An innovative £30 million project to help first-time buyers beat the deposit trap launches in London this summer. The Westminster Home Ownership Accelerator scheme offers would-be buyers low-cost rental accommodation in smart apartments in the west and north-west of the capital, giving them time to save for a deposit to buy their own home.
Participants, who can stay in the homes in Maida Vale and Bayswater for up to three years, will also get a cash bonus at the end of their tenure as an extra leg up.
SO WHAT’S THE CATCH?
Getting a place on the scheme, which is being run by housing charity Dolphin Living, is likely to be tricky because the deal it offers first-time buyers is unprecedented.
Finding a deposit for a first home is one of the biggest barriers to home ownership in London, where an average first-time property now costs £350,000. Raising a 20 per cent deposit means saving £70,000 — an almost impossible feat for those not heavily subsidised by the bank of mum and dad.
The first of the 50 flats included in the accelerator scheme are at Dibdin House in Maida Vale. Dolphin, which is contributing £17.5 million to the project and has been granted another £12.5 million by the City of Westminster, has bought and renovated 16 flats in the Thirties building, at an average cost of £400,000.
Later this year a dozen one-bedroom and two-bedroom flats in a small development in nearby Lanhill Road, being built by Dolphin, will be on offer. Some 22 homes in another new development in Porchester Road, Bayswater, will follow.
The cost will be pegged at 65 per cent of typical local rents — which means from £208 per week for one-bedroom flats at Dibdin House, £286 for two-bedroom flats, and £325 for three-bedroom homes. Participants will not have to pay a service charge.
Any first-time buyer who lives or works in Westminster can apply for the scheme, so long as their household income is less than £90,000.
They must also have savings of at least £22,500, which Jon Gooding, chief executive of Dolphin Living, believes will target the homes at people who have already started to save for a deposit.
“We are trying to help people who are really serious about getting into home ownership,” he says. “Deposits are a huge problem, particularly in Westminster where there are no shared-ownership options because the numbers just do not add up.
“We want to help people who are really thinking hard about home ownership.” If the scheme is oversubscribed, priority will be given to people currently living in council or housing association flats, and to members of the Armed Forces. Westminster residents will take priority over those who work in the borough, and those with children will also be prioritised.
DOUBLE YOUR MONEY
When the successful candidates decide the time has come to start house hunting Dolphin Living will give them a bonus, which will be linked to house price inflation during their tenure.
The formula the charity will use to decide the size of the bonus is complex, but Gooding says that if house price growth is slow participants could still double their original £22,500 savings. If it is strong they could triple it — plus, of course, whatever money they have saved. “The benefit of this scheme is that it tracks the market,” he adds. “It will be exactly as if they had bought a property and seen its value grow.”
The participants will be able to buy a property anywhere in Greater London. Should any of them decide not to buy a property at the end of their tenancy they will not be penalised, although they will not receive a bonus.
The pilot scheme, which is intended to run for 15 years, will then be assessed, and either continued or not.