Share-to-buy: mortgages between family and friends

With 53,000 new homes due by 2015, the best mortgage lenders are finding ways to help you buy them
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Hoxton Wharf
From £265,000: for flats recently released at Hoxton Wharf by Countryside Properties. Call 07714 689629
A £4 billion affordable housing package thrashed out between Mayor Boris Johnson and the Government will provide 53,000 new homes in the capital by 2015, with a borough-led new-build initiative focusing on Camden, Hackney, Newham, Wandsworth, Hillingdon, Ealing and Barking.

The range of new homes will include properties for working Londoners, with rents, available through housing associations, discounted to an average of 65 per cent of market value.

In conjunction with this, the Government is promoting “share-to-buy” mortgages, which allow up to four people to purchase a home together. For siblings or groups of friends without access to savings or parental help, this sort of joint-ownership deal could become a mainstream alternative to years of saving for a deposit.

Interest-free loans
Housing associations predict a surge in buyer demand from September, when a new top-up deposit scheme providing interest-free loans worth 20 per cent of a new-build property’s value comes into force.

Applicants are being directed to, a new website that lists all available affordable homes on a borough-by-borough basis. These include shared-equity properties offered by private developers and housing charities for which anyone earning less than £60,000 is eligible.

Leinster Terrace, Bayswater
£75,000: for a minimum share of a flat at Leinster Terrace in Bayswater. Call 0845 130 1422
Buyers can get on the ladder for less than £600 a month by purchasing the minimum 25 per cent stake and paying a subsidised rent on the remaining equity, and affordable homes in posh central postcodes are on offer, too.

Part-shares in flats at highly priced and highly prized newly reconstructed period showpiece Leinster Terrace, Bayswater (left), moments from Hyde Park, start at £75,000, with combined mortgage and rent payments of £895 a month, less than half the average private rent of £1,846 a month in the area, according to Octavia housing association. Call 0845 130 1422. Priority is given to anyone living or working in Westminster borough.

At 146 Kilburn High Road, Origin Housing is selling shared-ownership flats above a Victorian shopping parade. Prices start at £280,000 (£70,000 for the minimum 25 per cent share). Call 0800 068 8990.

Canalside apartments on the site of historic Crown & Manor Boys’ Club in trendy Hoxton Wharf have been released for sale by developer Countryside Properties. The scheme has 83 private flats priced from £265,000 and a new sports hall. Call 07714 689629.

Putney is popular with singles and couples who want the convenience of Tube connections, the buzz of a high street and the tranquility of surrounding leafy open spaces. At a former college site on Putney Hill, housing association A2 Dominion is selling 54 new apartments where the minimum shared-ownership price is £82,500. Call 0800 783 2159.

Putney Hill
£82,500: for a minimum share of an apartment at a 54-flat scheme on Putney Hill. Call 0800 783 2159
Band of brothers (and sisters or friends)
Britannia, part of Co-op Financial Services, has launched a share-to-buy mortgage that allows purchasers to borrow up to 90 per cent of the property’s value when a group clubs together. The maximum number of applicants is four, and co-buyers can be friends, married or unmarried couples or family members.

Borrowers pay 0.5 per cent above the lender’s standard variable rate for the lifetime of the loan, giving a current pay rate of 4.29 per cent. Normally you can borrow 3.75 times the combined income of two borrowers, or 4.25 times one income added to the other person’s income.

For three or four buyers, the multiple is two times all incomes added together or 3.75 times the incomes of the two highest earners.

Borrowers need to do their sums in order to work out which is the most advantageous option. There are also no early redemption fees to pay, meaning borrowers are able to switch to another lender without incurring any penalty charges.

Lawyers advise that anyone entering into co-buying should draw up a legal agreement covering scenarios such as one person wanting to sell (typically an agreement would specify buy-out options) and what happens if one person loses their job and cannot pay the mortgage (normally, the others would be liable for the shortfall).

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