Hope for 1st-time buyers amid bleak forecast
£650,000. That's the predicted price for the AVERAGE London home
by 2020 and it's hard to see how the typical first-time buyer could
afford anything close to that figure, blogs Alan Bradley,
Head of Sales, Bromford Homes.
Yes, it's an extreme example − property prices in the
capital being almost on another planet − but a just-published
National Housing Federation
report does forecast an average 35% property price rise over
the next seven years.
That includes us here in central England and, with many
first-time buyers already struggling to take that crucial
first-step on the housing ladder, the NHF's Home Truths
report offers a timely warning.
Hard-working people are already spending more and more of their
income just to keep a roof over their heads and NHF chief executive
David Orr warns today (Tuesday) that many could be forced to move
away from their jobs, schools, family and friends.
His bleak forecast is that, unless the nation starts building
more homes, many ordinary working people could be locked out of
home ownership. Instead, they will be forced to rent from private
landlords at prices that are forecast to rise almost 40% by 2020
and, in a growing number of cases, seek housing benefit to help
make ends meet.
Far better, argues the NHF, to spend taxpayers' money on more
housing that people can afford. For many first-time buyers and
other people who can't afford to buy on the open market, that means
shared ownership − where you buy
between 25% and 75% of a new home, rather than buy it outright, and
pay low rent on the remaining share.
This makes a big difference to people on lower incomes who
can't − and possibly never will − save enough to put down
a traditional open market deposit and can't borrow from what's now
commonly called the Bank of Mum and Dad.
This part-buy, part-rent formula really does work. In the last two
months alone, we've completed more than 40 shared
ownership sales across central England and we've got another 15
in the pipeline before Christmas.
It's quite literally a dream come true for first-time buyers like
Matt and Clare (pictured above), who bought roughly 50% of their
new two-bed home at Larks Rise, Coventry, earlier this year and
were so pleased that they agreed to feature in a special shared ownership video.
Aspiring homeowners like them keep saying an enthusiastic YES to
shared ownership and, with a typical 40% share of a new Bromford
home costing around £48,000 at a development like The
Beeches in Birmingham, it's easy to see why.
A minimum 5% deposit on that would be around £2,400 − so
much less than if buying on the open market − and the total
monthly housing costs (including low rent) are typically less than
if buying outright or renting from a private landlord.
Shared ownership buyers can also increase the percentage that
they own through a process that we call staircasing − if and
when, for instance, they increase their earning power.
It's not a perfect system − nothing is − but it works
well for the huge majority of our customers by enabling them to
move into a home that they can call their own and offers them an
affordable, more secure, alternative to private renting.
For most of our shared ownership buyers, it also means that they
can stay in the same area where they work, send their children to
school and have a cherished network of family and friends.
10 December 2013
If all goes well up to the end of March, 230 buyers will have
collected the keys to a new Bromford home during 2013-2014 and next
year we hope to continue "doing our bit" for the affordable housing
market, by building more shared ownership homes.