Sunday, 1 January 2012

Affordable home ownership options explained

If you think owning a property is out of your price range, think again. There are several affordable home ownership schemes that could help you climb the property ladder

Affordable housing schemes exist to help people who are priced out of the open market buy a home of their own. There are a wide range of schemes that can help you do this. We've listed the main home ownership options below.
FirstBuyThe Government’s new £250 million scheme is coming into force in September. FirstBuy unites the Government and housebuilders who will each provide a 10 per cent equity loan (interest free for five years) to 10,000 first-time buyers.

The buyer must raise five per cent of the home price themselves, which is then added to the 20 per cent equity loan already provided by the Government and housebuilder. The buyer then organises a 75 per cent mortgage on the remaining cost of the property.
The scheme is open to first-time buyers who have a combined household income of £60,000 or under. It is also dependent on the buyer raising five per cent of the cost of the home, which must be new build.
Shared OwnershipShared ownership means buyers purchase a part share (between 25-75 per cent) of a new build property in a selected development, and pay a subsidised rent for the remaining part.
After 12 months, they can then choose to purchase additional shares based on the market value of the home at the time, and their rent will be adjusted proportionately.
When the buyer wants to sell, they will receive the proportion of the proceeds according to the percentage of the property they own. For example, if they have a 75 per cent share, they’ll receive 75 per cent of the selling price.
Rent to BuyThis scheme allows people to rent a newly-built housing association property at a reduced rate - typically 20 per cent less than the current market rental value. The subsidised rental period is designed to let people save a deposit which is then used to purchase a share of the home.
The rent is payable for a predefined period, usually either three or five years, after which the renter is expected to buy the property on shared ownership terms.
Affordable housing – what's it for?Jamie Ratcliff of the Homes and Communities Agency says these options aim to get buyers into the property market. “Affordable home ownership schemes are an excellent way to get a step on to the housing ladder in a sensible and affordable way, and with the potential to move on to full ownership at a time that suits the buyer.”

For details on eligibility and to apply for many of these schemes, you should contact your local HomeBuy agent.

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