Apartment Homeownership schemes
Rapidly increasing property prices has prevented many people from taking that first step onto the housing ladder. However, there are schemes that the government has put in place to help those frustrated first-timers.
The government have three schemes currently running in the UK, but since they first launched back in 1997 only 80,000 people have bought their property through them.
The inner workings
First, lets look at the New Build Scheme (traditionally known as Shared Ownership). This basically allows buyers to purchase a share, starting from 25 per cent, of a purpose built apartment or house.
Obviously, in order to do this you will have to be able to get a mortgage for the share that you want to buy, and then you will pay rent on the remainder - an amount that is designed and calculated to be affordable.
Then, as you start to earn more or your circumstances change, you can buy additional shares until you finally own 100 per cent of the property. This process is known as staircasing.
Obviously, the tricky part comes when you want to sell. This is a bit different to selling in the normal way (although if you own 100 per cent you can go through the usual channels). There will be a clause in your contract that requires you to inform your landlord/housing association when you want to sell so that they can offer the property to other struggling first-time buyers.
This requirement is usually for a minimum of 3 months and then after this time you can put your share on the general market, or staircase up to 100 per cent and sell it in the normal fashion.
The Social Homebuy scheme is slightly different in that it is only open to eligible tenants. If you fit the bill, you will be able to purchase a share of the apartment or house that you already live in - and benefit from a discount of between £9,000 and £16,000 depending on where the property is.
This scheme, unlike New Build, is limited and not every council or housing association offers them.
The final scheme is Open Market Homebuy which offers first-time buyers much more of a choice as to where and what sort of property they can buy, whether it is a one bedroom apartment in the city to a three bedroom house in a village.
This scheme works through the use of special equity loans granted by the government and a mortgage lender (only a couple lend via this scheme at the moment). The loans are interest-free but come with the condition that if the apartment or house should rise in value, the buyer pays back a portion of the increase.
This is calculated on the percentage of the property that they own with the interest-free cash.
The Qualifying Process
Qualifying for one of the schemes will ultimately depend on where you live and which arrangement suits you the best.
Generally, to qualify you have to be a key worker, a social housing tenant or a first-time buyer that earns a minimum annual salary - although this figure changes from local scheme to local scheme.
To find out whether you qualify in your area, then you will need to speak to your local council or housing authority.