LONDON house prices might have risen some 5 per cent since last January but as any first-time buyer will tell you, it is tougher than ever to get on the property ladder.
With mortgage approvals still below their long-term average and deposits often as high as 40 per cent, even young professionals earning a decent salary are finding it a struggle. But if you are one of these people eyeing up properties in estate agent windows, then you have more chance than you might think.
Shared ownership schemes might conjure up images of dismal estates with hundreds of identical properties, things have changed. It’s not just people of low salaries that are eligible – households with an income of up to £60,000 can apply for the New Build Homebuy programme.
There are plenty of developments in the capital offering this scheme to prospective buyers. If you work in the City then the Stratford area has a number of developments offering shared ownership. At The Edge development, prices start from £66,500 for a 35 per cent share in an apartment with a monthly rent of £257.
Or if you fancy living next to the Grand Union Canal in Camden, then Genesis Homes still has one-bedroom apartments for sale in its Somerston House development. Prices start at just £73,750 for a 25 per cent share. And if you have a taste for south-west London, then Genesis is also offering two bedrooms at its development in Chelsea Bridge Wharf from just £108,750 for a 25 per cent share.
Tight credit conditions and the recession have meant that developers need to attract a wider audience, including young aspirational professionals. But if you are tempted, it is worth finding out who your future neighbours might be – it helps if a number of the other flats are also privately owned rather than investment flats.
CASE STUDY: TAY INCEKARA
Even though he was earning a good salary working for an asset management company in the City, 28 year-old Incekara struggled to get on the housing ladder. He wasn’t initially sure that he was eligible for shared ownership: “I thought it was just for teachers and nurses,” he says. “As a young professional working in the City, I wasn’t sure if I was what they were looking for.” But he was able to buy a 45 per cent share in a two-bedroom property in Watney Plaza, Shadwell. The total monthly repayment was less than his previous rent. He aims to buy the remaining 55 per cent as soon as he can. “I wasn’t sure how much I would like living here when I moved in,” he says. “But I absolutely love it..”
Prices start at £65,500 for a 35 per cent share in an apartment with a monthly rental of £257, plus other monthly charges. Contact: 0800 234 6242, www.edge-homes.co.uk.
FACTS | NEW BUILD HOMEBUY
Under the government’s New Build Homebuy scheme, people who cannot afford to buy a home outright can buy an equity share in a house and then pay proportionate rent on the part not owned. Usually, the initial percentage purchased is between 35 per cent and 75 per cent, although there is nothing to stop you buying a greater share if you can afford it.
You have the option to buy further shares of the property until you own the property outright – known as staircasing. As your equity stake increases, your rent reduces accordingly.
Households earning up to a combined £60,000 are eligible for the scheme and you have to have savings of around £4,000 to cover the starting costs such as a mortgage valuation and legal fees. You will also have to pay monthly costs such as buildings insurance and a service charge.