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Part-buy cheaper than renting, figures show

FIGURES published by a low-cost home ownership "champion" reveal that shared ownership can be cheaper − by almost £100 a month − than renting from a private landlord.

It costs £520 a month to rent a typical two-bed apartment in the Shropshire town of Telford, according to the latest comparison published by HomeFocus magazine. That's £93 more than it would cost someone buying a 50% share of the same £105,000 apartment through part-buy, part rent − also known as shared ownership.

The same cost comparison also reveals that shared ownership is cheaper − by £57 a month − than it would be for someone buying that apartment through the Help to Buy 80% equity loan scheme.

The HomeFocus figures (shown below) are highlighted by Bromford Homes Head of Sales Alan Bradley as a ray of hope for hard-pressed first-time buyers on lower incomes, those who can't tap into the Bank of Mum and Dad for help with a hefty open market deposit and people stuck in what's known as Generation Rent.

Telford cost comparison table

"These figures confirm that shared ownership does indeed offer affordable hope − especially for the ever-growing number of young adults who still live at home with their parents," says Alan. "This is the Boomerang Generation highlighted by national newspapers, who report a huge rise in the number of children aged 20-34 who are returning to the family home after university because they can't afford to live alone.

"These stories, based on new figures from the Office for National Statistics, make grim reading indeed. Many young singletons and couples are now forced to live with their parents while they try to build up a deposit − and this includes a big number of grads forced to take less well-paid jobs than they hoped."

According to Alan, shared ownership can help would-be buyers like these with three crucial problems:

DEPOSITS − the amount they have to save is much lower with shared ownership.

PURCHASE PRICE − this is also much lower, typically 45% of an average open market cost.

MONTHLY COST − this is lower too, as highlighted by the HomeFocus report.

"If you look at the HomeFocus comparison, you'll understand why so many are saying YES to shared ownership. It all adds up to a win-win-win for first-time buyers and other people who can't afford to buy on the open market," says Alan.

"If that sounds like you, my message is simple. You may think you can't afford to have a home you can call your own − and have to stay with your parents. You may believe that your only affordable option is to rent from a private landlord. Well, we urge you to look at these HomeFocus figures and think again. Getting onto the property ladder may not cost you as much as you think − thanks to shared ownership.

"We can't help everyone, of course. But your total household income can be as much as £60,000 a year and you can still qualify. And you don't have to take my word for it − just listen to some of the young first-time buyers who've collected the keys to a new Bromford home that they're proud to call their own."

Thomas Turner at St Marks View

He points to buyers like Thomas Turner at St Mark's View, Cheltenham, or Matt McIntyre and Clare McLaughlin at Larks Rise, Coventry − one of our most successful shared ownership developments in 2013-14.

Thomas (pictured above) urges other young adults to give shared ownership a go, saying: "It's ideal for first-time buyers like me who... don't want to wait until after they have saved up the enormous deposit that lenders require for an open market sale.

"Overall, I know I pay less each month than friends in the Cheltenham area who rent apartments and, unlike me, they are not going to get anything back over time. Before this I was lodging in a room at somebody else's home. They were very kind but I was always conscious of it not being my own home and that I was essentially helping to pay off somebody else's mortgage."

It's a similar story at Larks Rise. "We wanted to set up home together and to buy our own home rather than rent. Like a lot of people, I think paying rent is dead money," says Matt, pictured below with Clare. "Shared ownership really does make owning your own home affordable if you find you can't buy on the open market. We would certainly recommend it − and Bromford Homes − to other first-time buyers."

Larks Rise Matt and Clare 640x340

HOW THEY WORKED IT OUT
HomeFocus used an average repayment mortgage over 25 years at 5.5% to get their figures. Deposit amounts are 5%, which reflects what is available in the market at the moment. Please note that Help to Buy guarantee mortgages are NOT available in conjunction with low-cost home ownership (LCHO) schemes, but HomeFocus have used 5% deposits for 100% purchases assuming that the mortgage will be attained using a Help to Buy mortgage guarantee. Rent for shared ownership is based on 2.75% of the share you don't own, per year (this is then divided by 12 to get a monthly figure). Private rents and property prices are based on averages in the area, taken from popular property websites and not specific homes.

23 January 2014