Recent statistics for the UK indicate that one in every four young people within the age bracket between twenty and thirty five are still living with their parents – the highest number since nineteen ninety six. This should come as no surprise as for most people the economic reality has changed dramatically and irreversibly. On top of that, ever increasing property prices, along with fewer high paid job opportunities are preventing young people from stepping onto the property ladder.
Currently the UK government has devised and implemented a number of low cost home ownership solutions for young people looking to buy their first residential property. These schemes cover the actual purchase and conveyancing costs, not the more mundane expenses like man and van removal services, transfer of utilities, renovations etc.
Some of the low cost home ownership (LCHO) options can actually turn out to be cheaper than renting, plus they are government backed which makes them more robust to adverse economic and market changes.
The three main types of low cost home ownership schemes currently in use are:
- Help to Buy;
- Shared Ownership;
Help To Buy – this scheme enables people who do not have the minimum ten percent deposit to actually purchase a property. However, there are certain criteria to be met. Eligible persons will have to apply for an equity loan or a mortgage guarantee. To be able to do this, they need to have at least five percent of the deposit, the property in question should not exceed six hundred thousand pounds in value, and it should be their primary residence i.e. not buy-to-let.
Shared Ownership – this option allows people to purchase a smaller portion of the home like for example twenty five to seventy five percent of the total value, and pay rent on the remainder. The remaining portion is owned by a housing association (assisting people with shared ownership). Such homes are usually held or ‘owned’ for a fixed period of time, usually ninety nine years. To be eligible, one needs to be a first time home buyer, and to earn less than sixty thousand pound per annum,
NewBuy – this solution helps people buy their first home with only five percent of the deposit. The scheme applies to newly build homes, sold for the first time. They property must not exceed half a million pounds in value, and must be constructed by a builder taking part in the NewBuy program.
Finding the most suitable and affordable way to purchase a first home is indeed essential. Having said this, there are also many other expenses to account for when buying and settling at the new place. Some of them are conveyancing costs, man and van removal costs, transfer of utilities costs, exterior maintenance costs for gardens, driveways etc.
The LCHO government schemes are generally aimed at first time home buyers, but others can also become eligible, even if they have owned a home previously. Some of the LCHO programs are aimed at key workers as to enable them to own a home they could not otherwise afford.