Call to young who tap into Bank of Mum and Dad
FIRST-TIME buyers who tap into the Bank of Mum and Dad for part
or all of their deposits are being urged to consider shared ownership when they try to get
their first foot on the property ladder.
The same message goes to the parents, grandparents, other family
members and friends who are said to be pouring billions each year
into the property market to help young people buy their first
Shared ownership should be high on the list of options for many
first-time buyers, says Bromford Homes Sales and Marketing Director
Bev Hall, because deposits and monthly costs are typically cheaper
than when buying on the open market.
Her call is prompted by a just-published survey that says three
in ten of first-time buyers since 2009 got family gifts or loans
worth an average of £17,000 − or, in other words, more than
60% of the typical £28,000 deposit − according to figures
published by housing charity Shelter yesterday (Wednesday).
Bev (pictured above) compares those figures with the typical
deposit of around £13,065* for a shared ownership buyer in
Gloucestershire − one of the areas where Bromford has active
part-buy developments like Fortuna, where you can buy a
home for as little as £31,250** and your deposit can be as low as
"The numbers speak for themselves − highlighting the fact
that shared ownership deposits are generally much, much lower than
they are for first-time buyers on the open market," says Bev.
"It means young buyers like Claraine Walker
and Matt McIntyre can either build up
the deposits themselves without having to scrimp and save for ten
years and more or that the burden on the Bank of Mum and Dad −
where that is an option, of course − is much, much less.
"We urge first-time buyers − and their parents − to
take a good look at shared ownership, to find out what it is and
how it works because it really can be a much more affordable and
quicker way of getting on to the property ladder."
With shared ownership, you buy between 25% and 75% of your new
home rather than buying it outright and pay a low rent on the
remaining share. How much you buy depends on how much you can
afford with a typical amount being around 40%.
"It's a shame more people don't know about this part-buy,
part-rent path on to the property ladder and that includes parents
because they often play a key part when their children decide to
buy," says Bev. "That's why we decided to create a special
pocket-sized leaflet, Shared
ownership questions − from the parents' perspective, that
answers some of the most frequently-asked questions about our part
buy-part rent scheme."
First-time buyer Claraine (pictued above) highlights a lower
deposit as one of the key pluses of shared ownership and recommends
the part-buy, part-rent option to other first-time buyers. Like a
lot of younger people on lower incomes, 22-year-old Claraine had
just about given up hope of getting on to the property ladder after
many months of searching and frustrating knock-backs from mortgage
That only changed when she found out about shared ownership −
and in February moved into her new home at Cannock, Staffordshire,
after putting down a £6,000 deposit she had saved herself and
buying a 50% share for around £60,000.
"Shared ownership is definitely the most affordable way of
buying a house if you have a low income and can't afford the
deposit that lenders ask for on the open market," says Claraine,
who works as a Moneymates Team Leader with Bromford Support,
helping vulnerable customers to manage their financial affairs.
"Many of my friends − especially couples moving out of their
parents' home for the first time − go into renting as a short-term
solution, hoping it will give them time to save a bigger deposit,
but then find it too costly to do so. I always recommend that
anyone like me should consider shared ownership as the first
option. It's quicker and easier to buy and it can be cheaper on a
monthly basis than renting from a private landlord."
The Shelter findings support a call by the National Housing
Federation for the government to boost the number of homes being
built in Britain. Bromford supports that call and is using the
surplus generated by a few outright sale developments to help
subsidise the cost of building more shared ownership housing.
* Figures published by the NHF during Shared Ownership Week
** £31,250 represents a minimum 25% share of a one-bed apartment
with a market value of £125,000. The deposit, based on a customer
borrowing 95%, would be £1,563. The minimum 25% share of a
three-bed home would cost £57,500 and the deposit, based on a
customer borrowing 95%, would be £2,875.
25 July 2013