A company says it’s gathering £500m in funding to purchase properties for a “gradual home ownership” scheme - a variation on shared ownership - aimed at first time buyers.
Wayhome states that its first clients are moving in next month, under a scheme where they can buy a home six to eight times the size of their household income - generally much more than is often available via a mainstream mortgage.
Wayhome demands a deposit worth at least five per cent of the purchase price. Buyers choose a home that has already been bought by Wayhome in cash - using investors’ funds - with the buyer acquiring the proportion they can afford, and then paying rent on the rest.
As with conventional shared ownership, buyers can ‘staircase’ increasing shares of the home up to a maximum 40 per cent - but they cannot own more than that proportion.
The firm says: “Staircasing is fee-free, and as customers don’t have a mortgage, they avoid the time, cost, and inconvenience of altering it each time as they would with Shared Ownership. Customers are encouraged to choose a home which has a rental payment level which works for them, typically at less than a third of their income; this ensures they aren’t priced out of staircasing if they choose to increase their stake in their home.”
Buyers must have an income of £30,000 - very slightly above the UK average individual earnings according to government data - and are subject to an application process.
Wayhome says its properties will be “usually priced between £200,000 and £500,000, are in good structural condition with no building work needed, have between two and five bedrooms with well sized rooms, and are situated in desirable areas.”
Wayhome describes itself as “a professional buyer” handling the agents, conveyancers, surveyors and all other elements of the purchase.
The firm claims its selection and due diligence process reduces the risk of a customer overpaying or ending up in a home where the value might be impacted by structural problems or issues in the surrounding area.
Providing buyers pay their rent and, in the words of the company, “look after their home” they will always have security of tenure – only they choose if or when to sell their home.
The scheme is operating in 41 locations across 29 counties of England; there will be no restrictions on buyers decorating or keeping pets.
Chief executive Nigel Purves says: “Because lenders only offer loans based on low income multipliers, even those who have saved a significant deposit are often prevented from borrowing enough to buy the type of home that they can comfortably afford to rent.
“Our Gradual Homeownership scheme is a new route onto the housing ladder, one which satisfies our customers’ homeowning ambitions, while treating them fairly. Gradual Homeownership allows our customers to move into a bigger, better home. But it also means they can stay as long as they choose, decorate, and still share the maintenance costs fairly with our funding partners.”
He claims more than 40,000 people who have so far registered with his company are key workers.
“This initial launch is the first step towards a new world of possibilities for reluctant renters. There is so much more to come from us as we work to realise our mission of reinventing homeownership” he adds.