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Part-buy’s low-cost answer to deposit worries

SHARED ownership can help would-be homebuyers break through two of the biggest stumbling blocks that stand in the way of their property dream.

Saving a deposit remains by far the biggest obstacle for potential first-time buyers, according to a new survey of current renters, and the second major worry is being able to afford the monthly mortgage repayments.

Both costs are made much more affordable with our part-buy, part-rent scheme, says Bromford Homes Alan Bradley, and buyers like shared ownership case study couple Matt and Clare (pictured below) clearly agree, with sales completions this year hitting a record high of well over 200 across central England.

A typical shared ownership deposit on a new Bromford home is around £3,000* − less than half of what it would cost if buying a similar home on the open market. And the total monthly cost of our part-buy, part rent package is typically cheaper than the cost of renting a similar home from a private landlord − by almost £100 a month for the typical two-bed apartment quoted in another recent survey**.

LarksRise Matt&Clare alt2

"Shared ownership adds up to a real win-win deal for first-time buyers − with low-cost solutions to both of the major concerns that trouble them the most and stand in the way of making their home ownership dream come true," says Alan. "This is a really positive message for would-be homebuyers on lower incomes, especially those who feel their only option at the moment is to rent their home from a private landlord."

According to the just-published survey of YourMove and Reeds Rains*** renters, an overwhelming 96% of tenants registered with them want to become homeowners. But six out of ten of those tenants say that building up a purchase deposit is an uphill struggle and the biggest factor that prevents them from buying, while the second most common concern is having enough income to support mortgage repayments.

"These concerns reflect the views and experiences of many of the 200-plus first-time buyers that have gone on to see their property dream come true this year thanks to shared ownership with Bromford," says Alan. "They tell us that the low deposits make a huge difference and that the total monthly costs add up to less than it would cost to rent from a private landlord."

Thomas Turner with keys

A typical example is first-time buyer Thomas Turner, who strongly recommends share ownership to others having moved into his two-bed part-buy, part-rent home at St Mark's View, Cheltenham, last summer.

Deposits and purchase prices are much more affordable with shared ownership, he confirms. "It's ideal for first-time buyers like me who want a house that they can make their own and don't want to wait until after they have saved up the enormous deposit that lenders require for an open market sale," says Thomas, pictured above.

Smaller mortgage payments plus low rent also add up to a real win-win deal − and are typically less than than private renting. "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," says Thomas. "I always advise people that shared ownership is a brilliant way to get started on the property ladder."

Colliers Green homes

* In the case of Colliers Green (pictured above) in north Warwickshire, your deposit can be as little as  £2,757. That assumes a 95% mortgage when buying a typical 45% share of a two-bed house with a full market value £122,500. That 45% share costs £55,125. In another typical example, Greyfriars House in Lichfield, your deposit on a two-bed apartment could be just £3,098 if buying a typical 45% share for £60,750. The actual amount you buy depends on your financial circumstances but 45% is fairly typical and the maximum share is 75%. You pay low rent on the remaining share.

** It costs £520 a month to rent a typical two-bed apartment in the Shropshire town of Telford, according to a 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 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.

*** Find out more about the findings of the survey with Your Move and Reeds Rains tenants.

To find out more about shared ownership and Bromford developments across central England call 0845 60 10 878 or register for updates. You can also keep in touch by following us on Twitter and Facebook.

28 March 2014