Shared ownership and Help to Buy: how to buy a flat with a £5,000 deposit

The average London home costs £421,395 which means you need an income of £96,000 a year to buy one. Dream on says David Spittles - or wake up to shared ownership
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Shared ownership is keeping the dreams of young first-time buyers alive. The average price of a home in the capital is £421,395 and to get an 80 per cent mortgage requires an income of more than £96,000, while the deposit needed is close to £85,000.

But research by the National Housing Federation shows the average price of a shared-ownership home in London is £240,943, and buying the typical 40 per cent share would require a deposit of less than £10,000.

Buy a home with a £10,000 deposit
From £281,000: buy a new flat in Islington with a deposit of less than £5,000 at Xchange Point, Market Green N7. Call 020 7089 1315

Average combined mortgage and rent for shared ownership is £857 a month, less than half the £1,720 a month paid by other first-time buyers, and cheaper than the £1,348 a month it costs to rent privately. Shared-ownership buyers in London have an average income of £33,460.

While Help to Buy, the low-deposit scheme launched in the Budget last March, is beginning to have an impact, new shared-ownership deals have lost none of their lustre.

New flats in a smart part of Islington can be bought with a deposit of less than £5,000. Market Green, postcode N7, lies just north of King’s Cross and butts up against delightful Barnsbury conservation area. This is a fast-improving patch, once partly an industrial zone blighted by nearby railway yards yet with green retreats such as 10-acre Caledonian Park.

Share ownership
£181,250: for a flat at The Bloc, a new scheme in Enfield with 220 homes, where a minimum quarter share will cost £54,375. Call 0800 068 8990

Family Mosaic housing association is offering one- and two-bedroom flats in smart, low-rise courtyard blocks, part of a private scheme called Xchange Point. Prices range from £281,000 to £384,500, and the minimum 30 per cent shares start at £84,300. Buying the cheapest apartment with a 95 per cent mortgage, would require a deposit of £4,215. Monthly mortgage costs are £507, the rent is £246 and the service charge £150, bringing total outgoings to less than £905 a month.

“This scheme proves buyers with lower budgets do not have to settle for second best,” said the association’s Lauren Nicholson. “This is a revitalised district, right on the doorstep of King’s Cross.”

Apartments have a terrace or balcony and the development will provide underground parking and concierge services. Call 020 7089 1315.

Plan for a good selling price before you buy
Getting good value for money is only one consideration when opting for shared ownership. Buyers also have to think ahead about resale value — ensuring they will get a top price when selling, allowing them to move up the ladder.

One way to do this is to buy a shared-ownership flat at a new development where there are sought-after private homes alongside. Many new apartment schemes include shared-ownership flats built by the same private developer but which are managed and sold on by a housing association. Often the homes are identical in design and specification to the ones available for private sale and are equally in demand.

Origin housing association, which operates mainly north of the river, is selling shared-ownership flats in Enfield at a funky new scheme — Cubist-inspired, according to award-winning architect PCKO — called The Bloc.

There are 220 homes, including four- bedroom houses. Prices start at £181,250, or £54,375 for the minimum 25 per cent share. Call 0800 068 8990 for more details.

Shared ownership
Laura James bought her flat in Harold Wood thanks to the Help to Buy scheme
The Help to buy scheme is helping people buy homes
When Laura James, 24, got a job as an operations analyst for a Canary Wharf bank, she thought she would have to move into private rented accommodation in London. She had been living with her parents in Essex and had only modest savings.

However, Help to Buy made the difference, enabling her to purchase a two-bedroom apartment at a development called Kings Park, highly commended in last month’s Evening Standard New Homes Awards. The attractive parkland scheme is a few minutes’ walk from Harold Wood train station, which is in the Oyster card zone (a 33-minute train service to Liverpool Street station).

“I only needed a five per cent deposit and raised a mortgage for 75 per cent of the purchase price as the remaining 20 per cent is secured by the equity loan from government,” said Laura. “It made the crucial difference between owning and renting. My plan is to rent out the other bedroom for extra income.”

Harold Wood is a leafy part of the Essex commuter belt and due to get a boost as it is on the Crossrail route pening in 2018. Apartments are priced from £170,000. Help to Buy apartments start from £136,000, requiring a deposit of £8,500, topped up by the 20 per cent equity loan. Call Countryside Properties on 01708 348578.

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