What if the rent you paid could be saved towards your deposit instead? New homes developer Fairview has launched a scheme that does exactly that.
- A new Save to Buy scheme has launched, enabling first-time buyers to move into the home they plan to buy before they have completed on the purchase
- They then pay ‘rent’ at a fixed cost, with all of the money going towards their deposit
- The scheme, launched by Fairview New Homes, is currently available in London and Essex, but is set to be rolled out to other developments later this year
A new scheme has been launched for first-time buyers under which all money they pay in rent is put towards a deposit for their home.
The Save to Buy initiative enables first-time buyers to move into their home and pay ‘rent’ at a fixed cost for between six months and two years.
But instead of the money going into the pocket of a landlord, it is set aside until they have saved a big enough deposit to qualify for a mortgage on the property.
The scheme, offered by housebuilder Fairview New Homes, is currently running at two of its developments: New Hayes in West London, and Epping Gate in Loughton, Essex.
However, homes at other developments are expected to be added to the scheme later this year.
Christopher Hood, sales and marketing director at Fairview, said: “We’re bringing forward the opportunity to own a home for our customers.
“Those who thought home ownership was out of reach, because of the rental trap they found themselves in, can finally have the breathing space to save.”
How does Save to Buy work?
People who want to buy one of the Save to Buy homes must have already saved a deposit equivalent to 1% of the property’s value.
They hand this over to Fairview when they first exchange contracts and move into their home.
They then pay ‘rent’ at a fixed monthly cost, based on their own finances and average local rents, with 100% of the money going towards their deposit.
Buyers typically have between six to 12 months to save their deposit, but the scheme can run for up to two years if they need longer.
They can also top up their monthly payments to reach their goal sooner.
When they are within one month of having saved the required deposit, they submit a mortgage application to a lender to buy the property.
Once they have legally completed, they own the property, just as they would if they had bought it on the open market.
Who can use Save to Buy?
The scheme is designed to help people who would not otherwise be able to buy a home immediately.
To use it, you must also be a first-time buyer, be employed and the property must be your only residence.
If you think this applies to you, Fairview suggests talking to one of its sales representatives.
Those wanting to take part in the scheme will need to be assessed by a financial advisor, who will set out the income and deposit they require. They will also conduct a credit check to make sure you are eligible.
Homes available through the scheme are offered on a first come, first served basis, with the initiative due to close to new applicants in December 2023.
What other help is available to first-time buyers?
While Save to Buy is offered by a housebuilder, there are a number of government schemes available to help people get on to the property ladder.
Shared Ownership enables people to buy a share in a property and pay rent on the rest.
First Homes enables first-time buyers, key workers and local people to purchase a home at a 30% discount to its market price.
The Mortgage Guarantee Scheme, recently extended until 31 December 2023, enables both first-time buyers and home-movers to purchase a property with just a 5% deposit, with the government guaranteeing the portion of the loan over 80%.
First-time buyers saving for a deposit can also use the Lifetime ISA, under which they can save £4,000 a year. The government then adds a 25% bonus – up to a maximum of £1,000 annually. The money must be used to either purchase a first home or for retirement.
The government has also increased the threshold at which stamp duty kicks in for first-time buyers from £300,000 to £425,000 on homes costing up to £625,000 until April 2025.