LONDON Underground station supervisor Ian Legg was given £4,000 in free cash just by buying his £420,000 first home in Harlesden, London.
Ian, 43, only had to take out a £97,000 mortgage and put down a deposit of just £8,000 for his swanky two-bed flat because he bought it through a shared ownership scheme.
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It means that Ian owns 25% of his flat, while Hyde New Homes, the developer and housing association, owns the rest.
He said he would never have been able to buy a house like this if it wasn’t for the scheme.
Ian even bagged £4,000 in free cash from Westminster City Council because he previously rented a special home from the council before he bought his shared ownership home.
Councils and housing associations often have schemes – called intermediate rent schemes – for those looking to save up for a shared ownership property.
It means a budding buyer can live in a flat where rent is subsidised and around 20% cheaper than the going market rate.
These schemes aim to help tenants save more so they can move on and buy a shared ownership property of their own.
Westminster City Council runs its own intermediate rent scheme where it gives £2,000 in free cash for every year a tenant stays in its homes.
The tenant is given this cash – as long as they go on to buy a shared ownership property.
As Ian lived in his rented flat for two years, he got a £4,000 bonus – which he put towards furnishing his new home.
But you could get a maximum of £10,000 if you live there for five years – the maximum length of time you can stay in and rent one of these homes.
Ian lives with his partner but bought the flat himself.
He earns £48,000 a year, and received no financial help from friends or family.
We caught up with Ian to see how he went from being a tenant to a homeowner for The Sun’s My First Home series.
Tell us about your flat
It’s on the second floor of a new-build block of flats in Harlesden, London.
It has two beds, and the spare bedroom is currently used as an office and hobby room.
I wanted to buy a two-bed flat so if my circumstances change, I can always rent it out and it will help to cover my mortgage repayments.
But I’m enjoying the extra space it gives me and my partner so far.
It also has a living room, and I painted the hallway purple – which I’ve always wanted to do, but never could because I’ve always rented.
How much did you pay for it?
I don’t own all of my flat – I bought it through a shared ownership scheme.
Shared ownership lets buyers purchase a portion of the equity in a property if they can’t afford to take out a mortgage for the total value of the home.
Pros and cons of buying a shared ownership home
YOU can use the shared ownership scheme as long as your household earns £80,000 a year or less, rising to £90,000 in London.
You must be a first-time buyer or have sold your home and be unable to afford a new one.
Make sure to contact your local Help to Buy agent to see which schemes you are eligible for in England and your local authority in Wales.
But before splashing out, you’ll need to know the pros and cons of buying a shared ownership home – we explain below:
Pros
- More affordable to buy: You don’t have to buy the whole property, so you can take out a smaller mortgage for your home – making your monthly repayments less
- Smaller deposit: You only have to put down a deposit on the portion of the house you are buying – this can be as low as 5%
- Build up your equity: You can also slowly build up full ownership of your property by making “staircasing” payments
Cons
- Selling it on: If you haven’t staircased to own 100% of your property, you have to buy it onto a buyer who meets the shared ownership scheme criteria – limiting your pool of potential buyers
- Harder to get shared ownership mortgage: You need to get a special shared ownership mortgage – there are fewer lenders offering these types of loans compared to traditional mortgages
- Charges on your home: There will be service charges to pay and there could be restrictions on renovations or having pets
- You may have to move further afield to get a shared ownership home – there may not be a scheme going in your preferred location
That means I co-own my home with Hyde New Homes, the developer, and I get charged rent on its portion of the property.
I own 25% of the flat, and I pay £450 in rent per month.
My mortgage is smaller too because I didn’t have to buy all of the flat – I took out a £97,000 special shared ownership mortgage on a 28-year term with a fixed rate for five years.
It also meant I paid a smaller deposit – I put down a 5% deposit for it at roughly £8,000.
I wouldn’t have been able to afford a flat outside of London, nevermind one in the city, if it wasn’t for the shared ownership scheme.
How did you go about getting a shared ownership house?
I first knew I wanted to buy a shared ownership home after my brother bought one of his own four years ago.
I knew I’d never be able to save up enough for a deposit for the kind of home I wanted.
So three years ago, I moved out of private rented accommodation in Tooting into a council-run renting scheme designed for people saving for a shared ownership home in Ladbroke Grove.
Councils and housing associations have schemes – called intermediate rent schemes – for those looking to save up for a shared ownership home.
These schemes offer homes with cheaper rent rates, designed to help you save more for a deposit.
You could save up to 20% on renting one of these homes, compared to the market rate.
I applied for Westminster Community Homes’ intermediate rent scheme, and stayed there for two years.
Developers often sell shared ownership homes to people living in the local area, so I applied to rent in this scheme because it was in the area I originally wanted to buy in.
The eligibility criteria for these renting schemes could vary depending on who is running the scheme, but for my one, I had to have an income less than £60,000 a year, work in Westminster, and have a job.
You can check which intermediate renting schemes are on offer by asking your local council – you can find out which is yours, using the gov.uk’s tool.
I paid £1,000 a month in rent for my flat – but when I checked on Rightmove, I saw the same sized flats in the same area would cost up to £1,900.
Last year, I began to look at shared ownership homes to buy, and after looking at a few schemes, I fell in love with the flat I’m in now.
I applied to Hyde New Homes to buy it in December 2019.
The application process was quite intense – I had to provide six years of bank account statements and six years of savings account statements.
I was successful, and got the keys and moved into the house in January 2020.
How did you get the free cash?
As I was moving out and into my new flat, the lettings manager at tWestminster Community Homes’ intermediate rent scheme reminded me that I could get free cash because I had successfully bought a shared ownership property after staying at the scheme.
The council gives you £2,000 a year if you are a tenant and saving for a shared ownership home.
This is to assist tenants with their move and to cover legal fees.
As long as you buy a shared ownership house after leaving the scheme, you will get this cash.
You can stay a maximum of five years in one of the council’s subsidised rented homes, and you could get up to £10,000 free cash in your pocket.
I lived there for two years, so got £4,000.
All I had to do was confirm to the lettings manager I had bought a shared ownership home, and the cash landed in my account a month or so later.
Because councils run their own intermediate rent schemes, you may not be offered the same deal as I did.
Again, it’s best to check in with your local council about the perks of the scheme that they are offering.
How did you save for it?
Thanks in part to the subsidised rent, I was able to tuck £400 away per month into my savings – £200 of which I put into Premium Bonds, and £200 into my Help to Buy ISA.
I also saved in other ways too.
I’m known as the guy who will always stick his hand up for overtime at work – on average I would pick up two extra shifts a month, giving me £500 extra.
I’d prefer to work overtime so I can treat myself more often, instead of living on a super tight budget.
I love the cinema – but I cut down the number of trips I was making.
Every month I was spending around £100 on tickets – I saved £75 per month by watching Netflix and Disney subscription services instead.
I also never pay full price on my shopping because I use cashback websites like Quidco.
I got an average of £50 per trip in cashback by booking my holidays through the site – I went on three holidays over the time I was saving for my deposit.
Bringing a packed lunch into work helped me save £200 per month as well.
I would be spending roughly £10 a day on lunch from Sainsbury’s – but I ditched these trips and made my own sandwiches.
How have you afforded to furnish it?
The £4,000 in cash I got from Westminster Community Homes went straight towards furnishing my new flat.
I bought wardrobes for the bedrooms, a bed, a mattress, curtains and blinds using this money.
It was great to get this money, as I had a flat but not a lot of spare cash to furnish it up.
What’s your advice for other first time buyers?
Do your research and see whether shared ownership homes are a good option for you – especially if you don’t have a lot of savings.
Look into whether there are any schemes councils are offering to help you save money.
Get in touch with your local council and see what options are available to you.
If you’re looking for shared ownership properties, Share to Buy is a great website to look at – as it lists developers and housing associations offering homes for sale.
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