Archive for category: Resident Partner

Research by Halifax says there were more first-time home buyers in 2016 than at any time since the start of the financial crisis, however that is well down on the numbers who were able to buy homes before 2007.

Joint Equity tracks first time buyer numbers because it is one of our primary sectors, the others are divorced and separated and retired renters, and we think the best way to understand what has happened to the market is to look at it graphically.

First Time Buyers 2001 to 2016

This graph shows the quite dramatic decline from the 2001 high but this does not tell the real story and that is the number of people, which grows each year, that are unable to live in their own home.

The average FTBs buying their own home from 1991 to 2000 was 507,233 every year.  As our population grows from 57.5M in 1991 to 65M in 2015 it is reasonable to assume the real number of First Time Buyers wanting to live in their own home almost rises.

Now we are not statisticians (fortunately) and we accept that there are many factors that could distort our assumptions but we are simple people here at Joint Equity and we

UK Population 1990 to 2015

look at things simply as probably this tells us the clearest story.

If the numbers of FTB’s in the early 1990’s was an average of 0.882% of the total population then if we assume the average number who want their own home is constant the number of FTBs in 2015 who want their own is 0.882% of 65M which is 573,390.

That means that in 2015 approximately 237,640 people wanted to buy their own home who could not, who were denied access to the home ownership market.

So where did they go as they must live somewhere after all? As we see from the media many go back home to Mum and Dad and the rest have to go into private or social rented. This is supported by the growth in the private rented sector over the last 20 years.

Types of home tenure

Extrapolating the fairly steady growth from 2005 to 2014 for 2015 and 2016 we now have 5,800,000 privately rented homes in England an increase of 2,700,000 since 2005.

So it’s a fair assumption that the decrease in owner occupation and increase in population has been accommodated in the private rental sector and that means the Buy to Let predominantly.

Returning to the decline in Fist Time Buyers we can assess the total number of people who would like to buy their own home and cannot as the difference between the average demand (570,000) and the take up of FTB homes in 2016 (335,750) which is 234,250 people who cannot buy their own home. If we do this for each year of the decline below the average demand, then we see 3,800,000 people have been unable to buy their own home since 2001. Which corresponds to the growth in Buy to Let.

People excluded from home ownership

Halifax also found the average first-time deposit more than doubled compared with 2007 to stand at more than £32,000 and 60% of first first-time buyers’ mortgages were for 25 years or longer, up from 36% a decade ago.

Other reports in 2016 have found the average age that people buy their own home is also rising and is now around 33.

With the constant attacks on Buy to Let landlords (see Another Blow to Buy to Let Investments here) the numbers of BtL properties available will be static (best case) or decline as the combination of increased stamp duty, lower tax allowances and higher mortgage criteria send investors elsewhere.

What we need is

• Another way for investors to participate in the UK residential property market that is simple, secure and pays reasonable returns.
• A financially viable alternative way for the people who want to live in their own home top do so.

Joint Equity shared home ownership scheme offers a solution to both home owners and investors.

Through Joint Equity Bonds investors can invest securely in UK residential assets at reasonable returns with attractive terminal bonuses.

The Joint Equity scheme offers a new alternative for aspiring home owners who cannot buy their own home because their income is too low or their deposit is too small to provide a reasonable mortgage for the home they want.

More information on Joint Equity www.jointequity.co.uk

Joint Equity offers a new way to buy a home and new opportunities for investors.

There are over 1 million people trapped in the rental market with all the wasted money and insecurity that entails when they would rather live in their own home.

There are also many investors falling out of love with Buy to Let who still want to invest in the UK residential property market. Now we have a solution that brings benefits to both these parties.

For 35 years I have been a builder and developer selling well designed flats and houses that I am very proud of and, very importantly, my buyers are happy to live in.

But I have always been aware that for every home I built 10+ people were disappointed being unable to get a mortgage or not being able to raise a high enough deposit. This meant they remained in rented accommodation.

In my time I have lived in rented houses and I hated both the insecurity of a Short Hold Tenancy and the restrictions and interference of the landlord and agent.

And if I hated it, so do many others.

I really do not want anyone who does not want to to have to live in the rented sector so my vision was to devise a way to help those who needed help to get a home of their own.

Big ask? You are right but I was convinced there was a way to help people move out of rented into home ownership.

In 2006 I devised, invented, designed (call it what you will) a new structure that combines traditional approaches to buying and investing in homes in a new way – Joint Equity Co-Ownership.

As my personal targets have always been the “shoot for the moon” types, I have set the goals for Joint Equity as

1. To help 25,000 people every year buy their own home and
2. To provide investors with higher returns and less risk than Buy to Let.

Now with Joint Equity Bonds we have the means to attract sufficient investors to make this happen. So now my goals are within our grasp.

We can easily see what our Resident Partners get from Joint Equity.

• Security,
• A home of their own,
• No landlord or letting agent
• A knowledgeable Partner who is on your side
• A 50% share of the growth in house prices.

But what do Joint Equity Bond investors get?

• Their money back at the end of the Bond.
• Secure investment paying a good rate of return which increases the longer they hold the investment. I call this an escalating rate of return and it seems innovative.
• A terminal bonus that is linked to the increase in property prices over the life of the Bond.
• No hassles associated with being a landlord or having agents always asking for more money. No voids, damage, late payments, problem tenants, increasing legislation, changing tax regimes. (I could go on but there really is none of the problems with the traditional Buy to Let process).

Investors also get the big win with Joint Equity – the feel good factor, the personal satisfaction that comes from knowing that they are helping people who without their investment could never have the security of living in their own home.

So is my vision to help 25,000 people a year move into their own homes and to deliver good returns to investors achievable? Absolutely.

I am a hard headed developer but I also know there are 1,000’s of who really do want to get involved and help while making good returns on their money.

It’s a market solution for a social need – the perfect definition for ethical investment.

Brad Bamfield

CEO & Founder Joint Equity

More information www.jointequity.co.uk

Now we need to take this survey with a big pinch of salt as this falls into the category “well they would say that wouldn’t they” but while the hard numbers may not be accurate the overall picture is is the same as we would expect. Unfortunately.

According to the Local Government Association even discounted starter homes could be out of reach for the majority of families across the country.

Its analysis found that prices will be out of reach for all people in need of affordable housing in 220 council areas (67%) and are out of reach for more than 90% of people in need of affordable housing in a further 80 (25%) council areas.

People in need of affordable housing are defined as those who would have to spend more than 30% of their household income to rent or buy a home.

For the average earner with a 5% deposit, a 20% discount would make it possible to borrow enough to buy a starter home in just 45% of all council areas in England.

First-time buyers will be able to buy 200,000 new starter homes over the next five years (that is 40,000 homes a year) at a minimum discount of 20% to the market value. However, there is a demand for over 350,000 new homes a year. Discounted prices will be capped at £450,000 in London and £250,000 elsewhere.

The 20% discounts for new buyers would be funded by exempting developers from paying Section 106 contributions towards affordable rented housing and Community Infrastructure Levy contributions. In its own analysis, the Government has suggested that should 100,000 starter homes be built through the planning system, between 56,000 and 71,000 social and affordable rented homes would not be built.

Although house-builders will be able to build and sell starter homes below the price caps, councils are concerned that this could be difficult for developers to achieve without compromising on quality, particularly in areas with higher house prices.

Cllr Peter Box, LGA Housing spokesman, said:

“The private sector has a key role to play in solving the housing shortage, but it cannot build the 230,000 needed each year alone. Councils need to be able to ensure genuine affordable homes continue to be built for rent and sale across the whole country for future generations and the millions of people stuck on waiting lists.”

Brad Bamfield, CEO Joint EQuity, said “We need to get new entrants into the affordable market and to somehow change Local Authorities perceptions that only Housing Associations can provide affordable homes. At the moment LA’s make it very difficult for private companies to enter the market and that disadvantages buyers who need help. Private firms with private funds can deliver many new homes but we need to change the tenure structure.”

Joint EQuity has been providing shared home ownership homes from private funding since 2007 and allows the buyer to find their own home.

The average price paid for a property through an affordable housing scheme is now £189,786 according to Halifax – just 4% (£7,750) lower than the £197,535 average for house purchases.

That is not a big saving is it?

However, the discount is different for London:- regionally, the highest average price paid by purchasers using affordable housing schemes is in London (£323,148), while the lowest is in the North (£147,437).

Nevertheless, the average value of a London property sold in a scheme is 33% lower than the average London regional price (£482,579).

House prices will rise by 6 per cent next year, according to the Royal Institution of Chartered Surveyors, but renters will lose out the most to inflation.

Tenants are set to see the cost of renting a home rise faster than their incomes and faster even than house price growth, RICS suggests rents could rise by five per cent a year.

Next year, house prices across the UK are expected to climb by an average of six per cent and will ‘outstrip any commensurate rise in household incomes’, RICS forecast.

Northern Ireland and London could see prices climb by 5 per cent next year, while the South East and West Midlands could see hikes of 7 per cent

The Office for Budget Responsibility had predicted that house prices would rise 5 per cent year-on-year until 2020.

This is because the surveyors expect demand for homes to continue to outstrip supply going into the new year.

Northern Ireland and London could see prices climb by 5 per cent, while the North West, Wales and Yorkshire and Humberside could see a rise of 6 per cent.

In the North East, house price growth is expected to be more modest than the national average next year, with prices rising 3 per cent, RICS said.

Other regions, including Scotland and the East Midlands are predicted to see house price growth of 4 per cent next year.

East Anglia prices are predicted to lead the way with an increase of 8 per cent next year, while the South East and West Midlands could see 7 per cent price hikes RICS said.

These are predictions based on factors such as lack of supply and the impact of government initiatives.

Should house prices continue to rise faster than average incomes, aspiring first-time buyers will find it even tougher to get on to the property ladder in the new year. The problem would be compounded if rental costs continue to rise at an even faster pace as tenants will have to spend a greater proportion of their incomes on housing costs and will have less to put away towards a deposit.

Simon Rubinsohn, RICS’s chief economist, said: ‘Housing has clearly leapt up the Government’s agenda, but despite the raft of initiatives announced over the past year, the lags involved in development mean that prices, and for that matter rents, are likely to rise further over the next 12 months.

‘Lack of stock will continue to be the principal driver of this trend but the likely persistence of cheap money will compound it for the time being.

‘Looking further out, there is some justification for taking a more optimistic view of new build with significant incentives being put in place to deliver starter homes.

‘While this may not on its own stem the upward trend in house prices, it could help to slow the rate of growth to something closer to the probable rise in household incomes.

‘Critically our principal concern with the measures announced by the Government is that they are overly focused on promoting home ownership at the expense of other tenures.

‘Discouraging Buy to Let could see private rents take even more of the strain if institutional investment doesn’t increase significantly, particularly given the likely reduced flows of social rent property going forward.’

Brad Bamfield, CEO of Joint Equity says “buying with Joint Equity means your deposit is lower at 5% of house price as a minimum and we use your ability to pay rent as the affordability factor. So if you have paid rent for 12 months or more we will support you up to £100 per month more than that rent.”

This means most people who can afford to rent can afford to buy with Joint Equity.