A new way to buy: use your rent as a deposit

It is cheaper to buy than to rent. A new scheme is giving London's tenants a buying opportunity
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Factory Quarter, Turnham Green
From £870 a month: rent-to-buy flats at Factory Quarter, Larden Road, just north of Turnham Green, by Genesis Homes (0800 954 2364)
The rental industry is a landlords' market and likely to stay that way for some time, with rents forecast to increase by as much as 20 per cent this year.

Renting is now more expensive than buying across 80 per cent of Britain, even in London where the average rent of £2,121 a month is 14 per cent higher than the cost of buying the average property.

'Buying is the aspiration of most young Londoners, but the reality is shared accommodation or a private let'

It's a paradox that buying is the more cost-effective option, but with mortgage lenders remaining mean with money it is not possible to buy if you haven't got a deposit.

And it is not possible to move unless you have a very convincing case for more money... and most of us in this austerity year haven't got convincing cases or deposit money. Plus if you are twenty-something, forget it. Buying is the aspiration of most young Londoners, but the reality is shared accommodation or a private let while they save to get on the property ladder.

Discount options

Until recently, there was no housing association provision for "intermediate renters" - those who cannot afford to buy but whose income is too high for them to qualify for housing benefit so must rely on private landlords.

However, associations have stepped in to offer low-cost rental homes to people who are employed (earning less than £60,000 a year, in the public or private sector) and able to demonstrate they are saving to buy an affordable home.

The rents are discounted - set at 79-80 per cent of open-market rates - making it easier for people to build up a deposit.

Time House, Clapham
From £200 a week: new apartments with balcony and communal roof terraces at Time House in Clapham, by Thames Valley Housing (0845 351 2345)
There are also "rent-to-buy" options where rent paid by tenants is deducted from a pre-agreed price to purchase the flat they live in. In most cases, intermediate rent homes are part of new-build developments where shared-ownership and private sale flats are available, too.

Housing associations also take nominations from local authority waiting lists so it is a good idea to register with your council, either the one where you live or work (or both).

Thames Valley Housing has one- and two-bedroom flats available for rent at Time House, Clapham. This new development is close to Clapham Junction station, the bars and eateries of Northcote Road, the open spaces of Wandsworth Common and the Battersea riverfront. Rents start at £200 per week. Apartments have a balcony or terrace plus there are communal roof terraces and secure storage for bikes. Call 0845 3512345 or email sales@tvha.co.uk.

Loft-style apartments with high ceilings and big windows are available to rent at Factory Quarter, a redevelopment of the former Prostolite manufacturing plant in Turnham Green. Rents start at £870 a month (against £1,090 a month for a similar private let in the same area).

Tenants who manage to save a deposit can apply to buy under the shared-ownership scheme. To qualify, you have to live or work in the Hammersmith & Fulham borough. Call Genesis on 0800 954 2364.

Arch Street, Elephant & Castle
From £740 a month: rent-to-buy homes at Arch Street in Elephant & Castle, which fall under London & Quadrant's Up-to-You scheme
London & Quadrant offers a "rent-to-buy" option called Up-to-You at Arch Street, Elephant & Castle, and at a development called SE15, Peckham. Monthly rents from £740. Call 0844 4069800.

Flat sharing boosts savings and social life

Renting out a spare bedroom is one way for would-be first-timers to boost their savings. Flat sharing is booming, according to Richard Klin of estate agent Urban Share.

"Enquiries are up 50 per cent compared to this time last year. Sharing is substantially cheaper than renting a flat on your own - £650 a month in a shared house in Canary Wharf compared to £1,500 for a one-bed flat. Sharing also provides a ready-made social circle, which appeals particularly to those who are new to London."

Figures from London-wide estate agent Winkworth show a considerable variation in private rents. In general, rents are lower in south London, outer-north London and parts of east London. While the cost of a one-bedroom flat in Notting Hill ranges between £1,200 and £2,600 per month, in Crystal Palace it ranges between £625-£820.

Rents can also be compared on a "rents map" website set up by the Mayor. Visit london.gov.uk/rents.

Lorna Hosler
Lorna Hosler is enjoying the benefits of rent reduction

Rent reduction means more savings

Lorna Hosler (left), 29, pays £977 a month for a two-bedroom flat at a development called Cordwainer House, near London Fields, Hackney. Her landlord is Metropolitan Home Ownership. She had been living in a privately rented shared property only two streets away.

"It's made a huge difference to my quality of life," says Lorna, a community project manager for London University. "Without the rent reduction, I would have been unable to afford this standard of accommodation and this amount of space. Even though I'm renting, the place feels like mine - and it's brand-new. I'm paying about 20 per cent less than the market rate which means I have more of a chance to save a deposit."

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