Fees
Paying fees under the First Time Buyers Initiative
- Paying fees
- When do I begin paying fees?
- How are fees collected?
- Arrears agreements
- Information on staircasing
- Your responsibilities
Paying fees
As an FTBI homeowner you must pay a yearly fee worked out from the amount of financial help you received to purchase your property. For instance, if you paid 60% of the full purchase price when you originally bought your home, you will pay a fee based on the other 40% contributed through the FTBI scheme. The fee payable will be explained to you at the time of purchase.
When do I begin paying fees?
You will begin paying your fee after three years of owning your home, at the start of the fourth year after your completion date. The fee gradually increases so you pay nothing in years one to three. You then pay:
- 1% on the contribution you received from the FTBI scheme in year 4;
- 2% in year 5; and
- 3% from year 6 onwards.
Paying fees is covered by English Partnerships buyers’ charging document and mortgage deed, also referred to as the second charge document. This is the document you would have signed when you first bought your home, your rights and English Partnerships responsibilities are also clearly set out in this legal document.
The table below illustrates how the fees are calculated using an example of an English Partnerships of 25%, worth £37,500 on the day of purchase.
You will see from the table that the English Partnerships contribution amount is always increased by 2.4% every year. The 2.4% annual increase is an estimate of the long-term real rate of house price growth and ensures owners have an incentive to staircase or make full repayment of English Partnerships contribution, which will reduce the amount of fees to be paid.
The level of fees is fixed at the time of purchase so you will always know how much you will have to pay after three years of ownership. We will also write to you every year to remind you of when you will have to pay fees and how much they will be.
You must remember that because the English Partnerships contribution is increased by 2.4% every year, unless you staircase, your fees will keep rising year-by-year even when you have reached the 3% fee rate.
You must also bear in mind that the repayment of fees does not reduce English Partnerships entitlement to a percentage share in the proceeds of a future sale of your FTBI home. Before an owner staircases, or makes full repayment of the English Partnerships contribution, any fee arrears must be repaid.
| Start of year | English Partnerships contribution carried forward |
Percentage increase in contribution to work out the fee |
Total value to work out the fee at end of year |
Fee you will have to pay |
Monthly fee you will need to pay |
|---|---|---|---|---|---|
| 1 | £37,500 | 2.4% | £38,400 | 0% | £ 0 |
| 2 | £38,400 | 2.4% | £39,322 | 0% | £ 0 |
| 3 | £39,322 | 2.4% | £40,265 | 0% | £ 0 |
| 4 | £40,265 | 2.4% | £41,232 | £403 1% | £34 |
| 5 | £41,232 | 2.4% | £42,221 | £825 2% | £69 |
| 6 | £42,221 | 2.4% | £43,235 | £1,267 3% | £106 |
| 7 | £43,235 | 2.4% | £44,272 | £1,297 3% | £108 |
| 8 | £44,272 | 2.4% | £45,335 | £1, 328 3% | £111 |
| 9 | £45,335 | 2.4% | £46,423 | £1,360 3% | £113 |
| 10 | £46,423 | 2.4% | £47,537 | £1,393 3% | £116 |
How are fees collected?
We collect this fee monthly by direct debit or standing order. We will contact you at least a month before you start paying your fee to set up the direct-debit arrangement.
We will also give you a statement each year after you complete the purchase telling when you will need to start paying your fee. The yearly statement will also show any payments you have made once you start paying the fee.
You can arrange to pay your fee in a single yearly payment or monthly. Let us know what you prefer.
Arrears agreements
If you find yourself in financial difficulties and are not able to make a payment you may fall behind with your repayments this will put your account into arrears. We will try to offer you a range of options including debt counseling, access to independent financial advice and repayment plans so you can pay off what you owe.
If we make an agreement for you to repay any missed payments, it is entirely our decision. If we do agree a repayment plan, we will confirm this in writing and give you specific dates and acceptable ways to pay.
If an owner staircases, or makes full repayment of the English Partnerships contribution, any fee arrears must also be repaid. If arrears are not repaid we cannot approve the staircasing or repayment transaction.
information on Staircasing
Whenever you make a part repayment to decrease the amount of English Partnerships right to a share of the future sale proceeds (staircasing), how much you pay in fees will also reduce (see separate fees section). You can staircase at any point as long as at least three months have passed from the date of your first mortgage payment.
Once you have made a payment to increase your entitlement to a share of the future sale proceeds of your home, we will write to you to confirm the new fee you will have to pay. If you increase your entitlement and repay all of the FTBI contribution, called repayments, you will no longer pay any fees.
Full policies and procedures covering staircasing and repayments are available on this website.
Your responsibilities
By law, you must pay us your fee each year.
If you do not pay the fee, we have clear responsibilities under the terms of your English Partnerships buyers’ charging document and mortgage deed to get back the fees you owe.
We will contact you regarding any payment you have missed or a failed direct debit. If we do not receive your payment, we can:
- add what you have missed to your repayment when you sell the property in the future;
- agree an amount, and a period over which we can collect this, to cover the arrears on top of your normal monthly payment of fees; or, if we cannot reach satisfactory arrangements
- pass your account to a debt-collection agency.
Some or all of the above may result in reducing the amount you receive when you sell the property.
If you are in arrears with FTBI fee payments you could also consider discussing it with your existing mortgage lender.
Your home may be repossessed if you do not keep up payments on a mortgage or any other debt secured on it.
Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.
