By Martin Williamson, Head of Residential Property, Latimer Hinks Solicitors www.latimerhinks.co.uk
As Ive mentioned in previous columns, many young people are finding themselves priced out of today's property market, unable to provide the deposit that lenders require. However, tough times force industries to come up with innovative ideas to get things going again, and one company, Genie, has introduced an innovative deposit-and-mortgage-free payment plan.
It comes as no surprise that some reports predict the average age of first-timers will increase into the late-30s, but the Genie home payment plan could offer a viable alternative to traditional home ownership.
According to the la test stats from the Council of Mortgage Lenders, first-time buyer activity is showing some signs of resilience with 19,200 loans handed to new homeowners, an increase of 9.1 per cent on May, yet few of these would have been able to do this alone. Only 53% of first-time buyers are able to purchase their home by themselves, often relying on the age-old Bank of Mum and Dad for financial assistance. There are also several other schemes up and running that serve to help first-time buyers, including the Governments FirstBuy or NewBuy schemes.
The Genie process starts with buying new-build homes from house builders and developers, which it sells on to its customers under a 25-year payment plan. Under the plan, the occupier pays a monthly residency fee which is split three ways: one part is an administration fee, another is interest (the Genie interest rate is currently six per cent) and the final part goes towards buying the property. A scheme like Genie also has no penalties for early re-payment if families find themselves with spare cash to invest in their home and it also offers the chance to pay a minimum residency fee if they fall on hard times.
Subject to a financial assessment of the applicants ability to afford the plan, anyone with a pre-tax household income of at least £18,000 is eligible.
Also, if at the end of the arrangement the Genie buyer hasnt managed to acquire 100 per cent, they have three options: buy the remaining shares; sell their shares and use that money to purchase a different home; or, alternatively, they can look in to extending their plan with Genie.
At present, there are 50 homes lived in by Genie customers, an additional five are on reserve while a further 23 are being marketed. The company is also looking at buying additional housing stock in London, the North East and the North West.
There are numerous similar products on the market offered by mortgage lenders. These can involve parental assistance, using parents as guarantors or offsetting family savings against the deposit required for the first-time buyer. The current market is alive with innovation for first-time buyer finance and it pays to look around before making a final decision on the solution that works best.
Martin Williamson is Head of Residential Property at Latimer Hinks Solicitors in Darlington. Latimer Hinks has a team of around 50 people serving private and corporate clients.
For further information: www.latimerhinks.co.ukor call 01325 341 500.
Please note: This article is intended as guidance only. No responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by Latimer Hinks. In addition, no responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by the firm.