Key Considerations

Loss of Capital

The value of the capital you invest into a home through the Wayhome arrangement can go up and down, and upon exiting the arrangement you may not get back the amount you invested. Your capital is therefore at risk. The past price performance of a particular home or area should not be relied upon in projecting future capital returns.

Availability of properties

Subject to market conditions there may not be a sufficient number of properties that meet both your requirements/preferences and/or the requirements/preferences of our funding partners.

Illiquid Investment

Through the Wayhome arrangement, you are indirectly investing into residential property which is an illiquid asset. Should you therefore wish to exit the arrangement you may not be able to realise your investment proceeds in a short time frame.

Nature of the Investment

The Wayhome arrangement is a brand new offering which has not been tested in the financial services market. This means it cannot be compared with any other existing products on a like for like basis.

Tax

The tax treatment of the Wayhome arrangement is dependent on your individual circumstances and may be subject to change in the future.

You are responsible for the administering of your tax affairs, which may include capital gains and/or income tax. Your tax treatment depends on your individual circumstances and may be subject to change by HMRC in future. We do not provide tax advice and you should seek this independently from a qualified professional before investing. It is your responsibility to ensure that your tax return is correct and is filed by the deadline and that any tax owing is paid on time.

Repossession

The Wayhome arrangement contains a partnership agreement and a rental agreement. Both agreements put an obligation on you to make monthly rental payments. Should you fail to keep up with these payments or otherwise breach the terms of your agreements, your home may be repossessed. The agreements will set out details of your obligations.

Advice

Wayhome does not give investment advice or provide analysis or recommendations regarding the purchase of homes through the Wayhome arrangement.

Jurisdiction

The information and services provided on the Website are not provided to, and may not be used by, any person or entity in any jurisdiction where the provision or use thereof would be contrary to applicable laws, rules or regulations of any governmental authority or where the firm is not authorised to provide such information or services. Some products and services described in the Website may not be available in all jurisdictions or to all clients. This list of risk factors does not purport to be a complete enumeration or explanation of the risks involved. If you are unsure about any aspect of the information provided by the company, you should seek advice from an independent financial or legal adviser.

Buying a home is a big deal. We want to make it simple but also make you aware of things you should consider before going ahead. We suggest getting a second opinion from an independent, regulated, third-party, financial advisor.

Buying your home

Whenever anyone buys a home there are always associated costs. We call them ‘acquisition costs’. The costs you’ll need to cover are:

1. Stamp Duty
2. Conveyancing
3. Property survey

For each of these costs (Stamp Duty, conveyancing and the property survey) you pay proportionally according to how big a deposit you start with.

For example, if you start with a 5% deposit, you only pay 5% of these costs. Our funding partners pay for the rest to help get you started on the property ladder.

Stamp Duty

Stamp Duty is a tax paid to the government by the buyer every time a property is bought. It’s worked out based on the home’s value. Usually, first-time buyers pay less or no Stamp Duty. With Wayhome, it’s different because you’re buying the home in partnership with our funding partners who are treated differently by the government.

Because you’re buying a home in partnership with our funding partners who are ‘corporate buyers’ and not first-time buyers, the government charges the partnership at a higher Stamp Duty tax rate.

But you only pay Stamp Duty in proportion to your ownership. For example, if you start with 5% ownership, you only pay 5% of the Stamp Duty.

Home prices are divided into bands with each band being charged at a different rate.

* There are additional rules where individuals buying residential property own another home. Individuals who meet the definition of first-time buyers under the government’s rules do not pay Stamp Duty on residential property up to a value of £425,000.

As an example, on a £350,000 home, the total Stamp Duty due to the government would be £15,500. If you own 5% of the home, you only pay 5% of the Stamp Duty, which in this example is £775.

If you were an individual buying a £350,000 home with, say a mortgage, you would only start to pay Stamp Duty on the cost of the home above £250,000 (the amount between £250,001 and £350,000), which would be £5,000. Special rules and rates apply for first-time buyers.

The Stamp Duty treatment depends on your individual circumstances and may be subject to change by HMRC in future. We do not provide tax advice and you should seek this independently from a qualified professional before investing.

Conveyancing (solicitor) and property survey

The other two costs are also shared proportionally according to ownership.

Typically, you’ll need to pay for:

In this example, these estimated costs add up to £2,000. If you own 5%, you would only pay £100.

Wayhome doesn’t charge you anything when you buy your home.

Buying more of your home

For each of these ‘acquisition costs’ (Stamp Duty, conveyancing and the property survey) you pay proportionally according to how big a deposit you start with. Our funding partners pay the rest.

Then, when you buy more of your home, you reimburse them but with no interest or fees.

For example, on the £350,000 home mentioned above, there may be £20,000 of ‘acquisition costs’ (Stamp Duty of £18,000* and legal and survey fees of £2,000). If you pay £370 to buy more of the home, then £350 of this would buy an additional 0.1% of the home and the remaining £20 would reimburse 0.1% of the ‘acquisition costs’.

*Important! Stamp Duty rates have been temporarily reduced by the Government for residential property purchased between the 8th of July 2020 until the 30th September 2021. On the 1st of October 2021, the reduced rates will revert to the rates of Stamp Duty that were in place prior to the 8th of July 2020. For more information, please visit the Government’s website.

When you buy more, your rent for the next month decreases as you own more. In the example above, your monthly rent would decrease by 0.1%.

When you buy more of your home this includes paying back some of the original acquisition costs each time to our funding partners. Wayhome doesn’t charge you anything extra like fees or other amounts when you buy more of your home.

Maintenance costs in your home

Costs you pay 100% of:

1. Day-to-day maintenance: This covers general wear-and-tear like changing the carpets, and aesthetic changes like buying a new sofa.
2. Any service charges or ground rent: for leasehold properties, you would be responsible for paying any ground rent and any service charge. Ground rent is the rent that is paid to the owner of the land/building. Service charges are charges for looking after the common areas of the building such as landings, stairs, outside grounds etc. If any part of the service charge relates to major works such as re-painting the outside of the building, then this would be classified as Exceptional maintenance (see item 3 below) and you would only pay your share and our funding partners pay the rest.

Costs you share with our funding partners pro-rata:

Monthly costs

Apart from your rent, there are 3 other things to pay for every month. You split all 3 costs with the funding partners so you only pay a small portion of the total costs, which is currently £4.50 per month. This will be recalculated on an annual basis.

1. Building’s Insurance Policy: This insurance covers the cost of repairing damage to the structure of the home and will cover things like fires and flooding. It will not, however, cover any of your furniture or belonging in the home – for that you need your own contents insurance policy.
2. Home Emergency Insurance: This insurance policy covers the boiler, central heating, plumbing, drains and electrics in your home. It includes an annual boiler service by a Gas Safe engineer and 24/7 call outs 365 days a year for no additional charge.
3. Health and Safety Checks: There are a range of checks we do to ensure that your home is a safe place for you and your family. This includes an annual physical inspection by a RICS certified surveyor, a full electrical safety check every 5 years and other checks like fire safety.

Other costs

1. Exceptional Maintenance: In any home there are significant items that wear down over time e.g. repairing a roof or replacing a boiler. When these items come up you will need to pay your pro-rata share, and the funding partners will pay their share.
2. If the home purchased is a leasehold property: Then there are 2 additional costs ground rent and service charge. You would be responsible for any ground rent payment. Any service charges would be either “day to day” maintenance which is your responsibility or “exceptional maintenance” where you would pay your pro-rata. We will be able to provide you with estimates for these costs before you have to commit to the home so you know what additional costs you could expect.

Your share of maintenance covers the cost of the maintenance provider and is not paid to us. Wayhome doesn’t charge you anything extra like fees or other amounts for any maintenance on your home.

Potential increases to your monthly rent

Rent only goes up once a year at the rate of inflation. Inflation is measured by the government and is usually talked about as a percentage. The inflation index used is the Retail Price Index (“RPI”). The Retail Price Index can be viewed here.

Imagine the rent in your first year is £1000 per month. If at the end of the first year inflation is 3% then the rent in your second year would be £1030 per month. Knowing how much your rent will increase by should help you plan ahead rather than getting caught short when your landlord raises rent at their own will.

If you feel like your rent has become higher than the rent for similar homes in the same area, ask us for a rent review. You can do this every 5th year if you like. We will review your rent and let you know if it needs to be adjusted but be aware the rent can be adjusted up as well as down.

If you want to buy all of your home

The Partnership Agreement between you and our funding partners allows you to buy the whole home at any time, if the price of the home is more than the original price paid when you and the funding partners bought it.

If you choose to buy the whole home, there are a few costs. Some you are responsible for 100% of. Some you share with our funding partners.

Costs you pay 100% of:

1. If you would like to buy all of your home, you’ll need to cover the cost of getting your home valued. It needs to be done by a surveyor certified by RICS (Royal Institution of Chartered Surveyors). A valuation typically costs about £350 but this may change over time.
2. If you want to buy the whole home within your Early Buyout Period, we’ll ask you to reimburse our funding partners for the remaining acquisition costs they paid for (Stamp Duty, solicitors’ fees and property survey). If you buy the whole home after your Early Buyout Period ends, you don’t have to pay these costs. For example, on the £350,000 home mentioned above there may be £20,000 of ‘acquisition costs’ (Stamp Duty of £18,000* and legal and survey fees of £2,000). If you owned say 10% you would have paid £2,000 of the ‘acquisition costs’. If you wanted to buy the remaining 90% within your Early Buyout Period, then you would have to pay the remaining £18,000 of ‘acquisition costs’. If you wanted to buy the remaining 90% after your Early Buyout Period ends, you would not have to repay any more of the ‘acquisition costs’.
3. Costs that arise from buying the home. This can be things like, but not limited to, your own solicitor costs, any mortgage lender fees, survey fees for any survey required by the lender and any bank fees. When you buy 100% of your home, you will have to pay Stamp Duty again because the government view it as a new purchase. We are working with the government to change this because current laws don’t account for our new way of helping people buy homes. For example, on the £350,000 home mentioned above you would pay £7,500* of Stamp Duty under current rules as you wouldn’t be classified as a first-time buyer and the current rules don’t recognise that you own some of the home already.

*Important! Stamp Duty rates have been temporarily reduced by the Government for residential property purchased between the 8th of July 2020 until the 30th September 2021. On the 1st of October 2021, the reduced rates will revert to the rates of Stamp Duty that were in place prior to the 8th of July 2020. For more information, please visit the Government’s website.

Costs you share with our funding partners pro-rata:

If you buy 100% of the home, then the Partnership needs to be closed and there may be legal and accounting costs to prepare the final documents to close the Partnership. We would help you and our investments partners with this. For example, winding down the Partnership might cost around £750. If you owned 10% of the home, you would only pay £75.

If you decide to buy all your home, you will have to pay some costs as outlined above. It may also include paying back some of the original acquisition costs to our funding partners if you buy all the home within your Early Buyout Period. Our funding partners won’t charge you anything extra like fees or other amounts if you buy all of the home after your Early Buyout Period ends. Wayhome doesn’t charge you anything extra like fees or other amounts when you buy all your home.

If you want to move on from your home

The Partnership Agreement between you and our funding partners means nobody can tell you to leave if you are paying rent and not breaching your contracts. We want you to feel safe and secure.

If you choose to leave there are a few costs, most of which would happen when a property is sold. Some you are responsible for 100% of. Some you share with our funding partners.

Costs you pay 100% of:

1. If you would like to end the agreement and move on from your home, you’ll need to cover the cost of getting your home valued. It needs to be done by a surveyor certified by RICS (Royal Institution of Chartered Surveyors). A valuation typically costs about £350 but this may change over time.

If our funding partners decide to buy your share, which would be based on the current price, then you shouldn’t pay any other costs.

If you and our funding partners decide to sell the home on the open market, then there are costs that arise from selling a home.

Costs you share with our funding partners pro-rata:

1. This can be things like solicitor costs, estate agent fees, the cost of undertaking an Energy Performance Certificate (EPC) evaluation and any bank fees.
2. If the property is sold, then the Partnership needs to be closed and there may be legal and accounting costs to prepare the final documents to close the Partnership. We would help you and our investments partners with this. For example, winding down the Partnership might cost around £750. If you owned 10% of the home, you only pay £75.

If you want to move on, you will have to pay some costs as outlined above. Wayhome doesn’t charge you anything extra like fees or other amounts when you leave to move on from your home.

Other costs

If you decide to get independent professional advice at any time, then you will be responsible for that advice. For example, if before entering the Wayhome arrangements you decide that you would like independent legal advice then you would be responsible for any costs. We have a panel of legal advisors who are familiar with the Wayhome arrangement and the approximate cost of their assistance would be £425-495 plus VAT, we can pass on their details if you are interested or you can choose your own advisors.

If you pay your rent on time and look after the property, there should not be any other costs. But if you don’t pay your rent or don’t look after the property then there may be legal fees or other costs to deal with rental arrears or disputes.

The Wayhome arrangements differs to other ways of buying your main residence. You own part of your home through a partnership with our funding partners. You have legal and beneficial ownership of the home as a partner in that partnership. As part of the partnership agreement, you agree that the home will be your main residence, and you meet the government’s rules and criteria at the time you decide to sell, then you should not be liable for any capital gains tax when you sell your share of the home. The tax treatment depends on your individual circumstances and may be subject to change by HMRC in future. We do not provide tax advice and you should seek this independently from a qualified professional before selling your interest in the partnership.