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    Which scheme is best for you?

    Many of our customers considering an affordable housing scheme can often be understandably baffled by the variety of schemes in offer. For ‘low cost home ownership’, two principal schemes are available: shared equity and shared ownership. With shared equity, the key point is that you buy the whole property from the outset but with an equity loan for as much as 25% of the property. For example, the main shared equity scheme is Firstbuy and you typically put down a 5% deposit; take a mortgage for 75% (meaning that rate is a 75% loan to value product and therefore competitive) and are provided with a 20% equity loan for the remainder. With shared ownership, otherwise known as part buy part rent, you only buy a share in the property, paying rent on the remainder.

    For most people, both schemes are likely to be more affordable than buying on the open market and the big question will simply be about what availability of either scheme is available where you want to buy. But for customers fortunate enough to have the choice of both, they would find that part buy starts with much smaller shares meaning that the deposit can be really quite low (5% of a 25% share is bound to be less than 5% of the full property price on Firstbuy). Moreover, when you sell your shared ownership property you can ‘resell’ your share whereas with Firstbuy you have to resell 100% of the property. Finally, you may have to pay stamp duty on Firstbuy.

    In Firstbuy’s favour, many customers will want to own their home 100% and with Firstbuy you can do that from the outset even though if feels like you are only buying a share. Also, for reasons to do with the way lenders work out the ‘loan to value’, Firstbuy mortgage rates for a 5% deposit are 75% LTV mortgages and therefore potentially more competitive than part buy part rent where a 5% deposit means a 95% loan to value deal. The competitive nature of Firstbuy mortgages means that Taylor Wimpey North West claim it can be “cheaper than renting”.

    In a Homebuy case stamp duty will still be payable if the price paid for the initial share exceeds £125,000 or the rent payable to the housing provider is sufficiently great to bring it within the stamp duty regime.

    Firstbuy and shared ownership properties

    Most of the properties on our affordable homes portal are available for the part buy part rent scheme but we have recently added a range of Firstbuy homes in the north west of England, including: 1 bed flats and 3 and 4 bed houses in Blackley, Manchester M9; 3 bed houses in Ellesmere Port; apartments and 4 bed houses in Prescot, Merseyside and a range of other Firstbuy homes in Lancashire, Cheshire and surrounding areas. We also have added part buy part rent homes in the north west, including 2 bed houses in Congleton, Cheshire. As usual, we have added a lot of shared ownership property in London and other parts. Search for shared ownership properties across England and if you have not already done so please sign up for property alerts so that we can tell you when we add new properties.

    Regards,

    Share to buy