Question: Is "Newbuild Homebuy" a viable Government scheme? There are adverts for shared ownership all over town offering a step on to the ladder for a fraction of the normal price. It seems above board but my family think it's a bad idea and that I should carry on saving.
Jake B Lewis, Worcester
Answer: A problem shared is often a problem halved yet shared ownership – a bona fide helping hand on to the property ladder part-funded by government cash – is no easy solution for first-timers.
"Newbuild Homebuy" is a shared-ownership scheme covering newly built homes and flats across England and available from Homebuy "agents". These tend to be housing associations allowed to administer the scheme for you as long as you match the criteria: you (or together with a partner buying with you) earn £60,000 a year or less; have absolutely no other way of buying a property in the area; and are a first-time buyer or currently rent a council house.
Assuming you tick all these boxes, says consumer body Which?: "You can then purchase a stake of anywhere between 25 per cent and 75 per cent of the market value of your property and pay rent on the remaining share."
The amount of rent you pay can be up to three per cent of the value of the share belonging to the housing association, and this will have to be paid monthly on top of the mortgage.
Using government figures, say you bought 50 per cent of a £100,000 flat; the monthly mortgage on a £50,000 25-year loan at 6 per cent would be roughly £320. Add on rent of 3 per cent of the half owned by the housing association (£1,500 divided by 12 equals £125) and your monthly overall total would hover at about £445.
The idea is that, over time, you'll slowly buy the rest of your property as and when you can afford it.
If you're prepared to wait a few months, you might also consider the new "First Buy" scheme for new-builds. This is a "shared equity"-type scheme where the Government and housebuilders will jointly provide a five-year interest-free 20 per cent loan (with interest charged at 1.75 per cent in year six, and at RPI inflation plus 1 per cent after that) to top up first-time buyers' own deposit of 5 per cent. In principle, you can then take out a mortgage for 75 per cent of the property. The first homes are expected to be ready in September.