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Hire-purchase plan to help Londoners on to property ladder
Katharine Barney, Evening Standard03.03.09
HUNDREDS of London families will be helped onto the property ladder by a hire-purchase scheme which Mayor Boris Johnson is announcing today.
In the £42million plan for 500 flats, couples and families will pay rent at 80 per cent of the market value but should they choose to buy - which they are free to do any time - the amount of rent they have paid will be deducted from the total cost of the property.
The scheme coincides with a squeeze in mortgage lending and demands by high-street banks for at least a 20 per cent deposit - meaning that a buyer will need to find £40,000 before he or she can even think of making an offer on a typical first home within zone two costing £200,000.
Launching the First Steps scheme, Mr Johnson said: "London is leading the way in tackling this housing crisis as we begin the process of helping thousands of Londoners who have been left stranded for so long in both boom time and now during the downturn. The money we are investing today is also a major shot in the arm for London's development sector and the economy.
"As this rolls out, thousands of construction sector jobs will be saved but more importantly the sector will emerge strong to build and grow London when the recovery comes."
The homes are aimed at first-time buyers and will be available to those with an annual income of less than £72,000. Crucially, buyers do not have to be key workers.
The Mayor devised the scheme with the help of the Homes and Communities Agency which is focusing on five sites - the Aylesbury Estate in Southwark, the Heart of East Greenwich on the site of the former Greenwich District Hospital, the former StAndrew's Hospital in Tower Hamlets, the Woodberry Down site in Hackney, and the Holloway Road project in Islington.
The Mayor's housing director, Rick Blakeway, said: "This is a really fresh way of helping people get on the property ladder.
"It means people can try out a property first and the rent isn't dead money."
The agency's London Board also confirmed that it will immediately put another £93million into use at five stalled development sites.
This will see a further 1,500 units started over the next year, with the potential to build 6,000 more, of which more than half will be affordable housing.
Mr Blakeway said he expected the value of properties to stay in line with other homes but admitted there was no way of stopping the value increase.
Economic expert Tony Travers said: "The problem we have is that the only homes being built are social housing and there's a big gap in the market.
"This is a small but significant way of tackling that. It also goes part of the way to stopping the downward spiral of our construction industry."
Reader views (14)
A word of caution: if I move in today, pay rent for a year then buy, do I buy at the current deflated market price, or am I tied to what was last year's probably higher valuation? Who does the valuing of a house that is not actually on the market? I think Bojo means well here, but there are so many elephant traps in these part-ownership schemes; witness the 'shared-ownership' deals which give the occupant all the duties, and the Housing Association all the rights. And the 'key-worker' schemes, which are basically public-sector tied cottages , because if you move jobs out of the public sector (who else is a key worker, after all?), you lose your home!
- Mdj E10, london uk
Typical Tory. Lets give the rich a free flat that they can sublet at taxpayers expense. Does anyone in power have one idea how ordinary people live?.
- Michael Riley, London
why can they not bring back the proper old style right to buy with a decent discount and get another generation on the property ladder at affordable prices and at the same time re-invest the money plus more on property that can not sell on the open market? thousands of jobs and homes could be created in these downward spirraling times.after all boris johnston has a social housing budget of hundreds of millions.surely if the government can bail out the banks they can also bail out the ordinary person with personal debt and the right to a decent place to live.is that too much to ask?
- Owen Mulhall, london uk
Boris was my MP for many years and I have allways found him so helpful in many ways. This seems a good idea to me.I would be interested in reading comments other than those from ex pats. Instead of critisising perhaps someone can spare the time to come up with a better solution to London's housing problem.
- Keith Hedges, Wheatley. Oxford UK
Oh dear! Boris has done it again. He has made the announcement without waiting to see if the finance would be in place. It seems the powers that be think the emphasis should be placed on those people who have been waiting years on the housing list, and not for the £72k p.a. wannabees.
- Val Daniels, Mijas Costa, Spain
Why on earth should people with annual incomes of £72K get a leg-up on the housing ladder? Surely these homes which Boris describes as 'affordable', should be allocated to those on low incomes. Since when has £1,500 a week been a low income? His comment on TV this morning that social housing is being provided for the less well off is disparaging to say the least. Are they not good enough to be helped to own their own home? He's as good as saying social housing is good enough for them, but not for Londoners who are earning £72K p.a. I wonder who they will vote for.
- Val Daniels, Mijas Costa, Spain
A ladder to debt.
- John Smith, London , England
Yes, Melvyn Canvey Island, Thatcher did push through the sale of council houses but and here's the rub, Wilson whilst PM was told to do this but did not have the bottle, so it was not Thatchers baby , all she done was nick the idea from labour, as they do now with Tory polices.
- Terry, london
Can I ask a stupid question - what is wrong with saving to get the 20% deposit and then buying a flat - I have just done so after saving for 10 years - got a great little property and you know what - think I prove to the mortgage companies that I can manage my finances and haven't lived off credit. We are in this mess, because people who can't afford to buy - did and therefore can't pay back.
Proper investment and not stigmatising people who live in social housing is the way forward.
I do hope Bob and Jim live in SE1 and know the Aylesbury before making such comments.
- Jc, se1
Heres a better idea why not just rent out properties lets call it "Council Housing" that way people who have limited income or unsafe job security can have somewhere to live. It might also stop children who have lived in London all their lives having to leave London while those from outside get housed.
London homes for Londoners (birth certificate required!)
Boris should find out what happened to all the millions raised by council house sales forced through by Thatcher but with a proviso that money raised could not be used to build new housing. So where did all that money go?...
- Melvyn Windebank, Canvey Island, Essex
Jim,
The Aylesbury Estate is predominately populated with foreigners and is referred to locally as Little Lagos; as such only a few Londoners will actually benefit from this scheme!
- Mark, South-East London
Bob, you have not read the story, this is not one of Ken's schemes to reward only those he deemed worthy, this will include the vast majority of London's first time buyers - or is that what you mean by 'worthy'?
- Jim, London
Bob - He is not even helping Londoners. Plan is to help developers.
Who wants to buy the houses at inflated prices?
- Prasad, SIDCUP
So hold on, you're taking money from all Londoners to give to a select group of Londoners who you deem "worthy", whilst the rest of get nothing?
- Bob, Cheam
