Last month, Rentplus published research we had commissioned which revealed the full impact of COVID-19 on aspiring homeowners and in particular, on our key workers. It showed three in 10 (29%) key workers say COVID-19 crisis has made home ownership less achievable and that nearly 70% of those living in Leeds would support initiatives which would provide extra support to help our key workers onto the housing ladder.
Our research found that over a third (38%) of all NHS and key workers say they have less money as a result of the pandemic, putting home ownership that bit further out of reach, especially when you consider that saving for a deposit (29%) tops the challenges for key workers when thinking about buying a home.
The problem has been made even worse with the pandemic pushing building societies to ask for even bigger deposits – 15% or 20% and some even talking about 40%. This is making it impossible for individuals and families on low incomes to raise a deposit, and Government schemes to help first time buyers, such as shared ownership and Help to Buy – have clearly fallen short of helping those it sets out to support.
It comes as no surprise to me that the people of Leeds would therefore get behind initiatives which provide extra support to help people onto the housing ladder, given the pure hard work and commitment that key workers have shown over this difficult year. Of those surveyed, 24% said the public sector should pay, 7% the private sector, and 51% said it should be a mix of private and public.
I believe there’s a real need to increase the use of creative approaches if we are to make any progress at real scale to give our valued key workers the opportunity to own their own home, and this is something the people of Leeds support.
And that is where Rentplus can help.
Rentplus is a route to home ownership that requires no upfront deposit. Our residents move in to a brand new home without having to pay a penny in deposit – thus removing the biggest barrier to homeownersip. Over 50% of our residents are key or essential workers and they have told us that they were not in a position to save even £10 a month, so raising a £30,000 deposit would have been impossible.
Our homes are managed by regulated housing association partners. Residents pay an affordable rent set by the council (usually 80% of the private rental market costs). They pay no repairs or maintenance for the period they rent. They can choose to rent for 5-20 years. The initial 5 years gives them a chance to repair their credit history and to start to save. Where we have had tenants in homes for nearly 5 years, over 90% are on target to transfer from being a renter to being a homeowner. When they are ready to buy, Rentplus will gift them a further 10% of the sale price towards their deposit.
I want to see families and working people given the chance to rent a property for between five and 20 years, to start to save, repair their credit rating and most importantly, to live in a community they want to be in and want to raise their family in.
That’s why I am working hard, talking to housing developers, to local housing associations and to councils across the region to ensure that Rentplus’ unique affordable rent-to-buy proposition is made available to those on lower or middle incomes, without savings.
If you are a developer, a registered provider or a local authority, you can contact Alasdair by emailing [email protected]
Notes
*https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/june2020
***https://www.ft.com/content/88d1274f-e414-4444-9bc7-d7c97c5cfb26
The research was conducted by Opinium Research between 28 August and 2 September among 2,000 UK adults and 500 NHS/key workers
He added:
“However it is an omission not to mention that there are existing successful models which assist people from social housing into home ownership without any recourse to public funds. For example 17% of our Rentplus tenants come directly from social housing and in some areas, this is as high as 50%.
“Complementary models such as affordable rent to buy exist and can be delivered alongside government schemes. Affordable rent to buy is part of the answer to the affordable housing crisis and the Government should recognise it as such.”
November 2020
You can read the Rentplus response to the Inquiry here
“Many of these people are keyworkers; our nurses, care assistants and supermarket workers who continue to serve on the frontline during this pandemic and who want the chance to own their own home.
“With eye-watering house prices and rising private rents, it is virtually impossible to save for a deposit, and with that the possibility of home ownership moves further away.
“That’s why we gift a 10% deposit to help overcome what is for some, an insurmountable hurdle.”
https://www.mortgageintroducer.com/zephyr-lowers-btl-rates/
Key workers, who already find it tough to get on the housing ladder despite shared ownership and similar schemes, are finding things even tougher with three in 10 (29%) of these who rent saying it’s become less achievable as a result of the global pandemic.
With house prices rising 3.4% over the year to June 2020*, mortgage lenders pulling their high LTV deals**, and the stamp duty holiday only serving those more affluent buyers***, key workers have been hit with a toxic triple whammy as they try to take their first step onto the housing ladder. Nurses have been hit particularly hard, as one of the groups left out of the recent pay rises announced by the government back in the summer.
The research also found that over a third (38%) of all NHS and key workers say they have less money as a result of the pandemic, putting home ownership that bit further out of reach.
Of the challenges NHS and key workers faced when thinking about purchasing a home, saving for a deposit topped the list (29%), with their salary not being high enough (28%) and homes in their area not being affordable (25%) also ranking high.
Over four fifths (86%) of those key workers who do not own their home would like to do so, with those currently renting having done so on average for seven years.
In order to address this challengers, three quarters (75%) of the general public surveyed would support initiatives which provide extra support, with 25% saying the public sector should pay, 9% the private sector, with half (53%) saying it should be a mix of private and public.
In response to the findings, Steve Collins, Rentplus Chief Executive Officer, said:
“Beyond the headlines of a “housing boom”, there lies a divided housing market, where those on lower incomes are increasingly shut out and struggling to get on the property ladder.”
“Many of these people are keyworkers; our nurses, care assistants and supermarket workers who continue to serve on the frontline during this pandemic and who want the chance to own their own home. With eye watering house prices and rising private rents, it is virtually impossible to save for a deposit, and with that the possibility of home ownership moves further away. That’s why we gift a 10 per cent deposit to help overcome what is for some, an insurmountable hurdle.
“Although proposed solutions to the UK’s housing problem have been piloted they have failed to gain real traction and, in some cases, made the situation worse. There is a real need to increase the use of creative approaches if we are to make any progress at real scale and give our valued keyworkers the opportunity to own their own home.”
Qualified NHS nurse, Nicole Richards, 27, from Northampton was one of the many key workers who found it impossible to save for a housing deposit, due to expensive private rented accommodation and essential outgoings.
Nevertheless, Nicole was finally able to circumvent the “deposit barrier” after moving into one of Rentplus’ unique homes in May 2017. She is now paying a reduced rent on a new build home and saving for a deposit to buy the property. In five years, Rentplus will also gift 10% of the sale price towards her deposit.
Rentplus’ unique affordable rent-to-buy proposition offers those on lower or middle incomes, without savings, the chance to rent a property for between five and 20 years. During this time, they can save towards a deposit, and build a good credit rating which will allow them to get a mortgage when they decide to buy. A majority of its tenants are key workers.
Commenting on her new home, Nicole said:
“I’d been renting for about six years and I have never been able to save as much as I am now. Rentplus is a fantastic opportunity to help people such as myself to save to purchase their first home and I am so grateful to find this opportunity”.
The research was conducted by Opinium Research between 28 August and 2 September among 2,000 UK adults and 500 NHS/key workers.
*https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/june2020
**https://www.mortgagesolutions.co.uk/news/2020/09/07/more-than-1000-high-ltv-mortgages-pulled-from-market-in-six-months-moneyfacts/
***https://www.ft.com/content/88d1274f-e414-4444-9bc7-d7c97c5cfb26
“The lower prices of First Homes will make home ownership more accessible but, significantly, the scheme will still require a deposit of £14,000 on average as a minimum – we know that for many key workers and families on lower incomes this is a virtually impossible ask.
“Affordable rent-to-buy buy schemes like Rentplus offer the prospect of home ownership without the worry of saving for a deposit. We have received legal advice recently which reconfirmed that Rentplus falls within both the term “affordable rented” and “rent to buy” of the National Planning Policy Framework definition.
“First Homes can undoubtedly play a role in helping people to become homeowners, but there must still be other routes to home ownership for those who First Homes will miss off, those for whom raising a sizeable enough deposit is still not achievable.”
Rentplus CEO Steve Collins
You can read the full report here
Priya joins Rentplus from Lovell Partnerships Ltd where she was Partnerships Manager: her successes included obtaining, maximising and securing s106 and grant funded affordable housing offers from Housing Associations.
She joins a growing team at Rentplus, including Area Managers across England. Her new role will be to introduce Rentplus and establish and strengthen relationships with Local Authorities, Housing Associations, Land Agents and other social housing stakeholders and deliver affordable rent to buy to families across the Midlands.
“I am delighted to join the Rentplus team and I am looking forward to working with a range of clients across the Midlands to expand affordable rent to buy into the region to give our key and essential workers, and other hard working but lower income people, the chance to move from being renters to homeowners,” Priya said.
Chief Executive, Steve Collins, has welcomed Priya’s appointment: “Rentplus believes that every family dreaming of owning their home should have the opportunity to do so.
“Priya brings a wealth of knowledge, experience and transferrable skills that will make turning renters into homeowners a reality for families across the Midlands.
“Rentplus has already provided affordable rent to buy homes for key and essential workers and other families in Northampton and across the south of England and we are looking to make homeownership a reality in every county in the country. “
Rentplus, the affordable rent to buy provider, has seen its pipeline increase by a third in the last six months as it looks to meet the growing demand for affordable housing. In a time when it has become clear that the UK needs to do more to look after our key workers, Rentplus has adapted its business model to support local authorities and ensure better provision of homes for key workers and others who struggle to get on the property ladder due to high deposits. This group makes up 57% of its affordable rent to buy tenants.
The company utilised the slow property market conditions earlier in the year brought on by lockdown to scale up its homes pipeline. Rentplus has had offers accepted by a range of property developers on additional units which were originally earmarked for private sales. The company is also in discussions with housing associations to help deliver additional units which do not required grant funding from Government. This helps address the issue the affordable housing sector has experienced as housing associations across the country look to reconsider their development pipelines to preserve cash and protect themselves against loss of income brought about by the coronavirus pandemic.
Rentplus has now had offers accepted or completed on nearly 1,200 units for its rent to buy portfolio, which will be offered to tenants on affordable rental agreements, giving them the opportunity to purchase in 5,10, 15 or 20 years. It has another 7,100+ units in its sights, including a significant number originally earmarked for private sales. The total Rentplus pipeline is now over 18,000 homes.
Rentplus’ model is centred on partnering with Housing Associations to find and secure suitable tenants from council waiting lists leases. Leases are long terms and the tenant has an opportunity to buy the property at 5,10, or 15 years. Paying affordable rent (discounted to 80% of comparable private rents locally) means that the tenant can immediately start saving towards their deposit to buy the home they are living in. At the point of purchase, Rentplus uniquely gifts the tenant a 10% cash sum towards their deposit, thus removing the largest barrier to home ownership
Steve Collins, Rentplus Chief Executive Officer said:
“During lockdown, at a time when housing associations thought they would have to halt the purchase of land and new-build homes, and housing developers were unable to realise sales, we saw an opportunity to take on further sites by adapting our business model. This has not only enabled us to accelerate the growth of our pipeline by over a third, but also enables us to ensure the provision of housing for key and front line workers – the very people who were keeping the country afloat during lockdown.”
Historically Rentplus only acquired properties from developers under the section 106 agreement. Over the last six months the company has agreed to acquire units on the free market from smaller property developers looking for ways to release returns from their developments.
Planning reform must not come at the expense of those on lower incomes, says Rentplus. Planning reform must not come at the expense of those on lower incomes, says Rentplus. Planning reform must not come at the expense of those on lower incomes, says Rentplus.