No deposit? No problem: Boris launches First Steps, a new first-time buyers scheme

There is a new way to buy a home - with no deposit and no mortgage - as part of Mayor Boris Johnson’s First Steps programme. So where’s the catch?
Being able to buy a home without having to find a deposit — or even a mortgage — sounds too good to be true. But in this case there isn’t a catch, unless you find living in Erith, south-east London, a deal-breaker.

Erith Park in the borough of Bexley is the first place to launch an innovative scheme that is part of Mayor Boris Johnson’s First Steps programme (www.sharetobuy.com/firststeps). For those struggling to raise a deposit, it’s a ray of hope. The average price of a home in the capital is now more than £500,000, and even buyers who have a 20 per cent deposit typically need an income of £108,500 —more than three times the London average salary of £33,000 — to secure a morgage.

However, research shows there are pockets of decent value, and not always in outer travel zones, where shared ownership and other low-cost initiatives are helping people on to the property ladder. With the no-deposit, no-mortgage scheme, buyers acquire shares in their home each time they make a monthly “rental” payment.

Erith Park is in a new neighbourhood being built on the site of the former Larner Road council estate. The first phase of 343 homes offers a mix of buying methods through Orbit Group and Wates Living. Prices start at £139,950 for a one-bedroom flat, with three-bedroom houses from £240,000. Call 0845 463 3545 or visit www.erithpark.co.uk. 

SEE MORE: LONDON'S NEW HOMES FOR UNDER £250,000:


A further 2,000 homes are expected to be rolled out under the new initiative. No-deposit, no-mortgage purchase plans are provided by Genie, a social enterprise company. Buyers enter into a 30-year payment plan, reviewed every five years, and take full ownership of the property at the end of this period. If they want to “sell up”  before this, they can do so on the open market, with proceeds split according to shares owned.
 




Genie has right of first refusal to buy the part-owner’s share. Buying a £245,000 home would initially cost £1,136 a month. Every payment made buys a pre-determined share of the home, which is only 1.8 per cent in the first five years, with bigger equity chunks acquired later. Extra shares up to £5,000 can be bought at any time.

Genie customers would hope to be buying into an improving district, to benefit from a rise in property values in the longer term. This part of south-east London is one of the cheapest in the capital — forlorn but river-hugging and starting to benefit from regeneration and better transport, not least the Crossrail stations coming to Woolwich and Abbey Wood and a proposed bridge across the Thames to Docklands. 

Bexleyheath, the borough’s main town, is getting a facelift. It is suburban, surrounded by parks and green space and the area has heritage buildings such as Hall Place  — a Tudor mansion — and the National Trust-owned Red House, home of designer William Morris.

Pinnacle Square, a scheme of flats and houses, is part of the town centre makeover. Prices from £176,995. Call Bellway on 0845 548 8138.
 


With property prices rising faster than incomes, buyers have no choice but to compromise on location. Most head further south and east, where the bulk of new homes are being built and values are roughly two thirds of those in north and west London. Almost 80 per cent of housing demand in London is for homes below £450 a square foot — a ceiling of £250,000 for a one-bedroom property and £400,00 for a two-bedroom home, which is why developers are pushing into Zones 3 and 6.
Visit: www.sharetobuy.com/firststeps
 

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