With the end of Help To Buy Equity Loans, increasingly stringent mortgage affordability checks and rents in the capital skyrocketing by 16.1 per cent in the last year, it feels like it’s never been harder for Londoners to get on the property ladder.
A new, one-of-a-kind scheme, launching today, however, may offer a glimmer of hope to those wondering if they’ll ever own a home. Developer Fairview New Homes has unveiled its ‘Save To Buy’ scheme, which aims at helping those simultaneously trying to save for a deposit while also paying out for rent.
The new scheme is the first of its kind in the UK and allows first time buyers to live in their home rent free, with monthly payments going towards a deposit on their property, rather than a landlord.
It is also aimed at potential buyers living with their parents, encouraging them that home ownership is possible as early as this year. Successful applicants must be first-time buyers, over the age of 18, have a 1 per cent deposit already, be in full time employment (for a minimum of three months), and be qualified by a third-party financial advisor to confirm affordability and credit score.
By signing up to the program, applicants are essentially ‘exchanging’ on their property purchase. They then pay monthly instalments – 100 per cent of which goes towards their deposit – until they complete on the purchase.
These monthly amounts “are based on the area’s average monthly rent and the buyer’s personal finances” says the developer.
As an example, it suggests this amount would be around £1,500, but you can overpay on these monthly amounts and complete sooner.
For launch, the Save To Buy properties will be available in Epping Gate in Essex and New Hayes in west London, with dozens of properties going on sale throughout the year, and potentially hundreds, depending on availability and uptake.
Properties range from one bedroom up to three bedrooms, and have a modern finish with fitted kitchen appliances.
All the apartments at NewHayes also come with a private terrace or balcony. The price range is currently between £325,000 and £500,000.
“Our survey found that 79 per cent of renters in the UK and 83 per cent in London feel the cost of renting is negatively impacting their ability to save for a house deposit. In fact, almost two-thirds (64 per cent) blame the cost of rent for saving little or nothing at all towards a house deposit.
“The Save to Buy scheme is designed to break the vicious rental cycle, which could save first-time buyers in London around £15,000 in rental payments over a year,” says Chris Hood, Sales and Marketing Director at Fairview.
The idea would see the buyer complete on the property purchase after a maximum of two years, but Fairview expects most to do this within six-12 months.
The buyer would then own 100 per cent of their home and, once legally completed, Fairview has no share in the property.
If circumstances change while they are on the scheme and they can no longer afford to go through with the purchase, the buyer would need to contact their sales advisor to discuss your options.
“If a buyer decides not to proceed with the property purchase after exchanging, the 1 per cent deposit will be refunded, however monthly deposit payments made to date would not be returned,” says Fairview.
Save To Buy is set to run until the end of 2023 and is expected to be very popular, with applications made on a first-come, first-served basis.
The developer encourages people to register their interest and talk to a member of the team as soon as possible.
Plots will be released throughout the year, so if someone isn’t in a position to take part right away, they can be added to a waiting list.
For more information on Save To Buy, visit Fairview’s website.