Owners wishing to increase their equity stake
4.1 At any time after an owner has moved into a property, an owner can increase their equity stake in that property up to 100 per cent (or up to 90 per cent if there is a golden share). Each equity stake increase must be for a minimum 5 per cent equity stake.
The table below illustrates how this could work in practice. It uses two examples: one where the Scottish Ministers retain a golden share; the other where there is no golden share.
|Example 1 The Scottish Ministers retain a 'golden share'||Example 2 The Scottish Ministers have no 'golden share'|
|Initial equity stake taken by an owner.||65%||65%|
|Permitted (at least 5 per cent) equity stake increase (to no more than 90 per cent where there is a 'golden share') and allowable at any time after the owner has moved into the property.||85%||85%|
|Further permitted (at least 5 per cent) equity stake increase (to no more than 90 per cent where there is a 'golden share') and allowable at any time after the first equity stake increase||90%||95%|
|Further permitted (at least 5 per cent) equity stake increase (to no more than 90 per cent where there is a 'golden share') and allowable at any time thereafter||Not applicable||100%|
4.2 An owner can increase their equity stake regardless of whether the open market value of their property has increased or decreased. The open market value of the property will be determined by the District Valuer or such other professionally qualified valuer as agreed between the Scottish Ministers and an owner. The valuation will reflect any improvements carried out to the property by an owner but will disregard matters such as lack of vacant possession, any breach of an owner's obligations, any security or other encumbrance, and any reduction in value caused by adaptations carried out to meet the needs of a disabled person.
4.3 An owner will be responsible for meeting all costs (including those incurred by the Registered Social Landlord) when increasing their equity stake.
4.4 There will be no means testing of owners following the initial purchase and Registered Social Landlords must recommend to owners that they take independent financial advice before increasing their equity stake.
4.5 Annexe J illustrates how a financial reconciliation would work when an owner increases their equity stake from 65 per cent to 85 per cent, and then from 85 per cent to 95 per cent and then from 95 per cent to 100 per cent.
4.6 Full details of how this increase may be effected together with relevant correspondence is more fully set out in the After Sales Shared Equity Procedures (' ASSEP Procedures') for use by Registered Social Landlords. A copy of the ASSEP Procedures can be found on the Scottish Government website at www.scotland.gov.uk/LIFT