Homeownership is always important to UK people

A new UK-wide study from first direct highlights the meaning of success to people across the UK and reveals what they deem as ‘successful’ and important throughout different stages of their lives.

The research shows that young Brits aren’t deterred by the ever-increasing challenge of getting on the property ladder and are more keen to own their own homes than their parents.

Ambitious and unphased

According to the latest official figures, the typical home in the UK costs £216,674 – up by 6.9% from the previous year. As a result of the rise, the BBC recently reported that first-time buyers would need to find an average deposit of about £33,000 for a mortgage on such a property.

Putting away savings for a homeIn order to save for a deposit of this amount, first time buyers on the average UK salary of around £27,000 would need to save their full pre-tax wage for at least 14 months.
Despite the ever increasing challenges, the research suggests that young Brits are more determined than most to achieve the home ownership dream with 71% of 18-34 year olds saying it is important to them to own their own property against just 66% of those aged 45-54.

A place to call your own – Young Brits’ vision of success

The majority of millennials define success as simply having something you can call your own – 66% typically class success in the property market as owning your own home and funding it independently (41%); not having a large (20%) or expensive (13%) property.
However, owning your own home doesn’t come without being financially stable – 86% of those between 18-34 say admit this is important to them with the vision of achieving this between the ages of 25-34.

Interestingly, for 18-24 year olds; owning the perfect family home sits high on the list of life goals too. This age group are the most likely (than any other age group) to define success within the property market as ‘a great family home’ (51%), which they have funded independently (46%) – in comparison to less than a third (32%) of 35-44 year olds who believe this.

Looking for a home

Home ownership

When taking a wider look at the whole of the UK, first direct found that the majority of Brits (64%) believe simply having a place to can call your own, no matter where it is or what it looks like, is the vision of success when it comes to property. Similarly, over a third (36%) also believe that success comes from funding your home independently.

‘Family is the heart of the home’ – second on the success scale is to have a great family home (37% said this is the measure of a successful home) and a similar amount of Brits (36%) measure a successful home by the desirability of the area. Brits admit having a large (12%) or expensive property (8%) is of little value when it comes to a home with both revealed as some of the least important measures of a successful home.

Joint Equity Shared Home Ownership can help many people make the break from renting or living with parents who would be excluded from home ownership because they have insufficient deposit or their income is too low for the new mortgage affordability tests.

More here

 

Rents rise – but slower although additional upward pressure is coming

HomeLet has revealed that 2016 rents in the UK rose on average 1.7% in December – less than half the 3.8% rate of rental price inflation in December 2015.graph increase 3

According to the report, landlords agreeing new tenancies during December achieved more modest increases in rent than in previous months, with the annual rate of rental inflation falling from 2.9% in November.

Across the UK as a whole, the average rent for a new tenancy commencing in December was £892 per month, compared to £877 in December 2015. In Greater London, rents rose from £1,478 to £1,508 over the same period, a smaller percentage increase but still a higher rental value.

HomeLet’s Rental Index data for 2016 reveals a year of two halves: during the first six months of the year, annual rental price inflation was consistently 4% or higher, peaking at 4.7% in June. In contrast, the second half of the year saw rental price growth steadily reducing to the lowest rate of increase in the final month of year.

In some areas of the country the slowdown over the year was even more marked. Rents in Greater London were 2% higher in December compared with 6.8% at the mid-year point.

graph increaseRental price inflation is still running ahead of general inflation as measured by the consumer price index, but the slowdown seen during the second half of 2016 raises questions as to the extent to which landlords will be able to raise rents further during 2017. While some property analysts have predicted strong rental price appreciation in the years ahead, particularly relative to house price growth, landlords, in recent months, looked for much more modest increases. This could prove significant during 2017, with impending tax changes beginning in April potentially reducing the returns available from buy-to-let property investment.

House to rentWhile it has been suggested landlords impacted by the reduction in mortgage interest tax relief will seek to recoup this additional cost from tenants, this may not be feasible if lower rental price inflation persists. Further cost pressures to come include the potential impact of November’s announcement of a ban on letting agents’ fees, which could see landlords asked to meet such expenses in connection with renting their property to new tenants.

Across the UK as a whole, rent accounted for an average of 28.0% of tenants’ household income before tax, down slightly on last December’s figure of 28.4%. In London, the equivalent figures are 31.0% and 31.2%.

Martin Totty, HomeLet’s Chief Executive Officer, said: “While demand for rental property remains strong, landlords always have to be mindful of tenants’ ability to pay higher prices. The data recorded by the HomeLet Rental Index during the second half of last year suggests we have now begun to approach an affordability ceiling, particularly in areas of the country where rental price inflation was previously highest.

While the industry has speculated that landlords will increase rents to mitigate the impact of factors such as the impending reductions in mortgage interest tax relief, this may prove problematic given the pricing trends we’re currently seeing in the market and the potential for higher inflation and a squeeze on real earnings in 2017.

The private rented sector is now having to cope with a series of disruptive elements, just at a time of great economic uncertainty, and amid a continuing systematic imbalance between supply and demand for residential property. The assumption that landlords have sufficient means to bear higher costs will soon be tested. Tenants must hope they do.”

The regional picture for 2016

Northern Ireland, where rents were 6.4% higher in December than in the same month of 2015, saw the strongest rental price inflation of any region in the UK last year, followed by the North-East of England (4.9%) and Wales (3.9%). Just one region saw a fall in rents over the same period, with the East Midlands recording a drop of 0.4%.

Regions that were more likely to show higher rental increases during the first half of the year saw a more marked pull-back in the second six months. This was led by London, but the South-East saw rental price inflation fall from 4% in June to just 1.7% in December, while the East of England dropped from 5.5% to 2.5%.

 

Starter homes out of reach for most?

Even discounted starter homes could be out of reach for the majority of families across the country, according to the LGA logoLocal Government Association (LGA).

Its analysis found that prices will be out of reach for all people in need of affordable housing in 220 council areas (67%) and are out of reach for more than 90% of people in need of affordable housing in a further 80 (25%) council areas.

People in need of affordable housing are defined as those who would have to spend more than 30% of their household income to rent or buy a home.

Rock and Hard Place 1For the average earner with a 5% deposit, a 20% discount would make it possible to borrow enough to buy a starter home in just 45% of all council areas in England.

First-time buyers will be able to buy 200,000 new starter homes over the next five years (that is 40,000 homes a year) at a minimum discount of 20% to the market value. However, there is a demand for over 350,000 new homes a year. Discounted prices will be capped at £450,000 in London and £250,000 elsewhere.

The 20% discounts for new buyers would be funded by exempting developers from paying Section 106 contributions towards affordable rented housing and Community Infrastructure Levy contributions. In its own analysis, the Government has suggested that should 100,000 starter homes be built through the planning system, between 56,000 and 71,000 social and affordable rented homes would not be built.

Although house-builders will be able to build and sell starter homes below the priceDiminishing returns caps, councils are concerned that this could be difficult for developers to achieve without compromising on quality, particularly in areas with higher house prices.

Cllr Peter Box, LGA Housing spokesman, said:

“The private sector has a key role to play in solving the housing shortage, but it cannot build the 230,000 needed each year alone. Councils need to be able to ensure genuine affordable homes continue to be built for rent and sale across the whole country for future generations and the millions of people stuck on waiting lists.”

50-50 splitJoint Equity helps all buyers buy their own home by buying 50% of the property, reducing the amount of mortgage the Resident Partner needs to raise and for about the same cost as renting a similar home.

Home ownership is still hard to achieve.

Research by Halifax says there were more first-time home buyers in 2016 than at any time since the start of the financial crisis, however that is well down on the numbers who were able to buy homes before 2007.

Joint Equity tracks first time buyer numbers because it is one of our primary sectors, the others are divorced and separated and retired renters, and we think the best way to understand what has happened to the market is to look at it graphically.

No of FTBs 2016

First Time Buyers 2001 to 2016

This graph shows the quite dramatic decline from the 2001 high but this does not tell the real story and that is the number of people, which grows each year, that are unable to live in their own home.

The average FTBs buying their own home from 1991 to 2000 was 507,233 every year.  As our population grows from 57.5M in 1991 to 65M in 2015 it is reasonable to assume the real number of First Time Buyers wanting to live in their own home almost rises.

Now we are not statisticians (fortunately) and we accept that there are many factors that could distort our assumptions but we are simple people here at Joint Equity and we

UK population 2016

UK Population 1990 to 2015

look at things simply as probably this tells us the clearest story.

If the numbers of FTB’s in the early 1990’s was an average of 0.882% of the total population then if we assume the average number who want their own home is constant the number of FTBs in 2015 who want their own is 0.882% of 65M which is 573,390.

That means that in 2015 approximately 237,640 people wanted to buy their own home who could not, who were denied access to the home ownership market.

So where did they go as they must live somewhere after all? As we see from the media many go back home to Mum and Dad and the rest have to go into private or social rented. This is supported by the growth in the private rented sector over the last 20 years.

Homes by Tenure

Types of home tenure

Extrapolating the fairly steady growth from 2005 to 2014 for 2015 and 2016 we now have 5,800,000 privately rented homes in England an increase of 2,700,000 since 2005.

So it’s a fair assumption that the decrease in owner occupation and increase in population has been accommodated in the private rental sector and that means the Buy to Let predominantly.

Returning to the decline in Fist Time Buyers we can assess the total number of people who would like to buy their own home and cannot as the difference between the average demand (570,000) and the take up of FTB homes in 2016 (335,750) which is 234,250 people who cannot buy their own home. If we do this for each year of the decline below the average demand, then we see 3,800,000 people have been unable to buy their own home since 2001. Which corresponds to the growth in Buy to Let.

Number of people excluded from home ownership

People excluded from home ownership

Halifax also found the average first-time deposit more than doubled compared with 2007 to stand at more than £32,000 and 60% of first first-time buyers’ mortgages were for 25 years or longer, up from 36% a decade ago.

Other reports in 2016 have found the average age that people buy their own home is also rising and is now around 33.

With the constant attacks on Buy to Let landlords (see Another Blow to Buy to Let Investments here) the numbers of BtL properties available will be static (best case) or decline as the combination of increased stamp duty, lower tax allowances and higher mortgage criteria send investors elsewhere.

What we need is

  • Another way for investors to participate in the UK residential property market that is simple, secure and pays reasonable returns.
  • A financially viable alternative way for the people who want to live in their own home top do so.

Joint Equity shared home ownership scheme offers a solution to both home owners and investors.

Through Joint Equity Bonds investors can invest securely in UK residential assets at reasonable returns with attractive terminal bonuses.

The Joint Equity scheme offers a new alternative for aspiring home owners who cannot buy their own home because their income is too low or their deposit is too small to provide a reasonable mortgage for the home they want.

More information on Joint Equity www.jointequity.co.uk

No way out of renting for four in ten tenants

Home ownership is out of reach for 42% of tenants, who say they cannot afford to save for a deposit at all, and other want-to-be homeowners are unable to save enough.

fap_average_ftb_450 The average amount saved by the 35% of tenants who do save for a deposit is £12,125 – about 7.3% of today’s average house price of around £165,000. That’s significantly less than the 10 to 20% which is typically required (approx. £16,000 to £30,000).

What many people aren’t aware of are the alternative co-ownership options available to them. With Joint Equity, for example, the minimum deposit required is 5% of the home value which for today’s average house is £8,250.

Surprising still is that nearly one-third of tenants are spending more than half their take-home pay on rent, and 35% of those managing to save a deposit are having to dip into it, either regularly or to pay for holidays. Among the under-30s, 60% have already used their home savings pot for other things.

These statistics are all from the property-sharing website SpareRoom, and another interesting and perhaps unexpected statistic shows that the large majority (79%) of those polled described themselves as employed professionals.

Matt Hutchinson, director of SpareRoom.co.uk, said: “A significant proportion of the people we polled expect to live in rented accommodation for at least five years, and many believe it will be much longer than that.

“The facts speak for themselves. Soaring living costs mean it’s a struggle for many households just to keep their heads above water each month, let alone have enough spare cash to put aside towards a deposit. The survey shows that even those who are squirreling away funds have not managed to save anywhere near enough to buy the property they want.”

percentageBrad Bamfield CEO of Joint Equity said, “These stats continue to shock us which is why we’re determined to help educate people about alternative home ownership options. For instance, our Resident Partners can now live in their own home in co-ownership with us on a 50/50 basis. In nearly all cases if you can afford to rent you can afford to buy with Joint Equity.”

“We aim to help over 25,000 people leave the rented sector for their own home every year and our vision is that no one who does not want to rent should be forced to stay in it longer than really necessary”

For more information visit www.jointequity.co.uk

Our thanks to http://www.spareroom.co.uk/

Joint Equity Co-Ownership – an alternative way

Joint Equity offers a new way to buy a home and new opportunities for investors.

crowd 03There 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 35 years I have been a builder and developer selling well designed flats and houses that I am very proud of and, very importantly, my buyers are happy to live in.

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

Affordable 4I really do not want anyone who does not want to to have to live in the rented sector 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 higher returns and less risk than Buy to Let.

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 it seems innovative.
  • A terminal bonus that is linked to the increase in property prices over the life of the Bond.
  • 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.

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

I am a hard headed developer but I also know there are 1,000’s of who really do want to get involved and help 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

Another blow to Buy to Let investments and number of rental homes available will drop and rents will rise

In continuing moves across finance providers, Barclays has announced that it is increasing its rental coverage ratio from 135% to 145%.

Rental coverage ratio is how much more the rent is than the cost of the mortgage. So for a £200,000 loan at 5% the cost is £10,000 per year.

Under the old norm of 125% cover the rent would need to be £12,500 now at 145% it will be £14,500; a 16% increase.

Barclayshow-much-for BTL confirmed that it will continue to carry out income and expenditure assessments, allowing customers put disposable income and bonuses towards any shortfall in rental cover. This will only work if you don’t already have a mortgage on your own home or another Buy to Let which will all be added into your affordability calculations.

On the up side Barclays is also reducing its stress test from 5.79% to 5.5% which means can you afford the mortgage at 5.5% instead of 5.79%.

Barclays said: “These changes are being introduced as a result of the reduction in landlord tax relief available from next April (phased in over four tax years). As a responsible lender we want to ensure that our clients can afford their repayments plus, other costs associated with the property where the borrower is responsible for payment such as, council tax and management/letting fees.”

Foundation Home Loans also joined in the general tightening of mortgages when it announced earlier this week that it is changing the basis of its rental calculation for individual applications from 125% to 145%.

Armageddon 002Despite concerns, the industry has said that increases in buy-to-let stress test levels should not be viewed as an ‘Armageddon moment’ for the sector.

However, many landlords see it differently they see it as part of a concerted attack on the option of investing money into UK residential property through Buy to Let.

The unfortunate effect of less Buy to Let investors is less property to rent which means the rental costs will rise and some renters will not be able to find homes.

As you know form our previous posts we think that the Chancellor is trying to drive individuals out of the market by reducing tax relief, increasing stamp duty and making mortgages more expensive. This then leaves the market open for institutions to enter the BtL market.

This has been Osbourne’s desire for many years but unfortunately the returns on investment have not been very good after all the agent’s costs are taken into account and institutions have not been keen to invest.

Now with private landlords being squeezed out of the market rents will rise and the market will be wide open for the big institutions so another example of social engineering by politicians and moving equity from individuals to institutions.

However, there is an alternative with the Joint Equity Bonds which pay 7 or 8% interest depending on the Bond or you can link the terminal bonus to Halifax Property Index to take advantage of house price movements. More on Joint Equity Bonds Here

It is now easier to invest in the UK property market through Joint Equity Shared Home Ownership scheme which has the security of property but does not exploit the person leaving in the property as Buy to Let does. All our Resident Partners share in the capital growth of the property while paying about the same as renting*.

*The maximum we will allow is £100pm more than they are paying in rent now.

Even discounted starter homes could be out of reach for the majority of families across the country, according to the Local Government Association.

Now we need to take this survey with a big pinch of salt as this falls into the category “well they would say that wouldn’t they” but while the hard numbers may not be accurate the overall picture is is the same as we would expect. Unfortunately.

According to the Local Government Association even discounted starter homes could be out of reach for the majority of families across the country.Local Government Association

Its analysis found that prices will be out of reach for all people in need of affordable housing in 220 council areas (67%) and are out of reach for more than 90% of people in need of affordable housing in a further 80 (25%) council areas.

affordable homesPeople in need of affordable housing are defined as those who would have to spend more than 30% of their household income to rent or buy a home.

For the average earner with a 5% deposit, a 20% discount would make it possible to borrow enough to buy a starter home in just 45% of all council areas in England.

First-time buyers will be able to buy 200,000 new starter homes over the next five years (that is 40,000 homes a year) at a minimum discount of 20% to the market value. However, there is a demand for over 350,000 new homes a year. Discounted prices will be capped at £450,000 in London and £250,000 elsewhere.

The 20% discounts for new buyers would be funded by exempting developers from paying Section 106 contributions towards affordable rented housing and Community Infrastructure Levy contributions. In its own analysis, the Government has suggested that should 100,000 starter homes be built through the planning system, between 56,000 and 71,000 social and affordable rented homes would not be built.

Although house-builders will be able to build and sell starter homes below the price caps, councils are concerned that this could be difficult for developers to achieve without compromising on quality, particularly in areas with higher house prices.

Cllr Peter Box, LGA Housing spokesman, said:

“The private sector has a key role to play in solving the housing shortage, but it cannot build the 230,000 needed each year alone. Councils need to be able to ensure genuine affordable homes continue to be built for rent and sale across the whole country for future generations and the millions of people stuck on waiting lists.”

Brad Bamfield, CEO Joint EQuity, said “We need to get new entrants into the affordable market and to somehow change Local Authorities perceptions that only Housing Associations can provide affordable homes. At the moment LA’s make it very difficult for private companies to enter the market and that disadvantages buyers who need help. Private firms with private funds can deliver many new homes but we need to change the tenure structure.”

Joint EQuity has been providing shared home ownership homes from private funding since 2007 and allows the buyer to find their own home.

Government to build houses but can we make them affordable? Yes we can with Joint Equity

The Government is to directly commission the building of 10,000 new homes on public land as part of a “radical” new plan to build at a faster rate using smaller companies.

Prime MinPicture David Cameronister David Cameron described the move as a “huge shift”, claiming it marks the biggest use of such a policy since Margaret Thatcher and Michael Heseltine started the regeneration of London’s Docklands in the Eighties.

Rather than waiting for major construction firms to work their way through the government’s long list of housebuilding projects, the scheme will see smaller businesses take on less extensive sites that have already have planning permission.

The policy will be backed by an extra £1.2 billion to prepare brownfield sites for the building of 30,000 starter homes – available to first time buyers under 40 for at least a 20 per cent discount – over the next five years.

David Cameron described the move as a “huge shift”, claiming it marks the biggest use of such a policy since Margaret Thatcher and Michael Heseltine started the regeneration of London’s Docklands in the Eighties

“This Government was elected to deliver security and opportunity – whatever stage of life you’re at. Nothing is more important to achieving that than ensuring hard-working people can buy affordable homes,” Mr Cameron said.

rent or buy 2This is right and Joint Equity wholeheartedly agree no one should be forced to live in rented accommodation who deos not want to. And that is anyone from 18 to 80, we think a home of your home with absolute security to stay there as long as you want is a basic human right.

Our CEO Brad Bamfield has lived in rented accommodation and hated the insecurity, the interference of the agent and the different agenda of the landlord. It was one of the big driver later in his life to develop Joint Equity and help everyone who wants their own home get one.

So we do agree with DC in principle but what Mr Cameron and politicians of all persuasion describe as affordable and what everyone else considers affordable is two quite different things so we think the Government and the private investment industry needs to go further.

Brad Bamfield, CEO of Joint Equity, has written a blog on What is the Cost of an Affordable Home the conclusion is the Help to Buy Scheme is not really affordable for great numbers of ordinary people. But Joint Equity can provide you a home of your choice for as little as the cost of a cup of Cappuccino coffee a day more than renting the same house. Well we would say that you say but click here to read how we arrived at that surprising result. Its not rocket science and we explain all.

Old DC backed this up with a further £1.2 billion to get homes built on brownfield sites, “it shows we will do everything we can to get Britain building and let more people have the security that comes with a home of their own.” he said.

The construction of the first wave of up to 13,000 directly commissioned homes – 40% of which will be starter homes – will begin this year in Dover, Chichester, Gosport, Northstowe in Cambridgeshire and Old Oak Common in north west London.

In addition to these, the extra £1.2 billion will fast track the creation of at least 30,000 new starter homes and up to 30,000 market rate homes on 500 new brownfield sites by 2020. The new projects form part of the Government’s commitment to building 200,000 starter homes before the end of the Parliament.

Half of all new homes are constructed by the top eight house builders and the direct commissioning approach will help smaller builders and new competitor firms, according to No 10.

But how will people be able to afford it? Just having more homes does not make them affordable if you cannot get a mortgage or need £30k as a deposit.

puzzle-526420_1920We feel the right way forward is the partnership between investors and occupiers through Joint Equity and our Investment Bonds, more on our Bonds here.

Why invest in Buy to Let with all its hassles and its costs when with a Co-Ownership Bond from Joint Equity you can earn 5.5% average plus 3% pa contribution from the terminal bonus.

So 8.5% return and helping people buy their own home at the same time.

Now that is a win/win Partnership

Just how much does an affordable house cost? And is it affordable – the answer is surprising.

Diminishing returnsThe average price paid for a property through an affordable housing scheme is now £189,786 according to Halifax – just 4% (£7,750) lower than the £197,535 average for house purchases.

That is not a big saving is it?

However, the discount is different for London:- regionally, the highest average price paid by purchasers using affordable housing schemes is in London (£323,148), while the lowest is in the North (£147,437).

Nevertheless, the average value of a London property sold in a scheme is 33% lower than the average London regional price (£482,579).

First-time buyers remain the biggest beneficiaries of Help to Buy housing schemes; accounting for 80% of purchases over the last year. This is significantly higher than the 46% of all mortgage financed home purchases made by first-time buyers over the same period.

The average price paid by first-time buyers using the Government schemes is now £150,361; this is 10% (£16,732) lower than the average price paid by FTBs (£167,093) for all housing.

Again not a big discount and the question becomes does a 10% discount make the house affordable.

However, not everyone is eligible for or wants the properties offered through Help to Buy so what happens to them? Well they have to do the best deal they can with the mortgages currently on offer.

Lets look at what constitutes the term affordable:_

  1. The amount of deposit. The first thing you have to find is the deposit and unless your family can help you have to save it. So for a £150,000 house the deposit can be between 20% (£30,000) for good mortgage deals and 10% for the lowest deposit (£15,000).
  2. The costs of the mortgage. The deposit and the cost of the mortgage trade off each other for a 10% deposit the rate currently (Jan 16) is 2.18% to 2.5%. But for a 20% deposit the rate drops to 1.44%  to 1.65%. In Cash terms this means a 90% LTV costs £585pm and 80% LTV £477pm, a difference of £108 pm.
  3. Your salary and the % you spend on the mortgage. Mortgage providers are required by the regulator to ensure you can afford your mortgage and that still equates to not borrowing more than about 4x your income. So for a £135,000 mortgage (the mortgage for a 10% deposit) you will need to earn £33,750pa.
  4. To the Government affordable seems to mean not more than 30% of your income. So for this£150k house and a mortgage of 585pm we would need an annual income of £23,500pa.

Lets look at this another way:-

  1. So an average income family on £27,000 pa can get a mortgage of £108,000 which means the difference, £42,000, has to come from savings to be the deposit.
  2. This would mean the LTV is 72% so the deposit is 28%.
  3. The monthly cost would be £429 which is 20% of the income well inside the Government’s 30%

So the monthly cost is affordable but the deposit is not. Is that really affordable.

Lets now look at Joint Equity Co-Ownership for the same £150,000 home.50-50 split

  1. The minimum deposit required from the Resident Partner £7,500.
  2. The mortgage of £67,500 costs £268pm
  3. The Non Resident partner payment, for the 50% you do not own, is £387pm
  4. The total cost pm for your Joint Equity home is £655pm
  5. This is 29% of the average income of £27,000.

So Joint Equity offers the £150,000 home that you chose for £7,500 deposit and £655pm.

The alternative to buying is renting and the average cost of renting a £150,000 house is now around £575.

That means a owning your own home through Joint Equity will cost you £2.60 more a day than renting and you have the security of your own home, no short term tenancy, the threat of termination, swinging rent rises, or over bearing landlords and agents.

And what is £2.60 a day?

Well its a cup of coffee, 3/4 of a pint of beer or 6 cigarettes – not a very high price is it really.

And don’t forget that £2.60 also means you own 50% of the house and will benefit from rises in value of the house.

So if the property rises in price by 6% per year you will earn £4,500 per year or £12.32 per day. Not a bad return for your £2.60 extra cost is it?

Brad Bamfield, CEO of Joint Equity, says “affordability is a combination of many things and the tragedy is that many of our Partners are turned down for a mortgage when the rent they are paying is similar to the mortgage costs. To me its affordable if the deposit is at an attainable level, the monthly costs are not too high a proportion of the income and the security is assured. Joint Equity delivers affordable homes.”