Scheme, the Developer's interest will have to be taken into account. Any increased equity stake will have to reduce the Developer's and Scottish Government's equity stakes in equal amounts.]

Annex 3(E) Form for Proposed Increase in Shared Equity Amount

Please complete this table and return to [insert name of the RSL.] If emailed please Reply to email address of Sender.

Insert Name of Shared Equity Owner and Property Address

Please complete your solicitor's name, address, contact number and email address:

Name:
Address:
Tel:
Email:

Current percentage amount of your Equity Share

Percentage amount to which you wish to increase your Equity Share (see covering letter dated [ ])

If you have not already done so, please provide us with payment of (£ ) (inclusive of VAT at 20%). You may do this either by contacting us at the telephone number shown in the covering letter/email with credit / debit card details or providing us with a cheque (with name and address written on the back) made payable to us.

I/We hereby provide authority for <insert name of Administering Agent> to discuss my/our personal information with the above Representatives.

First Name
Second Name
Date

A copy of the Scottish Government's Shared Equity Scheme Privacy Notice can be viewed at /publications/shared-equity-schemes-privacy-notice/

This privacy notice illustrates how your personal information will be used by the Scottish Government in relation to the operation of its shared equity schemes and explains your rights under the General Data Protection Regulation (EU) 2016/679 and how to exercise these rights.

Annex 3(F) Shared Equity - Increase in Equity Share following Valuation - Email from the RSL to Harper Macleod

Insert name of owners (the "Owner")
Insert name of property (the "Property")

I enclose completed Proposal Form following Valuation and should be grateful if you could action. The Valuation was dated ( ) and addressed to Scottish Ministers / RSL.

Either

I also enclose copy of Shared Equity Agreement, Standard Security [and Ranking Agreement]. As you can see the documentation is in the name of the RSL/Scottish Ministers.

or

The documentation was dealt with by you and completed on [insert date].

Increase Under 100%

Please draft relevant documentation and advise when completed.

Increase to 100%

Please provide a Discharge of the Standard Security and advise when completed.

[Note to RSL - if this is a property which was purchased under the NSSE with Developers Scheme, the Developer's interest will have to be taken into account and the position explained to Harper Macleod - any adjustment to the retained equity stake of Scottish Ministers, or to the ranking of the various securities, will require to be mirrored in relation to the Developer's equity stake and ranking]

Annex 3(G) Equity Stake Increase Form

Notes on completion

Please read these notes before completing this form. If in doubt, please consult your grant provider.

You should submit a completed form each time an owner has increased their equity stake in a property.

Forms must be submitted to the grant provider within one week of the equity stake increase having taken place. This allows the grant provider to raise a request for the receipt of sums due to the Scottish Ministers.

You should not enclose any remittances with the form, as the information contained therein will be used by the grant provider to raise a request for the sum that is repayable.

Annex 3(H) Help to Buy (Scotland)/Help to Buy (Scotland) Affordable Home Ownership/New Supply/Open Market Shared Equity scheme - equity stake increase form

Please complete this form each time an owner has increased their equity stake in a property.

Part A General information
1. Registered social landlord or subsidiary ("registered social landlord"):
2. Address of property:
3. Name and address of RSL's solicitors:
Not required.
4. Date of settlement of further equity stake acquired:
(Note: Complete either Part B (i) or Part B (ii) below. Part B (i) should be completed if the owner has increased their equity stake in the property for the first time. Part B (ii) should be completed if the owner has increased their equity stake in the property for a second time.)
Part B (i) Financial reconciliation (first equity stake increase)
Current open market value of the property (please enclose a copy of the professional valuer's report)	£	(A)
Original % equity stake taken by the owner (please enclose appropriate supporting documentation showing the original % equity stake taken)	%	(B)
Owner's actual equity stake (current open market value (A) x % (B))	£
Additional % equity stake now being taken by the owner (please enclose appropriate supporting documentation showing the additional % equity stake being taken)	%	(C)
Owner's receipt to the Scottish Ministers: (current open market value (A) x % (C))	£
Part B (ii) Financial reconciliation (second or subsequent equity stake increase)
Current open market value of the property (please enclose a copy of the professional valuer's report)	£	(A)
Current % equity stake taken by the owner (please enclose appropriate supporting documentation showing the original equity stake taken plus any additional equity stakes already taken)	%	(B)
Owner's actual equity stake (current open market value (A) x % (B))	£
Additional % equity stake now being taken by the owner (please enclose appropriate supporting documentation showing the additional % equity stake being taken)	%	(C)
Owner's receipt to the Scottish Ministers: (current open market value (A) x % (C))	£
Part C Declaration
I declare that the above information, together with any supporting information, is true and complete.
Signature (Officer of registered social landlord authorised by Management Committee or other governing body)		Date
For grant provider's use:	Checked by:	Date
	Approved by:	Date

(Note: A copy of the Scottish Government's Shared Equity Scheme Privacy Notice can be viewed at /publications/shared-equity-schemes-privacy-notice/

This privacy notice illustrates how your personal information will be used by the Scottish Government in relation to the operation of its shared equity schemes and explains your rights under the General Data Protection Regulation (EU) 2016/679 and how to exercise these rights.)

Annex 3(I) Financial Reconciliation - Equity Stake Increases

This example shows what would happen if an owner decides to increase the equity stake in their property from 65 per cent to 85 per cent and then from 85 per cent to 91 per cent and then from 91 per cent to 100 per cent. There is no golden share in place.

	£
Open market valuation (1 year after the owner has taken entry of the property)	130,000
Owner's equity stake (65 per cent of £130,000)	84,500
The Scottish Ministers' equity stake (35 per cent of £130,000)	45,500
Owner then increases their equity stake to 85 per cent:
Owner's new equity stake (85 per cent of £130,000)	110,500
Owner's receipt to the Scottish Ministers (£110,500 - £84,500)	26,000
The Scottish Ministers' equity stake decreases to 15 per cent:
The Scottish Ministers' new equity stake (15 per cent of £130,000)	19,500
Administering Agent pays the receipt to the Scottish Ministers:	26,000
Open market valuation (3 years after the initial purchase)	140,000
Owner's equity stake (85 per cent of £140,000)	119,000
The Scottish Ministers' equity stake (15 per cent of £140,000)	21,000
Owner then increases their equity stake to 91 per cent:
Owner's new equity stake (91 per cent of £140,000)	127,400
Owner's receipt to the Scottish Ministers (£140,000 - £127,400)	12,600
The Scottish Ministers' equity stake decreases to 9 per cent:
The Scottish Ministers' new equity stake (9 per cent of £140,000)	12,600
Administering Agent pays the receipt to the Scottish Ministers:	12,600
Open market valuation (4 years after the initial purchase)	142,000
Owner's equity stake (91 per cent of £142,000)	129,220
The Scottish Ministers' equity stake (9 per cent of £142,000)	12,780