As reported by the FT this month that Fairview Homes are trialling a save to buy scheme. This is not a government run scheme. From what we can see this allows people to get a deposit together over 6 to 12 months and they can then use this to buy the property and apply for a mortgage.
Is Save to Buy The New Help To Buy?
So could save to buy be the new help to buy? It’s certainly another option to look at if you are wanting to get on the property ladder. Other schemes to buy a property affordably already exist.
It is important to state that is initiative is being run by developer Fairview Homes. They are running a small trial at present in Essex. So it is not a government run scheme. You will need to get in contact with them to understand the criteria and how it works. However will the government be interested in this type of scheme in the future to replace Help To Buy? Who knows!
There are a few government schemes being run to help people get on the property ladder and buy first time buyer houses. Let’s take a look at what they are.
Rent To Buy, So What Is It?
Rent to Buy allows buyers to rent a property from a housing provider for up to five years at a discounted rent. This is usually a housing association. The idea is that at the end of this 5 year rental period, you can then buy your home. The idea is that the money you have saved in rent over the renting period can be put towards a deposit to then buy the property.
An important factor is that in this case renting cannot be perceived to be throwing away money as it is going towards the purchase of your home. Also they are likely to be renting the home at 20% of the market rent.
To be eligible for Rent to Buy, you must be in employment. This could be full or part time employment and a first-time buyer.
You must also be able to pay your rent and save for a deposit at the same time.
Usually the initial renting period is 2 years although you will need to check this with the housing provider advertising their rent to buy properties.
Like with any scheme house prices can go up or down. So by the time you look to buy the property it may be worth more than when you started renting which will mean you pay more for the property.
It’s important to note that rent to buy won’t be good for every first time buyer. You need to do your research to see if it is right for you.
Shared Ownership, So What Is It?
If you are a regular visitor to our blog you will know that we’ve covered shared ownership in a number of posts. However, to summarise you buy a share of a property, the minimum being 10% and rent the rest of the property from the housing provider which is usually a housing association.
So unlike rent to buy, you get a share of the property straight away. You do have the ability to buy a bigger share of your home, called staircasing.
Rent to Buy vs Shared Ownership
So what is the difference. Both give you the opportunity to purchase your own home in very different ways. In short with rent to buy you do what it says, rent first then buy at a later date. With shared ownership you part buy part rent. So what is right for you? Everyone is different so always do your research and speak to housing providers about the different schemes.
Are there other affordable government home ownership schemes?
There is also the First Homes scheme which offers new build homes to key workers for at least 3o% discount. There is also older people’s shared ownership. However, this is very similar to the main shared ownership scheme with the exception you can only buy up to 75% share of the property. There is also right to shared ownership which is similar to the main shared ownership scheme, however it is targeted at those who are existing tenants of either social rent or affordable rent properties.
