Renters snub buy-in plan

GOVERNMENT attempts to "staircase" tenants into homeownership by turning rents into mortgages have been slammed by lenders and housing experts as unsustainable and unrealistic. It was announced last week that only five tenants took up one scheme that the Government spent £410,000 to promote.

Another 100 applications to the Rent to Mortgage scheme are being processed, but this is peanuts compared withGovernment expectations. At its launch two years ago,Sir George Young then housing minister, spoke of 1.4 million council tenants and "many thousands" of housing association tenants who might be able to afford their own homes.

Rent to Mortgage allows council and housing association tenants to treat rents as a staircase into home ownership, with equity being transferred in stages. Three of the five successful applications were from tenants of the Barbican, owned by the Corporation of London, where the high value of the flats makes the scheme attractive when tenants cannot afford to buy outright.

A 1991 report by the Council of Mortgage Lenders predicted that Rent to Mortgage would be a failure. Author Steve Wilcox, of Cardiff University, says that developments since have killed off any slim chance of success.

"The current relationship between rents, capital values and interest rates means there is virtually no demand for the scheme, except for very new tenants in some regions," he argues. "The Rent to Mortgage scheme is a niche product aimed at tenants who can afford to pay their rent without assistance from housing benefit, but who cannot afford outright purchase. The changes in the private housing market over the last two years, with house prices and interest rates falling while council rents continued to rise at 5 plus per cent above inflation, have in effect wiped out the market for the scheme."

A more flexible alternative is the Shared Ownership scheme, available through housing associations. Purchasers buy a share of a property, from one quarter to three quarters, and pay rent to the association on the balance. This has been much more successful, with 70,000 households converting into homeowners.

It has been a succcess because it enables people to move out of properties with which they are dissatisfied. Tenants of other landlords, including local authorities, and those on waiting lists, can apply to associations for especially built properties or eligible properties purchased on the open market. People moving for jobs to higher cost areas are also eligible.

The Halifax figures Shared Ownership is not always the cheapest option. Douglas Smallwood, its head of commercial lending, says: "It varies according to which part of the country you are in. In the North, it is cheaper to buy outright; in the South-east, it is cheaper to go for Shared Ownership - it still makes good economic sense there."

Government pressure on associations to adopt a more commercial attitude is likely to lead to significant rent increases in April, particularly for larger properties. Tenants not on housing benefit are likely to find that rent is now not much cheaper than a mortgage.

Best deposit rates

INSTANT ACCESS Telephone Account Notice Deposit Rate Interest

or term % interval

Skipton BS 01756 700511 3 High Street Instant £2,000 6.25 Year

Manchester BS 0161 834 9465 Easy Saver Instant £50 6.75 Year

Britannia BS 01538 392808 Capital Trust Postal £10,000 6.50 Year

£25,000 6.75 Year

NOTICE ACCOUNTS

Nottingham BS 0602 481444 Autumn Bonus 30 Day £2,500 5.90 Year

Coventry BS 0345 665522 Postal 50 50 Day (P) £2,000 6.55 Year

Scarborough 0723 368155 Scarborough 50 50 Day (P) £25,000 7.35 Year

Bristol & West (Asset) BS 0800 303330 Asset 90 90 Day (P) £25,000 7.10 Year

TERM ACCOUNTS

Woolwich BS 0800 400900 One yr fxd rate bond 1 year £500 7.50 fixed Year

Halifax BS 01422 333333 Guaranteed Reserve 1 year £10,000 7.50 fixed Year

2 year £10,000 8.25 fixed Year

3 year £10,000 8.60 fixed Year

MONTHLY INTEREST

Birmingham Midshires BS 0902 710710 First Class Postal £1,000 4.79 Month

Britannia BS 01538 392808 Capital Trust Postal £2,000 5.84 Month

£10,000 6.31 Month

£25,000 6.55 Month

TESSAS (tax-exempt special savings accounts)

Manchester BS 0161 832 0101 5 Year £8,400 8.00 fixed Year

Market Harborough BS 0858 463244 5 Year £9,000 7.75 Year

Hinckley & Rugby BS 01455 251234 5 Year £3,000 7.65 Year

Barclays Bank 0800 400100 5 Year £1,000 7.50 Year

HIGH-INTEREST CHEQUE ACCOUNTS

Woolwich BS 0800 400900 Current Instant £500 3.85 Year

Halifax BS 01422 333333 Asset Reserve Instant £5,000 5.00 Year

Chelsea BS 0800 717515 Classic Postal Instant £2,500 6.00 Year

£25,000 6.50 Year

OFFSHORE (gross)

Portman Channel Islands 01481 822747 Instant Gold Instant £5,000 6.20 Year

Derbyshire IOM 01624 663432 Instant Access Instant £10,000 6.30 Year

Derbyshire IOM 01624 663432 90 Day 90 Day £10,000 6.75 Year

Halifax JSY 01534 59840 Fixed Rate Intl 1 Year £50,000 7.70 fixed Year

NATIONAL SAVINGS

Accounts & bonds (gross) Notice or term Deposit Rate % Interest interval

INVESTMENT ACCOUNTS 1 Month £20 5.25 Year

£500 5.75 Year

£25,000 6.00 Year

INCOME BONDS 3 Month £2,000 6.50 Month

£25,000 6.75 Month

CAPITAL BONDS (Series I) 5 Year £100 7.75 fixed Maturity

FIRST OPTION BONDS 12 Month £1,000 6.40 fixed Year

£20,000 6.80 fixed Year

PENSIONER'S GUARANTEED INCOME BOND (Series 2)

5 Year £500 7.50% fixed Month

NS Certificates (tax free)

42nd ISSUE 5 Year £100 5.85 fixed Maturity

8th INDEX-LINKED 5 Year £100 3.00+RPI Maturity

CHILDRENS BOND (Issue G) 5 Year £25 7.85 fixed Maturity

P= by post only. All rates are shown gross and are subject to change without notice.

Source: Chase de Vere Investments PLC - 0171 404 5766. Compiled on 16 February 1995

Best borrowing rates

MORTGAGES

Fixed rates Telephone Rate/period Max Fee Incentive

% advance % £

Hinkley & Rugby BS 01455 251234 1.50 to 1/1/96 70 £250 -

Capital Home Loans 01252 812271 2.99 for 1 year 95 £295 -

Citibank 0181 846 8363 6.45 to 1/3/97 85 £250 -

Leeds & Holbeck BS 01532 459511 7.99 to 1/4/98 75 £145 -

Northern Rock BS 0800 591500 8.74 to 15/4/00 90 £250 No MIG, free valuation

TSB Local branch 9.49 to 31/3/05 95 £250 Free valuation

Variable rates

Scarborough BS 0800 590547 1.95 for 12 months 95 - Free valuation

Bristol & West BS 0800 100117 2.49 for 1 year 90 - -

Bank of Ireland 01734 510100 5.55 to 1/4/97 90 £260 2yrs free ASU - FTB

Stroud & Swindon BS 01225 427764 6.50 to 31/1/98 75 - -

PERSONAL LOANS

Unsecured Telephone APR Fixed monthly payments on £3,000 for 3 years

% With insurance Without insurance

Midland Bank Local branch 15.40 £116.54 £103.14

Abbey National Local branch 15.90 £115.81 £103.77

Clydesdale Bank 0141 248 7070 16.30 £113.94 £103.33

Secured Max advance % Max term

Royal Bank of Scotland 0131 556 8555 10.90 70 3 years to retirement

Midland Bank Local branch 11.40 90 5 to 30 years

First Direct 0800 222000 12.30 80 Up to 40 years

TYPICAL OVERDRAFTS

Telephone Authorised Unauthorised

EAR % EAR %

Barclays Bank Local Branch 19.20 29.80

Lloyds Bank Local Branch 19.40 26.80

National Westminster Bank Local Branch 18. 90 33.25

BEST OVERDRAFTS

Telephone Authorised Unauthorised

EAR % EAR %

Woolwich 0800 400900 9.50 29.50

Alliance & Leicester BS 0500 959595 9.50 29.80

Abbey National 0800 555100 9.90 29.50

CREDIT CARDS

Telephone Card name Minimum Rate APR Annual

income pm % % fee

Standard

Robert Fleming (S&P) 0800 282101 Mastercard/Visa - 1.00 14.60 £12

Royal Bank of Scotland 0131 556 8555 Mastercard - 1.25 16.00 -

TSB Local branch Mastercard/Visa - 1.38 17.90 -

Gold cards

Lloyds Bank Local branch Mastercard £20,000 0.94 11.80 £40

Midland Bank Local branch Mastercard £20,000 1.30 18.10 £35

MBNA International 0800 062620 Mastercard/Visa £20,000 1.38 18.90 -

STORE CARDS

Payment by direct debit Other methods

Telephone pm APR pm APR

John Lewis Local store - - 1.39 18.00

Marks and Spencer 01244 681681 1.70 22.40 1.84 24.40

Burtons Local store 1.94 25.90 2.20 30.40

APR=Annualised percentage rate. EAR=effective annual rate. All rates are subject to change without notice.

Source: London & Country. Freephone 0800 373300 Compiled on 16 February 1995