Come buy with me

For many first-time buy­ers, go­ing it alone is im­pos­si­ble. To­day, part­ners, friends, par­ents, even per­fect strangers are called on to share the bur­den. Les­ley Gillilan re­ports

The Daily Telegraph - Property - - Front Page -

Young, sin­gle ac­count man­ager Katie would like to meet like-minded, non­smok­ing pro­fes­sion­als with a view to shar­ing a mort­gage. “I want to en­ter the world of prop­erty own­er­ship,” she says. “Pay­ing rent is dead money.”

Kelly, from Kent, is look­ing for “some1” with a good sense of hu­mour (no “neat-freaks” or al­lergy suf­fer­ers – she has a dog).

Tom, a law grad­u­ate is look­ing for peo­ple in “the same rut as me… liv­ing in Lon­don, earn­ing enough to pay a mort­gage, but not enough to get a whole one to my­self.”

Per­haps they should all hook up with John. He wants to buy with up to three peo­ple. He’s laid-back, clean, re­li­able and can raise up to £5,000 in de­posit.

All four are reg­u­lar vis­i­tors to CoBuy­withMe, an on­line chatroom – the prop­erty-mar­ket equiv­a­lent of speed-dat­ing – which helps young, wannabe buy­ers get to­gether to co­fund shared prop­er­ties. It rep­re­sents an emerg­ing mar­ket trend (an­other on­line spe­cial­ist, Share­to­Buy.com, meets the grow­ing de­mand for joint mort­gages), and it is an in­ter­est­ing in­sight into the mind of the mod­ern first-time buyer.

Thanks to a diet of lifestyle television pro­grammes fed from an early age, they have high ex­pec­ta­tions. And though they tend to be older and a tad wiser than the pi­o­neers of Thatcher’s home-own­ing democ­racy (the root and branch of the 1980s hous­ing boom), they have much less buy­ing power.

Re­search by mort­gage com­pany, Al­liance & Le­ices­ter, sug­gests they are pre­pared to make huge sac­ri­fices to be­come home-own­ers (one in five move in with­out a bed). Many over­stretch them­selves, sign­ing up to years of debt. A re­cent sur­vey by the Univer­sity of York says young, first-time buy­ers are at the great­est risk of fall­ing into a poverty trap.

And things are not get­ting eas­ier. In the past few months, there has been a hike in in­ter­est rates, a rise in mort­gage re­pos­ses­sions and record in­creases in fuel bills. Ac­cord­ing to the Coun­cil for Mort­gage Lenders, the av­er­age first­time buyer is now pay­ing 3.21 times their salary in or­der to get on the hous­ing lad­der, the high­est fig­ure on record.

The av­er­age na­tional house-price hov­ers around £220,000, and there’s no sign of a lull in a still-ris­ing mar­ket. And while young ur­ban buy­ers such as Katie and Kelly face stiff com­pe­ti­tion from in­vestors and buy-to-let­ters, their rural coun­ter­parts are see­ing the low­er­cost prop­er­ties snapped up by sec­ond-home buy­ers. The 35-year mort­gage is on the in­crease. Ditto the in­ter­est-only mort­gage. There is a note of des­per­a­tion among the cor­re­spon­dents of Co-Buy­withMe, but they are not with­out hope.

To­day’s first-time buy­ers are a re­silient breed, and not only are they find­ing so­lu­tions, but they are get­ting some as­sis­tance. A range of gov­ern­ment-ini­ti­ated, af­ford­able hous­ing schemes (in­clud­ing Shared Own­er­ship, re­cently re­branded as “New Build HomeBuy”) en­able young cash-strapped buy­ers and key­work­ers to buy their own homes, or at least part of one. De­vel­op­ers are lur­ing young buy­ers to in­vest in erst­while dodgy ar­eas, by of­fer­ing free me­dia play­ers and Stamp Duty con­tri­bu­tions. The “co-buy­ing” net­work is not only gain­ing mo­men­tum, but also be­com­ing more main­stream. And if all else fails, there’s al­ways Mum and Dad.

Ac­cord­ing to the Coun­cil for Mort­gage Lenders “up to 50 per cent of young first-time buy­ers may be get­ting help from their par­ents to fund a de­posit”. Many, how­ever, are still wait­ing for a cor­rec­tion in the hous­ing mar­ket: a fall in prices is their only hope.

Parental Sup­port

Anja Schel­len­beck, 28, and Alex Ste­wart, 27, had been look­ing for an af­ford­able home in the Cotswolds for over three years, and had al­most given up hope when both sets of par­ents of­fered to lend a hand.

They had strug­gled to save (both pay­ing high rent on mod­est salaries, while pay­ing off stu­dent loans) and their measly bud­get of less than £130,000 didn’t of­fer much choice in the pricey Wilt­shire-Glouces­ter­shire area. “Tet­bury is very ex­pen­sive,” says Anja, who works as a re­cep­tion­ist for a Tet­bury es­tate agency while re­train­ing as a Feng Shui con­sul­tant. “And the Cotswolds on a bud­get is al­most im­pos­si­ble.”

When Anja’s fa­ther of­fered to con­trib­ute an in­ter­est-only de­posit of £20,000, Alex’s par­ents agreed to add an equal amount – giv­ing them a to­tal of £40,000; enough to buy a small cot­tage-style prop­erty in Crud­well, near Malms­bury, Wilt­shire, at £185,000.

The house, the first new-build on a small de­vel­op­ment, had been on the mar­ket for a year; per­haps, says Anja, be­cause buy­ers were put off by the con­struc­tion work that was go­ing on around it. “It’s also on a busy road, and not quite large enough for a fam­ily.”

The cou­ple’s loan has since been con­verted into an early wed­ding gift, with both par­ents see­ing it as a step to­wards avoid­ing in­her­i­tance tax down the line. But even with a gen­er­ous de­posit, they still have a mort­gage of £150,000 (in­clud­ing ex­tra bor­row­ings to help pay for furniture). “It’s a lot of money,” says Anja. “But it is won­der­ful to have our own home - and the monthly re­pay­ments are £100 less than the rent we were pay­ing.”

New Build Homebuy

Af­ter sav­ing long and hard while liv­ing at home with their re­spec­tive par­ents, David Gains­bor­ough, 21, and part­ner, Stacey Huet, 22, reck­oned they could af­ford a mort­gage on a mod­est prop­erty in Lon­don.

“We didn’t want to live in a stu­dio flat above a ke­bab shop in some grotty area,” says David. “We wanted some­where nice that we could re­ally en­joy liv­ing in.” With a joint an­nual in­come of un­der £40,000, and a de­posit of £6,000 (and noth­ing to spare for home im­prove­ments), they didn’t have a lot of choice. So they opted for a shared-own­er­ship scheme, en­abling them to dou­ble their bud­get, and move into a spank­ing new twobed­room flat in the Royal Arse­nal de­vel­op­ment in Wool­wich, within an easy com­mute of the of­fice (they both work as ac­counts clerks in a cen­tral Lon­don ship­ping com­pany).

Shared-own­er­ship schemes are the prod­uct of a Hous­ing Cor­po­ra­tion ini­tia­tive in which de­vel­op­ers are re­quired to pro­vide a per­cent­age of af­ford­able hous­ing, on a variety of tenures, as part of new-build schemes. At the Royal Arse­nal, 25 per cent of the 1,200 homes were made avail­able to the South­ern Hous­ing As­so­ci­a­tion. David and Stacey bought a half­share of a £275,000 apart­ment, tak­ing out a 95 per cent mort­gage on £137,500. They rent the re­main­ing half from the hous­ing as­so­ci­a­tion at a sub­sidised rate; mak­ing a mort­gage-rent to­tal of £900 a month.

The flat came with all es­sen­tial ap­pli­ances, which saved on movin­gin costs, and they re­ceived £1,000 cash­back for com­plet­ing within a month. For David, the move from Croy­don has cut com­mut­ing costs in half. And they are con­fi­dent that Wool­wich is “up and com­ing”: up­graded trans­port links, planned for the Olympics, could raise prices in the area.

“I don’t think we had any other op­tion,” says Stacey. “We didn’t want to rent, and we didn’t want to com­pro­mise. Shared own­er­ship gave us the op­por­tu­nity to be fussy.”

Co-Buy­ing

For many first-time buy­ers cobuy­ing with friends is the only way to get a toe on the lad­der – but 33year-old ac­coun­tant Stephen Cur­tis and his three share-to-buy mates (Andy Barette, Jeremy Hous­ton and Mark Gates), have done rather bet­ter than most. A joint mort­gage, and four times the buy­ing power, en­abled them to pur­chase a £630,000 de­tached house in Tun­bridge Wells. They all own a quar­ter share of the prop­erty, and all, ex­cept Stephen, are first-time buy­ers.

It started when Stephen was search­ing for a prop­erty on the in­ter­net. He had de­cided to sell his one-bed­room flat (bought as a buyto-let in­vest­ment six years ago) and was look­ing for an al­ter­na­tive, prefer­ably some­thing large enough to share. When he came across a seven-bed­room “cot­tage” on the com­mon in Tun­bridge Wells, he sug­gested to friends and for­mer flat­mates Andy and Jeremy that they might buy it be­tween them. “At first, they thought I was mad,” he says. “But when we looked at the prop­erty and saw its po­ten­tial, it made sense.” They in­vited Mark to join them.

Most high-street mort­gage lenders didn’t agree with them. “As soon as they heard there were four of us, they didn’t want to know,” says Stephen. But an­other search put them in touch with joint­mort­gage spe­cial­ist, Share­to­Buy.

Hav­ing moved in a month ago, the fours are now pay­ing mort­gage re­pay­ments of about £500 each – a lit­tle less than the av­er­age rent on a one-bed­room flat. Stephen, who pro­vided the bulk of the de­posit from the sale of his flat, pays less to al­low for his larger con­tri­bu­tion. They all put in £10,000 to cover ex­penses – le­gal fees and stamp duty. And they got a lot of house for their money: three storeys, three bed­rooms, three bath­rooms, four re­cep­tion rooms, and a gar­den.

The four plan to share the cost of im­prove­ments, which, they hope, will raise the value of the prop­erty and their in­di­vid­ual share of the eq­uity.

“It will get tricky if one us de­cides to leave or get mar­ried,” ad­mits Stephen. “We’ll deal with that if and when it hap­pens, but I think we all un­der­stand that this is a short-term so­lu­tion, and that even­tu­ally we’ll all go our sep­a­rate ways.”

Co-buy­ers can meet po­ten­tial house-share mates on a num­ber of web­sites in­clud­ing www. co-buy­withme.co.uk and www.sharedspac­es.co.uk. For ad­vice on buy­ing and mort­gag­ing a shared home, con­tact Share­to­buy on 0870 755 4118 (www.share­to­buy.com). An off­shoot of the Grad­u­ate Net­work, the com­pany of­fers a free mort­gage broking ser­vice for all joint buy­ers. For in­for­ma­tion on the Gov­ern­ment’s na­tion­wide HomeBuy scheme, con­tact the Hous­ing Cor­po­ra­tion on 0845 230 7000 (www.hous­ing­corp. gov.uk). In each re­gion, HomeBuy schemes are de­liv­ered by lo­cal HomeBuy agents (or hous­ing as­so­ci­a­tions). For de­tails of agents in Lon­don, visit ww.housin­gop­tions. co.uk.

Share op­tions: Anja Schel­len­beck and Alex Ste­wart (top left); pool­ing re­sources in Tun­bridge Wells (main); shared own­er­ship buy­ers David Gains­bor­ough and Stacey Huet (rig

Ways and means… young buy­ers in the Cotswolds (above left), Tun­bridge Wells (right) and Lon­don (above right) sought dif­fer­ent meth­ods to se­cure their first home

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