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
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
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
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.
"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
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."
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."
23 January 2014
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.