Monthly outgoings for 25% of a property costs slightly less than comparable rental apartment
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Being a tenant in London can feel like you’re on a treadmill that it’s impossible to get off.
You work hard just to stay in the same place, with money simply disappearing from your account each month.
For that, you get a roof over your head and a property maintained, but seldom improved.
Rent’s expensive too, making saving cash for a deposit challenging at the best of times.
It’s a precarious situation, with rent rises and landlords selling up a constant reminder that a rapid house move may always be in the pipeline, with comparatively little notice.
Without capital or the means to build it up, the dream of home ownership can easily seem just that, a fantasy.
There is, however, another way. Affordable housing providers are increasingly holding up shared ownership deals as a mirror to renting.
Buyers can purchase 25% or more of a property with a mortgage while paying a capped rent on the remainder.
That typically means a much lower deposit than buying outright, plus lower monthly outgoings than comparable properties up for rent.
“It’s the biggest selling point,” said Kate McLure, regional sales manager for south London at London Square.
“As a developer that’s all about creating communities, it was quite apparent to us that there were a large number of people in the capital who want to purchase a property but aren’t able to get on the ladder.
“Your average Londoner who works in the city often isn’t able to buy on the open market.
“That’s why we set up Square Roots as an accredited affordable housing provider, so we could offer shared ownership to those people.
“The products that we’re building are similar in terms of specification – really this is about opening up opportunities for people to get access to these homes.”
Square Roots Lewisham recently launched, a scheme of 141 apartments with one, two and three-bedroom homes available on a shared ownership basis.
Prices start at £106,250 for a 25% share in a one-bed with a full market value of £425,000.
The scheme is located within walking distance of both rail and DLR services at Lewisham station beside the River Ravensbourne.
“The products we’re building at Square Roots are similar in specification to those we’re selling through London Square,” said Kate.
“Square Roots is really about opening up opportunities for people to be able to purchase these homes.
“The aim is that they can then staircase their share in the property until they own the whole thing.
“What we find is that a lot of people come to us who are renting privately in the surrounding areas and are paying more every month than they would on a mortgage payment and rent combined through shared ownership.”
THE MATHS
To illustrate that point, we took a deep dive into the figures to see how the entry level one-bed at Square Roots Lewisham stacks up against a similar flat available for rent in the area.
Using Square Roots’ affordability calculator, buyers of the £425,000 one-bed can expect a monthly cost of £1,531.
That figure includes a mortgage payment of £658 based on a 25 year term with a 5% deposit of £5,313.
Then there’s £730 of rent, payable on the 75% owned by Square Roots at a rate of 2.75% of its value.
The remainder – £143 – is the estimated service charge for the 551sq ft property, at £3.13 per sq ft.
In contrast, a slightly smaller rental flat (538sq ft) at a similar distance from the station costs £1,575 per month to rent.
“The other thing you get with shared ownership, which is really quite different to private rent, is security,” said Kate.
“It’s not like being a tenant. You don’t have to ask your landlord for permission to decorate or be worried about not getting your deposit back if you put picture hooks in the walls.
“It’s your property – you can do what you want with it, even though you’re sharing the ownership with the housing provider.
“You have that stability in knowing you won’t have to move and it works out as more affordable than renting.
“At Square Roots Lewisham, we’ve been very mindful not to build too many amenities into the scheme that would potentially make the service charge too expensive for people buying here.
“It’s right next to Lewisham town centre, so there are plenty of gyms, services, shops, restaurants and bars for buyers to enjoy.
“It’s a responsibility for us to attract as wide a customer base as possible and we don’t want to price people out.
“We want buyers to have the choice about what to spend their money on after they have moved in, rather than making assumptions about what they want.”
IN FOCUS The entry-level one-bed apartment at Square Roots Lewisham comes with a fully-fitted kitchen, balcony, open-plan living area and built-in storage in the bedroom. Here are a few quick fire facts: - Total size: 551sq ft - Leasehold term: 990 years - Time to Canary Wharf: 18 minutes (from station) - Total value: £425,000 l - Estimated monthly cost: £1,531 - Time to cycle to Greenwich Park: 12 minutes - Train travel to Cannon Street: 20 minutes
With parent company London Square’s name an homage to the communal outdoor spaces in the older parts of the city, Square Roots offers a communal roof garden on the fifth floor of its Lewisham scheme.
As an ongoing shared ownership partner with buyers, it will also host a customer community committee so residents will have a voice in how things are run on a long-term basis.
“It’s very much a collaborative effort,” said Kate.
“People will have a say and that say matters. I think shared ownership still needs demystifying to some extent.
“The process can seem overwhelming to first-time buyers, so I would always invite them to come and talk to us.
“We can then put them in touch with independent financial advisers who can help them to see what they can afford.”
Find our more about Square Roots Lewisham here
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- Jon Massey is co-founder and editorial director of Wharf Life and writes about a wide range of subjects in Canary Wharf, Docklands and east London - contact via jon.massey@wharf-life.com
