Housing associations are using their muscle as leading developers of affordable homes to broker special mortgage deals and other incentives for first-time buyers fighting to get on to the property ladder.
Low-budget buyers who struggle to save big deposits are being offered help by Affinity Sutton, for example, which manages 54,000 homes across the country. It has launched a 95 per cent loan-to-value shared-ownership mortgage backed by high-street bank Santander. It is the first deal of its kind in the affordable homes sector.
The offer is available to buyers purchasing a 25 to 75 per cent share of the property. Three-year and five-year fixed and tracker rates are on offer, starting at 5.35 per cent. The maximum loan is £250,000.
Described as a "bespoke product", applicants first have to be approved by Affinity Sutton. Buyers then visit any Santander branch in London and the South-East to discuss their mortgage requirements. By reducing the deposit required, more borrowers will be able to purchase above the 25 per cent equity stake they could otherwise afford. Buyers pay a subsidised rent on the remaining amount of equity, which reduces the monthly payments. Typically, buyers will need to stump up a £3,600 deposit plus £3,500 in associated purchasing costs.
'First you must be approved by the housing association, then you head for a London branch of Santander'
Santander is the only mainstream lender supporting such high loan-to-value mortgages. It says this "strategic partnership" will allow it to extend its reach into the shared-ownership market.
Part-buy, part-rent flats are for sale at Maple Quays, moments from Canada Water Tube station in Rotherhithe. Prices start at £70,625 for a 25 per cent share of a one-bedroom apartment (full price £282,500). Rent and service charges combined cost £582 per month. Other London developments will come on stream later this year. For commuters, homes are available now at schemes in Stevenage, Gravesend and Ashford. Visit affinitysutton.com.
Put it on the card
London & Quadrant housing association has launched a discount card giving buyers access to 400 savings offers — including weekly supermarket shopping, electrical and household goods, furniture, insurance, motoring and gym membership.
The personalised Welcome Home card is issued by incentive provider Countdown. Participating retailers include M&S, B&Q, Sainsbury and Halfords. Visit lqgroup.org.uk. Most first-time buyers operate on a shoestring budget and struggle to find extra money to kit out their new home before they move in. For two in three buyers, it takes 12 months to fully furnish their homes, while one in 10 is still buying basics three years down the line, according to a recent survey.
Private developers used routinely to offer furniture packs and other incentives to first-time buyers but this practice stopped two years ago when mortgage lenders started to question whether such sweeteners were merely disguising higher property prices and leading to overvaluations. In general, housebuilders now focus on helping buyers overcome the deposit hurdle.
Coming soon is another L&Q initiative called UpToYou, which is aimed at those with an income of between £12,000 and £25,000. It is a "rent-to-purchase" scheme, allowing people to offset rent paid against purchase price if they choose to buy within five years. "It's for people in priority need — on the waiting list but not in first place — and who are in work," explains an L&Q spokeswoman.
Enfield is the location of the first scheme. Others will follow later this year. L&Q has a development pipeline of 9,000 homes in London and the South-East. Fairview, a developer of first-time buyer homes, is offering a "try-before-you-buy" deal at Pembroke Park, Crawley. New two-bedroom flats with a value of £170,000 can be rented for £825 per month for six months. Call 0800 883 8085.
Places for People, a housing association developer, helps low-budget first-time buyers by providing 10-year interest-free equity loans for 30 per cent of the purchase price. It also offers 100 per cent mortgages.
The organisation has its own pool of money and says it has 14 different finance methods to help buyers purchase a property. For more information, visit places forpeople.co.uk.