One of the biggest criticisms of affordable housing, particularly in central London, is how incredibly unaffordable it is for many young first-time buyers. In 2012 a housing association offered shared-ownership flats in Clerkenwell with market prices of up to £705,000 — buying a 25 per cent share of a flat in Central Square would therefore cost up to £2,322 a month for rent and mortgage.
A new scheme that launches later this month is using a new model of shared ownership to break this pattern, helping buyers on low incomes in one of London's most expensive boroughs, Hammersmith & Fulham.
The Bloom has 170 apartments, ranging from one to three bedrooms, and is in Bloemfontein Road, White City (nhhg.org.uk/bloom). The budget option is to buy a property using a new type of affordable scheme, discount market sale, which is being underwritten by Hammersmith & Fulham council.
Some 42 one-bedroom flats, with a guide price of £290,000, will be sold under this scheme to people on the council's housing waiting list.
They will need to get a mortgage to buy a proportion of the property — usually 40 per cent, although other options will be available depending on individual circumstances. The council will own the remainder, and these homes are being targeted at buyers with a household income of less than £40,500.
How does discount market sale work?
Discount market sale differs from shared ownership in that people will not be expected to pay any rent for the portion of the property the council owns, making monthly outgoings significantly less - an estimated £718, including service charge. When owners want to move on they will share the proceeds of the sale with the council.
"It is becoming more and more difficult for people to afford even affordable housing," said Wendy Gordon, sales manager at Notting Hill Home Ownership, which is running the scheme. "It is something that we are very aware of. People are not getting big increases in their pay but prices are going up and the bubble does not look like it is going to burst anytime soon."
For buyers on slightly higher salaries the remainder of the homes will be sold under normal shared-ownership terms.
Final prices have not yet been confirmed but buying a 25 per cent share of a one-bedroom flat will cost about £72,500, and the estimated monthly outgoings, including mortgage, rent and service charge, will be from about £1,200. Two-bedroom flats start at £427,500. Buying a 25 per cent share will mean a total monthly cost of about £1,230.
Discount market sale family homes
There are also eight three-bedroom homes on the site, which will be put on sale in a later phase of the scheme. These are likely to be valued at about £545,000, which will mean that a 25 per cent share will cost £1,460.
Priority is given to people who live or work locally and who earn less than £66,000 (for one- and two-bedroom flats) or £80,000 (for three bedrooms). The first homes will be ready to move into in November 2013, with the development completed in January, 2014. The seven-storey block has been designed by award-winners Penoyre & Prasad and will include a supermarket and health centre.