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
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.
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.”
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