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http://www.telegraph.co.uk/finance/persona...ime-buyers.html

The debate about whether house prices are on the way back up or will continue to fall is in full swing, but home ownership remains out of the reach of a large number of first-time buyers, many of whom are struggling with high rents instead.

This is partly because mortgage lenders are applying much stricter terms and conditions before they agree loans – the toughest being a sizeable deposit. Most lenders now want to see a 25pc deposit from homebuyers; before the credit crisis, the norm was between 5pc and 10pc.

SHARED OWNERSHIP

Government scheme: New Build HomeBuy

Buyers of any age may apply for this scheme, although key workers and social housing tenants are given priority. You do not have to be a first-time buyer, but you cannot already own a property when you apply. At the moment, there is no government funding available to buy older properties under this scheme – it is only available for newbuild.

"This allows the borrower to purchase a share – between 25pc and 75pc of a property with a mortgage – with the share they don't own being rented from a housing association," explains Richard Morea, from independent mortgage broker London & Country. This means that even if you need a mortgage to cover your share, you only have to find a deposit of 25pc of that share – not the whole property value.

Through what is known as "staircasing", owners can, if they wish, buy further shares later on until they own the property outright. These schemes are normally leasehold, where the housing association will typically grant a lease of 99 years.

"There are different income levels for different areas, but generally if you are under the £60,000 mark, you should be eligible," says Sue Dance, assistant director of sales and marketing for Circle Anglia, a group that encompasses 10 not-for-profit providers of affordable housing in the UK.

"People often think shared ownership properties will be low quality, but in fact they can be very high quality." Last year, Circle Anglia built 2,000 new homes; it manages 46,000 homes in total.

Once you have bought your share, you pay a rent equivalent to 20pc below the market rate on the part you do not own, plus ground rent and service charges. These fees may be reviewed annually, but may only rise in accordance with rules laid down by the Homes and Communities Agency (HCA).

Although the housing association will apply a rigorous affordability test to ensure you can afford to buy the property share, it is wise to remember that circumstances can change. Do not sign up to something you think you may have trouble coping with later on.

As this is a shared-ownership deal, matters are not straightforward when it comes to selling. You will usually be required to give the housing association first refusal, and generally it will then market the property for you.

In the case of Circle Anglia associations, they will do this for 12 weeks without a fee, although owners must pay valuation fees. If there is no sale within 12 weeks, the property is passed on to an estate agent, and normal fees apply. However, Circle Anglia say that more often than not it finds a buyer within the initial period.

There are several mortgage lenders willing to provide loans to people in shared ownership schemes, including Abbey, Barclays, Halifax, HSBC and Nationwide – for a full list, see www.shared-ownership.org.uk.

Jackie Lawrence, spokesman for Nationwide Building Society, which allows borrowers to select from its full range of home loans, says: "We anticipate that the numbers of shared ownership loans we are doing will increase. Age limits for our loans are the same as our mainstream mortgages – the repayment term must not take the borrower over the age of 75."

"Buyers interested in shared ownership or shared equity schemes [see below] need to do their homework, as not all lenders support all schemes," says Morea. "Lenders who do support these schemes often insist that the buyer contributes a personal deposit, the size of which will vary."

To find out which housing associations act as agents for shared ownership schemes around the country, see www.shared-ownership.org.uk.

For more information about Homebuy schemes, see www.homebuy.org.uk, www.homesandcommunities.co.uk and www.direct.gov.uk.

SHARED EQUITY

Government scheme: Homebuy Direct

This scheme is run under the same terms and conditions as New Build HomeBuy, but the Government funds an equity loan of between 15pc and 30pc. Rather than charging rent or interest on this portion, it instead benefits from the growth in value of its stake.

"The borrower takes a conventional mortgage for part of the purchase price – typically 75pc – and owns the property outright, but the equity is shared with the loan provider," says Morea. "Most lenders will lend between 85 and 95pc of the share being purchased, so a personal deposit is still required."

The Council of Mortgage Lenders (CML) reported in March that lenders tend to prefer shared equity schemes, as the equity loan helps protect both borrower and lender from negative equity. "The alternative of a shared ownership scheme is less attractive to the lender as it is more complex," says Morea.

Private house-builder schemes

Property developers can fund their own shared equity schemes. Barratt Homes operates Head Start, under which it provides an interest-free 10-year loan for 15pc of the purchase price, and Parent Power, where they will match any contribution from the buyer's parents, up to 5pc. Taylor Wimpey is offering Deposit Match, which is a variation on the interest-free loan/match-your-deposit approach.

Some developers may insist on the loan being repaid after the 10-year period, so you must make sure you will be able to pay it. Repaying 15pc of your property value after 10 years may be a tall order for some families. And mortgage lenders may be unwilling to lend if you are borrowing your deposit from the developer, warns Morea.

"Developers' own schemes, which offer interest-free loans or other incentives, may affect the lender's desire to lend, so make sure you understand exactly how the incentives work and get your lender's agreement before committing to the purchase."

Government schemes for struggling buyers

New Build HomeBuy Shared ownership scheme, usually for newbuild properties through housing associations. Available to households earning up to £60,000 per year.

HomeBuy Direct Available to households earning up to £60,000 per year. This is a shared equity scheme, with the Government and the developer funding an equity loan of between 15 and 30pc. Scheme developed partly to help

sell unsold newbuild property.

Social HomeBuy A shared ownership scheme which allows council or housing association tenants to buy a share of their rented home. Discounts available to the tenant.

Rent to HomeBuy Rent the property at a discounted rate for up to five years with the option to buy.

Right to Buy Gives council tenants the opportunity to buy their home at a discount. Dependent on how long applicants have been a tenant and the maximum discount available in the area.

For any of these schemes, the first step is to contact your local HomeBuy agent. As there is limited annual funding, your eligibility needs to be approved before you can take the process any further

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New Build HomeBuy Shared ownership scheme, usually for newbuild properties through housing associations. Available to households earning up to £60,000 per year.

This is the issue, the government feeling the need to support people whose salaries are actually quite high compared to the norm.

When you exclude stupid banker and footballer 'earnings', how many people actually earn significantly more than £60k - 15% of the working population? That means that the other 85% are eligible for schemes like this because the government recognise that there is very little way other them buying housing otherwise.

I realise that this is household income, so could also apply to couples earning £30k each, but even that must be seen as quite a high salary combination in a lot of parts of the country.

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http://www.telegraph.co.uk/finance/persona...ime-buyers.html

The debate about whether house prices are on the way back up or will continue to fall is in full swing, but home ownership remains out of the reach of a large number of first-time buyers, many of whom are struggling with high rents instead.

This is partly because mortgage lenders are applying much stricter terms and conditions before they agree loans – the toughest being a sizeable deposit. Most lenders now want to see a 25pc deposit from homebuyers; before the credit crisis, the norm was between 5pc and 10pc.

SHARED OWNERSHIP

Government scheme: New Build HomeBuy

Buyers of any age may apply for this scheme, although key workers and social housing tenants are given priority. You do not have to be a first-time buyer, but you cannot already own a property when you apply. At the moment, there is no government funding available to buy older properties under this scheme – it is only available for newbuild.

"This allows the borrower to purchase a share – between 25pc and 75pc of a property with a mortgage – with the share they don't own being rented from a housing association," explains Richard Morea, from independent mortgage broker London & Country. This means that even if you need a mortgage to cover your share, you only have to find a deposit of 25pc of that share – not the whole property value.

Through what is known as "staircasing", owners can, if they wish, buy further shares later on until they own the property outright. These schemes are normally leasehold, where the housing association will typically grant a lease of 99 years.

"There are different income levels for different areas, but generally if you are under the £60,000 mark, you should be eligible," says Sue Dance, assistant director of sales and marketing for Circle Anglia, a group that encompasses 10 not-for-profit providers of affordable housing in the UK.

"People often think shared ownership properties will be low quality, but in fact they can be very high quality." Last year, Circle Anglia built 2,000 new homes; it manages 46,000 homes in total.

Once you have bought your share, you pay a rent equivalent to 20pc below the market rate on the part you do not own, plus ground rent and service charges. These fees may be reviewed annually, but may only rise in accordance with rules laid down by the Homes and Communities Agency (HCA).

Although the housing association will apply a rigorous affordability test to ensure you can afford to buy the property share, it is wise to remember that circumstances can change. Do not sign up to something you think you may have trouble coping with later on.

As this is a shared-ownership deal, matters are not straightforward when it comes to selling. You will usually be required to give the housing association first refusal, and generally it will then market the property for you.

In the case of Circle Anglia associations, they will do this for 12 weeks without a fee, although owners must pay valuation fees. If there is no sale within 12 weeks, the property is passed on to an estate agent, and normal fees apply. However, Circle Anglia say that more often than not it finds a buyer within the initial period.

There are several mortgage lenders willing to provide loans to people in shared ownership schemes, including Abbey, Barclays, Halifax, HSBC and Nationwide – for a full list, see www.shared-ownership.org.uk.

Jackie Lawrence, spokesman for Nationwide Building Society, which allows borrowers to select from its full range of home loans, says: "We anticipate that the numbers of shared ownership loans we are doing will increase. Age limits for our loans are the same as our mainstream mortgages – the repayment term must not take the borrower over the age of 75."

"Buyers interested in shared ownership or shared equity schemes [see below] need to do their homework, as not all lenders support all schemes," says Morea. "Lenders who do support these schemes often insist that the buyer contributes a personal deposit, the size of which will vary."

To find out which housing associations act as agents for shared ownership schemes around the country, see www.shared-ownership.org.uk.

For more information about Homebuy schemes, see www.homebuy.org.uk, www.homesandcommunities.co.uk and www.direct.gov.uk.

SHARED EQUITY

Government scheme: Homebuy Direct

This scheme is run under the same terms and conditions as New Build HomeBuy, but the Government funds an equity loan of between 15pc and 30pc. Rather than charging rent or interest on this portion, it instead benefits from the growth in value of its stake.

"The borrower takes a conventional mortgage for part of the purchase price – typically 75pc – and owns the property outright, but the equity is shared with the loan provider," says Morea. "Most lenders will lend between 85 and 95pc of the share being purchased, so a personal deposit is still required."

The Council of Mortgage Lenders (CML) reported in March that lenders tend to prefer shared equity schemes, as the equity loan helps protect both borrower and lender from negative equity. "The alternative of a shared ownership scheme is less attractive to the lender as it is more complex," says Morea.

Private house-builder schemes

Property developers can fund their own shared equity schemes. Barratt Homes operates Head Start, under which it provides an interest-free 10-year loan for 15pc of the purchase price, and Parent Power, where they will match any contribution from the buyer's parents, up to 5pc. Taylor Wimpey is offering Deposit Match, which is a variation on the interest-free loan/match-your-deposit approach.

Some developers may insist on the loan being repaid after the 10-year period, so you must make sure you will be able to pay it. Repaying 15pc of your property value after 10 years may be a tall order for some families. And mortgage lenders may be unwilling to lend if you are borrowing your deposit from the developer, warns Morea.

"Developers' own schemes, which offer interest-free loans or other incentives, may affect the lender's desire to lend, so make sure you understand exactly how the incentives work and get your lender's agreement before committing to the purchase."

Government schemes for struggling buyers

New Build HomeBuy Shared ownership scheme, usually for newbuild properties through housing associations. Available to households earning up to £60,000 per year.

HomeBuy Direct Available to households earning up to £60,000 per year. This is a shared equity scheme, with the Government and the developer funding an equity loan of between 15 and 30pc. Scheme developed partly to help

sell unsold newbuild property.

Social HomeBuy A shared ownership scheme which allows council or housing association tenants to buy a share of their rented home. Discounts available to the tenant.

Rent to HomeBuy Rent the property at a discounted rate for up to five years with the option to buy.

Right to Buy Gives council tenants the opportunity to buy their home at a discount. Dependent on how long applicants have been a tenant and the maximum discount available in the area.

For any of these schemes, the first step is to contact your local HomeBuy agent. As there is limited annual funding, your eligibility needs to be approved before you can take the process any further

My rent is approx half what the mortgage payments (assuming 90% LTV) would be on a comparable house, even an interest only mortgage would be an extra £2-300 a month. Thanks but no thanks for the 'help' and opportunity to own a bit of a housing assoc estate, I'll stick with renting for now :lol:

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all shared ownership schemes do is help maintain high house prices......because on a 50% share the rented share at market rent less 20%...........will be cheaper than the bought share....meaning the the buyer is paying less than he/she would on a normal purchase ///////////

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all shared ownership schemes do is help maintain high house prices......because on a 50% share the rented share at market rent less 20%...........will be cheaper than the bought share....meaning the the buyer is paying less than he/she would on a normal purchase ///////////

50% rent is 220 and mortgage 50% is 350 IO - what's the sense in that? What bit of brainless dumbf%ckery brain thinks that's a good idea?

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if private companies and private individuals want to get involved in these worthless schemes then i say more power to them, but any form of government 'assistance' to households on average or above average incomes is... i don't know how to describe it, monster raving loony stuff, absolute madness?

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Its back :o This is 2004/5 revisited... except that there is no booming economy to back it up. I remember when these schemes first came out, and it was at that point that I joined HPC. I was on 26K and I couldn't make sense of how I could really afford a 300K flat in London when the rent and the morgage between them were going to cost me 3/4 of my income.

This shows just how desperate the government are to prop up the property market, particularly with a plunging pound (which, as I understand it, will compound the effect of a price drop on the contraction of the economy in relative terms)

There is a serious crash coming to Britain finally (too late for me, but ... oh well)

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if private companies and private individuals want to get involved in these worthless schemes then i say more power to them, but any form of government 'assistance' to households on average or above average incomes is... i don't know how to describe it, monster raving loony stuff, absolute madness?

Whats the point of improving yourself to command a higher salary, only to find that your taxes are taken to provide opportunities to those who didnt improve themselves, and thanks to government interference, are now better off than you.

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Whats the point of improving yourself to command a higher salary, only to find that your taxes are taken to provide opportunities to those who didnt improve themselves, and thanks to government interference, are now better off than you.

Erm, you probably don't want the kind of government "assistance" people are getting from these part-buy schemes anyway... Since 2000 it's just been helping foolish people to get on the future negative equity ladder.

Edited by bearly legal

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September 2010. Bye-bye Homebuy. And good riddance!

What they dont tell you is that the 20% ish is increased in ground rent and service charges, sometimes a bit more, i know because i have a mate that works for one in london.

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How about another money saving scheme?

This scheme abolishes all government intervention in the housing market.

You can get the government to subsidise your rent, give you a council house, nor pay your mortgage should you become out of work, or retired. The scheme requires that no one working for government can get their mates or family cheap accommodation.

This might seem perverse to socialists, but money is saved by doing nothing. Instead, the taxpayer has more money, and they are free to make their own mistakes, rather than relying on even more incompetent people to do it for them.

Losers in this scheme might be better off too. Instead of gaming the system, making fraudulent statements and scrounging off others, they may be compelled to get a job, though the major downside for them is that this could lead to far better things if they work hard and produce useful things.

Come on Cameron, close down these silly schemes now. Help first time buyers out by getting those in government to do nothing, and by spending nothing on anything.

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How about another money saving scheme?

This scheme abolishes all government intervention in the housing market.

You can get the government to subsidise your rent, give you a council house, nor pay your mortgage should you become out of work, or retired. The scheme requires that no one working for government can get their mates or family cheap accommodation.

This might seem perverse to socialists, but money is saved by doing nothing. Instead, the taxpayer has more money, and they are free to make their own mistakes, rather than relying on even more incompetent people to do it for them.

Losers in this scheme might be better off too. Instead of gaming the system, making fraudulent statements and scrounging off others, they may be compelled to get a job, though the major downside for them is that this could lead to far better things if they work hard and produce useful things.

Come on Cameron, close down these silly schemes now. Help first time buyers out by getting those in government to do nothing, and by spending nothing on anything.

Ha Ha, jokes on me. I thought that they were doing the scheme again after reading the first article. Just goes to show me what a major muppett I am.

So Cameron is taking my advice, even before I gave it to him. Well done that lad.

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