How does Government schemes to help home buyers compare to Joint Equity

If you’re one of millions of people that don’t have access to family financial support, there are a range of Government Schemes to help you take your first step on the ladder and we outline the key points below.

Then we look at the Joint Equity Shared Home Ownership scheme for comparison. Well we would wouldn’t we!

Help to Buy

First-time buyers can open a Help to Buy ISA, which gives a 25% government bonus on amounts saved between £1,600 and £12,000 – although the bonus is capped at £3,000.

It can be used for any property costing under £250,000 (£450,000 in London) and any mortgage.

You can save up to £1,000 in your first month, then up to £200 a month after that. You can choose to pay in less if you want, and it’ll still work.

Help to buy ISAs are only available to individuals. If you’re buying together, you can separately claim the government bonuses on your savings – and then combine the two to form a joint deposit.

Things to note:

  • The deadline to open an account is December 2019. In April 2017, help to buy will relaunch to become the government’s lifetime ISA . But you will be able to shift your money across tax-free.
  • It’s a monthly saving scheme but if you miss a contribution one month, you can’t make up for it in the following month (the cap is £200).
  • If you’re buying together, but one of you is already a home owner. The first time buyer can still open an account.
  • You need to get your solicitor to apply for the bonus when you buy a home. Alternatively, you can take the money out at any point, but if you choose this, you won’t qualify for the bonus.
  • If you’re saving into a help to buy ISA you can’t save into another cash ISA in the same tax year.

More on Help to Buy ISA http://www.moneysavingexpert.com/savings/help-to-buy-ISA

Help to Buy Equity Loan.

The remaining part of help to buy scheme is called the Equity Loan. It requires a minimum 5% deposit of the property value with the government offering an interest-free loan of a further 20%. The remaining 75% is covered by a standard mortgage.

As Zoopla explains, to buy a £200,000 property under the equity loan scheme, you’d need a minimum deposit of £10,000 and to qualify for a £150,000 mortgage. The government then provides an equity loan of £40,000.

Help to Buy LoanHow does it work?

  • There is no interest to pay for the first 5 years.
  • In year 6, interest (known as a ‘loan fee’) kicks in at 1.75%.
  • The rate increases every year thereafter at the RPI (retail prices index) measure of inflation plus 1%.
  • The idea with the help to buy equity loan is that, because you’re theoretically only borrowing 75% from the mortgage lender, rates will be cheaper than on a 95% mortgage. But don’t assume that’s always the case.
  • When you come to sell your home, the government will take back its 20% share of the sale price.

This option is only available on new-build properties worth up to £600,000. The scheme will remain open until 2020.

Lifetime ISA

In his 2016 Budget, Philip Hammond announced a new lifetime ISA which will launch in April 2017. This will replace the current help to buy ISA – you’ll be able to shift your money across tax-free.

  • You can only save a maximum of £4,000 a year
  • The account offers a tax-free boost of up to £1,000 a year towards either buying your first home or saving towards retirement.
  • Savers aged 40 or under can open these accounts, which will become available from April 2017. You can put away up to £4,000 each year. The government will then boost returns by 25p for every £1 saved at the end of each tax year.
  • If you’re a first time buyer, you can then opt to use your lifetime ISA cash as a deposit on a property worth up to £450,000.
  • If you save the maximum for 5 years you will have £20,000  + £4,000 bonus

Finally the penalty – if you save £1,000 the Government will give you £250 seems a good deal (but remember the maximum you can get is £1,000 bonus a year  not to be sniffed at but not its not huge sums) and if you need the cash for any other purpose than buying a home you have to pay a penalty of 25%.

But here is the rub its calculated on 25% of the total which is £1,250 and so the penalty is £312.50 leaving you just £937.50 or £62.50 less than you saved. That is the penalty you pay.

So beware taking your money out for any reason other than buying a home or at retirment is costly

More Lifetime ISA http://www.moneysavingexpert.com/savings/lifetime-ISAs

Starter Homes scheme

Starter home schemeIn March 2015, the government proposed a new Starter Homes Initiative. In January this year, it said work on the new scheme had commenced.

This will see the creation of around 200,000 new ‘affordable’ homes, sold at a minimum discount of 20% to first-time home buyers aged between 23 and 40. Construction of these homes started in January 2017 – and the properties could be ready to sell as early as January next year.

There’s a £250,000 price cap on homes available under the scheme, rising to £450,000 if you’re buying in London.

Beware though developers build homes to make money so expect low specifications, small sizes ad corners to be cut.

Shared Ownership.

Shared Ownership schemes allow you to purchase just share of a home (between 25% and 75%) from a local Housing Association and pay rent – up to 3% – on the part you don’t own.

Under a process known as ‘staircasing’ you’ll then be given the chance to buy back chunks as and when you can afford to until you own 100% of the home. These chunks will be priced at the home’s current market value as assessed by the Housing Association. You will also have to pay a valuer’s fee each time.

To qualify for Shared Ownership, your household income must not exceed £80,000 or £90,000 if you’re buying in London.

Housing Associations have strict rules and eligibility can be a problem if you do not have enough “need” as they define it.

The application process is tortuous at best and you can only buy the properties they have on offer in the locations they have built in.

More here http://www.zoopla.co.uk/shared-ownership/

Joint Equity Shared Home Ownership

So how does Joint Equity Shared Home Ownership compare?

As you know the Resident Partner buys 50% of the home and Joint Equity contributes the other 50%.

  • It’s a simple to understand scheme based on real Partnership between the Resident Partner and the Investment Partner.
  • You can use your Help to Buy or Lifetime ISA to buy your Share as long as you have a mortgage as well.
  • You cannot staircase above 50% but you can offer to buy out the Investment Partner 50%.
  • If you sell your Share the Investment Partner may buy it from you and the gain you make is all yours.
  • You pay a Non Resident Partner payment for the 50% you do not own, the same as the Housing Association rent, but with Joint Equity its not a rent and there are no rental conditions attached.

Joint Equity does build homes for sale in the Joint Equity Shared Home Ownership scheme but because we are 50% Partners with the Resident Partner we build real homes for people to live in, to high specifications, with large airy rooms. We build for the future value of our Share not for the sale price today and walk away from the future value like developers and builders.

But Joint Equity will also join with you to buy any second hand home that you like and want to live in. Its not for nothing we say

Any home, any where.

Finally we are your Partners as long as you stay with Joint Equity and we are always here when you need help and advice with anything to do with your home, we will also contribute to improvements that raise the value of your home.

So Joint Equity is simple, easy to live with and a real Partnership and that makes living in your own home with our help rewarding, profitable and secure.

Some of our Partners have been with us over 10 years now and say they never want to leave.

Retired and still renting –  a concerning trend

Joint Equity now helps retired people who are trapped in rental properties buy a home of their own. We have always helped first time buyers and divorced and separated but the demand from older would be buyers who have perhaps been refused mortgages or believe they will never have the security of their own home  is overwhelming.

Buy-to-Let has always been popular but that is now changingIn the 2011 census there were 4.2m households living in private rented accommodation. 50% of the head of household were in the 50 to 75 age group – that is over 12m households. 50% of these people declared themselves as economically inactive.  The majority said this was because they were retired. That is a staggering 3m households.

In the 50 to 75 age group just over 25% were renting and – using the same proportion of social to private sectors. This suggests that over 350,000 households are retired and living in the private rented sector.

“At later stages in life, where security and peace of mind is even more of a priority, it’s concerning that such a significant percentage of our retired population is having to endure the uncertainty, and many other issues, that come with renting a property, “ says Brad Bamfield CEO of Joint Equity.

“There are so many unappealing aspects of rented living – the prospect of having to regularly move, the upheaval, the concerns about rising rent prices. A priority must be to educate people more about the alternative home ownership options available to them. There are new ways to escape the rental market, take control of your housing finances and own your own home.”

If any of the following questions strike a chord with you, as it does many of our current Resident Partners over a “certain” age, and you answer yes then you need to read on and see how Joint Equity can help you now because if you can afford to rent you can afford to buy with Joint Equity.Rock and Hard Place 1

  • Are you retired and living in rented property?
  • Do you dislike the insecurity of rented accommodation?
  • Worried about future rent rises?
  • Do you have savings that earn you next to nothing?
  • Do you think you can never live in your own home with all the security that provides?

Joint Equity can help change things for the better.

You own 50% and we own the other 50% in Partnership. So any growth in the property is shared 50/50 between us and when you sell your Share in the property you get your deposit back as well.

And we do this often for less than the cost of renting.

Remember we are not your landlord we are you Co-owning Partner and its absolutely your home with complete security to stay there as long as you want.

Your investment in your home can be passed on to your heirs together with your share of the increase in value, we are not Equity Release taking great chunks of your value. Nor do we interfere in your life while you live in your home however, we are always available 7 days a week if you need advice or help with the home – we are you Partner after all.

bradBrad Bamfield CEO of Joint Equity said “the retired renting sector is very important to us as security becomes more important the older you become. We all remember when we were young nothing was frightening and moving every year or so was exciting. “

“This is not the case when you are over 60 when change and upheaval, usually not through your choice but usually imposed by your landlord, is frightening, difficult and deeply upsetting.”

“Joint Equity offers a real alternative to many people in this sector offering peace of mind, security and a real Partnership for the future years.”

Joint Equity offers an alternative for retired people living in rented accommodation and a viable, secure way of owning your own home. For more information find out about how to become a Resident Partner www.jointequity.co.uk and check out our video page https://www.jointequity.co.uk/videos/ for a real life Resident Partner and her experience.

Sources: Housing Census headlines here

How much do you need to earn to buy a home? It ranges from £24k to £97k

A ‘chronic shortage’ of homes for sale in Britain’s cities has helped to push house prices up in urban areas by more than 10 per cent this year. It means buyers need to earn significantly more than a typical wage before they can own a city home.

New figures suggests that out of 20 major cities in Britain, the average household income needed to afford a home with a typical 76 per cent mortgage is £49,700, up from £45,000 a year ago.

But the range is significant – from less than the average wage at £24,000 in Liverpool, to a staggering £80,200 in Oxford and almost £100,000 in London.

UK MapThe research by Hometrack found those buying in Liverpool need a smaller deposit at £26,500, compared to £88,700 in Oxford and £108,000 in London.

The weakest rate of growth has been Aberdeen, where average house prices have dropped 2 per cent following a 12 per cent increase the previous year.

The city with the strongest turnaround in the past year has been Glasgow, where growth has jumped from 1.8 per cent to 8 per cent as prices recover from a relatively low level in one of the most affordable cities covered by the research.

Hometrack blamed a lack of supply, created by strong demand from investors along with a low number of existing homeowners who are moving. The latter group accounts for 33 per cent of housing sales today compared to 50 per cent in 2007.

Richard Donnell, director of research at Hometrack, said: ‘The scarcity of homes for sale looks set to remain a feature of the market in 2016. This will only ease once we see greater levels of output from home builders and renewed activity among existing mortgaged homeowners.

‘Questions about the sustainability of house price growth are being raised as house prices accelerate on growing scarcity and lower sales volumes, especially in the high growth markets such as London.

Wages & depositsHowever, there is a glimmer of hope for buyers as investor demand weakens next year, Hometrack predicts. This will be due to the changes in stamp duty rates for second homes and the tax relief changes for landlords.

Mr Donnell added: ‘Assuming the first interest rate rise is in the second half of 2016 then we expect 7 per cent growth in city level house prices over 2016 with housing transactions broadly flat. This is based on a slowdown in growth across London as affordability pressures and lower investor demand ease the upward pressure on house prices.

‘Earlier and faster rate rises than those assumed by the market would reduce the scale of house price growth as they would further impact investor demand and mortgage affordability.’

The Bank of England is widely expected to raise interest rates in the second half of next year from the historical low of 0.5 per cent as the economy improves.

Brad Bamfield, CEO of Joint Equity says “buying with Joint Equity means your deposit is lower at 5% of house price as a minimum and we use your ability to pay rent as the affordability factor. So if you have paid rent for 12 months or more we will support you up to £100 per month more than that rent.”

This means most people who can afford to rent can afford to buy with Joint Equity.

Article source This Is Money, full article here.

Shared Home Ownership rises by 130% in 6 years

A new report from mover conveyancing services provider, My Home Move, has found that the number of shared home ownership purchases increased by over 130% in the last six years.

The Government shared ownership scheme, which was re-launched eight years ago via HomeBuy Direct, has grown in popularity as house prices across the country have risen by nearly 30% since 2011. Having analysed over 100,000 of its home buyer records, My Home Move discovered that shared home ownership purchases account for around 1% of property transactions year each, with nearly one in five (17%) being purchased by first-time buyers.

At Joint Equity we have found that over 58% of applicants are First Time Buyers with 33% in the divorced and separated and 9% in the retired-renting sectors.

Doug Crawford of HomeBuy says: “For many, the prospect of buying a home outright is still a pipe dream, as prices have risen by around £60,000 since 2011, meaning that a home in the UK now costs an average of £217,000, or if you’re looking to buy in London, nearly £500,000. It is no wonder that solutions like shared home ownership have grown in popularity, and by the end of 2017 we would expect shared ownership transactional volumes to account for more than 1% of all activity – especially as many lenders are now more willing to lend on shared ownership schemes, which historically only a small number of building societies would.”

As there were 1,057,340 residential purchases in England last year a volume of 1% is 10,500 which Brad Bamfield, CEO of Joint Equity, noted is 25% below the target of 135,000 the Government announced in the 2015 Autumn Statement and the announcement tin the 2016 Budget that 13,000 new shared home ownership properties would be brought forward into the 2016 2017 round.

The research also revealed that, on average, the age of those buying a shared ownership home has decreased, with those in their mid-thirties now accounting for the majority of purchases; while between a third and a half of all shared ownership transactions take place in London and the South East each year.

Doug continued: “Whereas six years ago it was those in their 40s who looked to buy a shared ownership home, today it is those in their 30s – thanks in part to the Help to Buy: Shared Ownership scheme.”

Brad Bamfield also says “Joint Equity has found that our age range of applicants for partnership in the Joint Equity Shared Home Ownership Scheme is between 25 and 75 with the youngest applicant just 21. It is clear that shared home ownership and especially our Scheme with the total emphasis on Partnership in Ownership is easily understood and very acceptable to our potential Resident Partners.”

The target Joint Equity has is to add 25,000 Joint Equity Shared Home Ownership homes a year once we have established adequate private funding sources but Brad Bamfield says “our target of 25,000 homes will only scratch the surface of the demand which has built up over the last 10 years and our research shows a past demand of nearly 500,000 which is growing by around 75,000 homes a year. The difference between the Joint Equity and the Government schemes just about  is we will support “any home, any where” and focus on second hand property, as we do not feel new build is of sufficient standard or size to give long term investment security to our Partners. The other major drawback to Buy to Let is that the ownership is leasehold until the Government loan is paid off then you have to buy the freehold.”

More from Joint Equity www.jointequity.co.uk

 

Rent rises likley to triple in 2017 as landlords pass on all the new costs to tenants

Rent rises could triple in 2017 after a year of little growth as landlords pass on new costs to tenants

  • Extra tax charges for landlords will be passed on to tenants, claims Landbay
  • But rents were up just 1.1% in the year to November, falling behind inflation
  • Forecast that rents will rise by 3% next year – triple this year’s rate 

The pace at which rents are rising is set to triple next year as landlords force tenants to bear their rapidly increasing costs, according to one expert. Rising rents are bad news for tenants but how can they avoid the rental trap when mortgages are so hard to get? 

Rising rents in 2017The chief executive of property investment platform Landbay is predicting that rental inflation, which has slowed this year amid a tumultuous year for landlords, will see a spurt next year with rents rising 3 per cent in 12 months – almost tripling this year’s inflation rate.

Across the UK as a whole rents rose by 1.12 per cent in 2016 to November, slowing from 2.34 per cent by same point in 2015, according to Landbay’s analysis.

It means the average rent paid by tenants renting from private landlords hit a record £1,188 per calendar month, up from £1,177 at the turn of the year; an extra £11 per month or £132 per year.

But the more benign environment for renters won’t last, according to John Goodall, chief executive of Landbay.

‘When you look at the raft of regulatory, political and economic challenges coming to bear on the buy-to-let sector in 2016, it’s clear to see why rental growth has slowed this year, but the fall in rents is unlikely to last,’ he says. ‘We expect the tide will turn in 2017.’

A new stamp duty levy was slapped onto landlords purchasing new buy-to-let properties in April this year causing a spike of buy-to-let purchases in the first three months of 2016. These properties were then released onto the rental market over the summer, giving tenants more choice and pulling rents down – temporarily.

IN 2017Buy-to-Let has always been popular but that is now changing tighter mortgage controls from the Bank of England and the removal of tax relief for buy-to-let will put even more pressure on landlord finances with widespread warnings they will have to hike rents to afford increasing costs.

‘These changes are likely to restrict the supply of rental housing in 2017,’ warns Goodall.

‘Tenants will have little choice but to compete for what properties are on offer. As a result we expect rents to rise faster than the pace of inflation next year, with growth tripling to 3 per cent by the end of 2017.’

This will come as a blow to those living in cities in the Midlands where rents have rocketed since the government’s second high speed rail line was announced in January 2012. The area around Birmingham Curzon Street has seen rents rise 23.7 in five years compared to the national average of 8.8 per cent over the rest of the country and rents across the city of Birmingham have also rocketed, rising 22.4 per cent since HS2 was confirmed.

Leeds has seen rental inflation of 15.3 per cent, Sheffield has seen rents lift 15 per cent and Manchester has seen rises of 14.5 since January 2012 – outstripping the rest of the country.

Avoid rising rents and consider Joint Equity Shared Home Ownership as the real alternative.

Joint Equity Co-Ownership – an alternative way

In this article Brad Bamfield, Joint Equity CEO, discusses Joint Equity Shared Home Ownership  – a new way to buy a home for home owners and new opportunities for investors.

trapped in rentingThere are over 1 million people trapped in the rental market with all the wasted money and insecurity that entails when they would rather live in their own home. There are also many investors falling out of love with Buy to Let who still want to invest in the UK residential property market. Now we have a solution that brings benefits to both these parties.

For over 35 years I have been a builder and developer selling well designed flats and houses that I am very proud of and my buyers are happy to live in.

But I have always been aware that for every home I built 10+ people were disappointed either being unable to get a mortgage or not being able to raise a high enough deposit. This meant they remained trapped in rented accommodation.

In my time I have lived in rented houses and I hated both the insecurity of a Short Hold Tenancy and the restrictions and interference of the landlord and agent. And if I hated it, so do many others.

I really do not want anyone who does not want to, to have to live in a rented property so my vision was to devise a way to help those who needed help to get a home of their own.

Big ask? You are right but I was convinced there was a way to help people move out of rented into home ownership.

In 2006 I devised, invented, designed (call it what you will) a new structure that combines traditional approaches to buying and investing in homes in a new way – Joint Equity Co-Ownership.

As my personal targets have always been the “shoot for the moon” types, I have set the goals for Joint Equity as

  1. To help 25,000 people every year buy their own home and
  2. To provide investors with better returns and less risk than Buy to Let.
  3. Provide a real Ethical Investment opportunity

Now with Joint Equity Bonds we have the means to attract sufficient investors to make this happen. So now my goals are within our grasp.

We can easily see what our Resident Partners get from Joint Equity.

  • Security,
  • A home of their own,
  • No landlord or letting agent
  • A knowledgeable Partner who is on your side
  • A 50% share of the growth in house prices.

But what do Joint Equity Bond investors get?

  • Their money back at the end of the Bond.Escalating Returns from Joint Equity
  • Secure investment paying a good rate of return which increases the longer they hold the investment. I call this an escalating rate of return and I am told its innovative.
  • A terminal bonus that is either fixed and accrued annually.
  • No hassles associated with being a landlord or having agents always asking for more money. No voids, damage, late payments, problem tenants, increasing legislation, changing tax regimes. (I could go on but there really is none of the problems with the traditional Buy to Let process).

Investors also get the big win with Joint Equity – the feel good factor, the personal satisfaction that comes from knowing that they are helping people who without their investment could never have the security of living in their own home. The essence of Ethical Investments.

So is my vision to help 25,000 people a year move into their own homes and to deliver good returns to investors achievable while being ethical?

Absolutely.

I am a hard headed developer but I also know there are 1,000’s of people (our investors) who really do want to get involved and help others while making good returns on their money.

It’s a market solution for a social need – the perfect definition for Ethical Investment.

Brad Bamfield

CEO & Founder Joint Equity

More information www.jointequity.co.uk