With the UK property market looking as bleak as a no-deal Brexit, wannabe homeowners can often feel trapped in a never-ending renting cycle. However, statistics show that the number of first-time-buyers is actually on the rise, so it’s clear that the dream of being a homeowner is attainable. The question is: how?
If you look beyond the traditional home-buying cycle you’ll find there are a number of alternative routes to home ownership, including: shared ownership and rent to buy schemes, building it yourself and the novel idea of house raffles. Each route caters to a different budget and lifestyle, so it’s a case of finding the best solution for you.
Shared ownership
For those unable to afford the upfront deposit on their dream home, shared ownership offers a great solution. Instead of purchasing the property in full, you buy a share worth between 25-75% of its total value, paying a deposit on this share. The remaining share is owned by a housing association, local authority or independent landlord, where you’ll pay rent to your landlord and mortgage on the share you own.
You can buy a bigger share in the property at any time, decreasing your rent and increasing your ownership and once you reach 75% ownership, you’ll no longer need to pay rent on the remaining share.
Shared ownership is available to first-time buyers that can prove they’re able to cover the mortgage costs. If that’s you, then congratulations – you can take your first steps on the property ladder!
If you want to partner with an independent landlord, head to Share to Buy where you’ll find a directory of landlords offering shared ownership properties. Alternatively, you can qualify through your desired housing associated, but be prepared to experience long waiting lists, which can be frustrating.
Rent to Buy
Like shared ownership, Rent to Buy is another government initiative that helps first-time buyers struggling to gather a deposit, establish their place on the property market.
These homes are typically new builds, offered to the market by a housing association or local authority with subsidised rent; you’ll rent the property at approximately 20% below the market rate for up to five years (time period varies by property) giving you time to save for a deposit on the property at a later date.
You’re able to buy the property at any point along your contract. However, as your lease comes to an end, you’ll have to decide whether or not you’d like to buy your home outright or enter into a shared ownership scheme. If you decide against these options, or simply can’t afford to do so, then you must vacate the property.
Overall, the Rent to Buy scheme is a great way to ease your transition from renting to buying, allowing you to live in a lovely new build home while saving enough to become a homeowner yourself.
House Raffles
There’s a new route to home ownership fresh to the property market: house raffles. Property-tech startups such as Raffle House or WinAbode give prospective home owners the opportunity to win a property by answering a simple trivia question and entering a ‘house raffle’. You buy tickets to enter the prize draw and a winner is randomly selected at the end of the contest.
While you’re competing with others for the same property, these raffles have amazing odds as customers have a minimum of 1 in 100,000 to 200,000 chance of winning – a far cry from the UK National Lottery’s 1 in 45,000,000 or Euromillions’ 1 in 140,000,000! Raffle houses are the fun, new alternative to traditional home-buying, offering a seamless and essentially free route onto the property ladder.
Auctions
Houses offered at auction are often thought to be repossessed or problem properties. However, this generally isn’t the case and homes under the hammer can often provide you with rare deals on top properties.
To participate in an auction, you simply need your driving license, solicitor details and an acceptable means of paying the deposit (cheque, credit/debit card, banker’s draft, etc.) to hand. You don’t even have to turn up if you don’t want to, with the options of phone, virtual and proxy bidding available. Instead, you can sit at home and watch the events unfold, bidding as and when you please.
These auctions offer a faster, more transparent and simpler route to home ownership than going through an estate agent. So, if you’re looking for a quick and easy route to home ownership with the opportunity to secure a fantastic deal, then start browsing for upcoming auctions via sites like RightMove or Zoopla.
Build it yourself
If you’re a fan of Grand Designs and have a particular vision of your dream home, then why not build it yourself? At first glance this may seem like a crazy idea, but it’s actually a very realistic option for aspiring homeowners.
While you’ll need a fair amount of cash (or a loan) to cover the up-front costs, the long-term rewards of building your own home can be huge. You’re able to exercise complete control over the architectural design, interiors and even the budget so your dream property is tailored to your precise specifications. Unlike buying a pre-existing home, which can often come with unknown (and expensive!) complications you ultimately end up paying for, building it yourself allows you to choose how much money you invest in the property as well as foreseeing and avoiding, any potential complications.
In short, it’s much cheaper to buy land and build a home compared to how much it would be to purchase an equivalent, existing property. So, if you feel like embarking on a creative challenge, having complete control of the design and cost of your dream home, then building it yourself might be your best route to home ownership.
By: Benno Spencer, CEO of Raffle House