First-time buyers: Try before you buy

Market conditions are squeezing first-time buyers more than ever. So could the answer be a scheme that lets you rent first, purchase later? Ginetta Vedrickas finds out
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The Independent Online

It may be the single largest expenditure we ever make, yet it's often one we spend literally minutes deciding upon. Chances are, you'll spend less time inside the potential home of your dreams before buying than you subsequently spend choosing furniture for it. But, in today's buyer's market, it turns out that test driving a property is perfectly possible.

With developers becoming increasingly desperate to unload "sticking" properties and seven out of ten first-time buyers having given up hope of ever owning their own house – according to a comprehensive new survey by Propertylive.co.uk – vendors are trying to entice buyers with ever more attractive offers. Forget free gym membership though, "try before you buy" is being offered at many developments around the country. SmartNewHomes.com currently lists 19 such schemes and Managing Director David Bexon says it's a great way to buy a new home: "You wouldn't buy a pair of shoes without trying them on or a new car without giving it a test drive, so why do so many people buy a home after spending only 15 minutes inside?"

Most try before you buy deals offer subsidised rents, in some cases up to three years, with payments deducted from the sales price if you subsequently buy. With lenders still demanding hefty deposits, mortgage approvals fell by over 30 per cent in the last year, so this is one way that buyers can save for their first steps on to the property ladder. Mortgages may still be tricky but house builder Bellway describes today's buyers as "spoiled for choice with offers".

The developer's "try before you buy" incentive has been a success at Bayside Plaza, part of Prospect Place in Cardiff where studios start from £450 per month. Potential buyers can rent for up to 12 months, with no obligation to buy, but all rent is deducted from the sales price if they do. Since launching the offer last month, 12 potential buyers have signed up and sales director Billie Oaten says: "Would-be buyers prefer to sit out the recession. Try before you buy allows them to do just that and at the same time benefit from the fact that they are living and renting a luxurious new home that could be rent free for up to a year should they choose to buy."

Samantha Allen, who works in the financial sector, was one of the first to rent at Bayside Plaza, where she's planning on buying: "I'd been trying to buy a home for ages; this scheme was perfect for me. I can live in my new home knowing that the rental payments will ultimately reduce the cost. I feel really lucky, where I am living now is close to where I work, the town is in walking distance, I look directly out on the waterfront and it all feels really safe and secure. I'm now effectively saving up for my new home while enjoying all the benefits from living in it."

In Acton, London, new development Issigonis House was built on the site of a former car factory and named after the engineer who created the Morris Minor and Mini. Owners Shepherd's Bush Housing Association are offering some apartments on a "rent to buy" basis. Rental for one-bedroom apartments starts from £208 per week, 20 per cent less than market rents, allowing tenants to save towards a deposit.

Winkworth's Carl Burgess says that the apartments are a great opportunity for anyone earning under £60,000 who wants to get on the property ladder: "A friend is trying one out and he's already decided to buy. They do have the wow factor as they were originally built as live/work units."

Under these schemes, there's no obligation to buy and you have the luxury of being able to wait and see what happens to the market but what happens if their value plummets? Many developers will offer to get a market valuation and adjust the sales price accordingly. Agents Knight Frank are offering "deposit saver – live rent free for a year" at new development the Pinnacle in Northampton.

Prospective buyers can rent a two-bedroom apartment, costing £150,000, for £650 per month, which then goes towards your deposit. If, at the end of the year you decide to buy, the developer adds to your deposit cutting the actual sales price to £135,000. They also agree to a revaluation at the point of purchase and will hold the original price if it has increased.

And, trying before buying is not restricted to the lower end of the market. The owner of a large country pile in Cobham, Surrey, is offering prospective buyers of Ockham Grange, a £2.45m house set in 2.36 acres, the chance to rent it for £7,000 per month, which will be deducted from the sales price if they go on to buy. Selling agent Serena Brown of Browns says the trial is unheard of in affluent Surrey: "The recession has made everyone look at things from different angles. This makes sense as the house is occupied, the owner can pay off their loan and, as moving is such as an upheaval, whoever rents it may decide to stay put."

Julia Lockyear, 56, from London now lives in Columbia where she runs her own computer company. Julia is offering the buyer of her Oxfordshire cottage in Thame, on the market with Connells for £224,950, a two-week holiday for six in her French farmhouse in the Limousin: "I've already dropped the price but, as with selling anything, when there is a surfeit of the product and little demand you have to make yourself stand out from the crowd. It occurred to me to apply marketing techniques from other sectors to my house sale i.e. 'buy one get one free'!"

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