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Part-buy offers hope for out-priced rural buyers

A NEW property survey has highlighted the plight of first-time buyers in the Cotswold area by naming it the least affordable rural district in Britain.

Buying a typical home here on the open market can cost more than nine times − or £318,128 − the local gross annual average earnings of £33,721, says the Halifax research.

The findings are highlighted by Bromford Homes Sales and Marketing Director Bev Hall because, she says, they reinforce the need for more shared ownership homes in the Cotswold and other rural areas.

"The Halifax figures may shock some people but probably won't come as a surprise to first-time buyers in Cotswold district and other sought-after rural places where property prices are high and average wages relatively low," says Bev.

"These are mostly younger people with strong local roots and it can seem like the only option is to stay with the family or become part of Generation Rent, with little or no hope of buying a home as they watch property prices and private rents get higher and higher.

"For them, shared ownership probably represents the only affordable way of getting onto the property ladder unless − like some fortunate first-time buyers − they are able to tap into what's become known as the Bank of Mum and Dad."

Fortuna exteriors 1

With shared ownership, you buy between 25% and 75% of your new home and pay low rent on the remaining share. So, for example, at Cirencester's popular Fortuna (pictured above) development − in the heart of Cotswold district − you can get onto the property ladder for as little as £31,250* and pay as little as £1,563* in deposit, based on a 95% mortgage.

"That deposit is much less than you would have to pay if buying on the open market − or if you buy through the new Help to Buy mortgage scheme," says Bev. "That's true even if you end up buying a more typical shared ownership share of 40%. That would cost you £50,000 using the same example at Fortuna and a minimum 5% deposit would be just £2,500."

Compare that, says Bev, with a similar apartment selling for an open market price of £125,000. A minimum 5% deposit would be £6,250 − two and a half times as much as our average part-buy example.

"These figures − and especially the low deposits − go a long way towards explaining why so many people on lower incomes are saying YES to shared ownership − especially in rural areas like Cirencester. In fact, we've sold more than 90 part-buy homes here at Fortuna and are down to our last few apartments," says Bev, who also points to other rural shared ownership success stories such as Middleton Chase in Middleton Cheney, Northamptonshire.

"It's also been proven that your typical total monthly housing costs are cheaper with shared ownership than if renting from a private landlord or buying outright. That's true even when you add in the low rent that's charged on the share you don't buy as well as other regular housing costs," Bev (pictured below) tells first-time buyers.

Bev Hall on HomeBuy

"At the end of the day, you get a new feature-packed, energy-efficient home that you can call your own. You can decorate it the way you like and enjoy the peace of mind that comes with knowing that it's so much more secure than rented housing."

According to the Halifax survey, rural house prices are on average 13% more expensive than in urban areas. Home buyers in rural areas will pay £206,423 for a property, compared to £182,710 in a town or a city.

In the West Midlands, for example, an open market home will cost £251,996 in a rural area, while a similar home would cost £145,801 in an urban area − a 59% price difference.

The research also concludes that while first-time buyers account for more than half − 52% − of house purchases in urban areas, they account for just 40% in the countryside.

To find out more about shared ownership, give Bromford Homes a call now on 0845 60 10878 or register your interest online. You can also keep in touch by following us on Twitter or Facebook.

Go here to find out more about the Halifax survey and how they worked out their figures.

* £31,250 would buy a 25% share of a one-bed apartment at Fortuna and a deposit could be as little as £1,563 with a 95% mortgage on that minimum share. The actual amount you buy reflects what you can afford.

22 October 2013