How a college is teaching the Government a thing or two about giving people a hand on to the property ladder
A new initiative to get young people into their first homes is set to eclipse Britain’s ailing Rent to Buy scheme.
The Government is seeking a private buyer for its £7.4bn Help to Buy loan book.
Under their scheme, first-time buyers were offered an equity loan of up to 20 per cent of the value of a newly built home … more in London.
The loans were interest-free for five years but after that borrowers face an increase of RPI plus 1 per cent each year.
Now, one of Britain’s new breed of ‘financial angels’ has backed an initiative by a leading construction industry college which could succeed where the Government is struggling.
Pioneering construction trainer Engineering Real Results, head office in Luton, fast-tracks plumbers, bricklayers, carpenters and electricians into well-paid jobs by training them in derelict properties across the UK.
And some of the renovated homes have now gone on sale twenty miles outside London.
Financial angel Dr Jan Telensky, from Bedfordshire, who has invested in business opportunities all over the world, said: “This is a business that cares, a college which uses state of the art training methods, including virtual reality, to fast-track builders of the future into the qualifications that give them the best chance of getting jobs.
“Now it is offering a straight-forward scheme which can actually leave first-time buyers with money in their pockets.”
The apartments in London Road, Luton, have risen from the ashes of a B&B which was razed to the ground a decade ago when the area had become so rundown it was known as the ‘doss-house of Luton’.
However, London Road is also home to upmarket Stockwood golf course and opulent Victorian and Edwardian homes, many built in the town’s hat making hey-day.
The homes are launched as the Government was searching for large investors to take over its Help to Buy loan book.
About 145,000 properties had been bought using the scheme since last September with the value of the loans standing at £7.4bn. The properties bought using the loans are valued at £35bn.
The Government has also been attacked by Avant Homes who say it needs to be dramatically reform the scheme to stop housebuilders from using it to boost profits.
Repayments too have come under fire over fears that Help to Buy mortgagees will face a squeeze on their finances as the first fees fall due.
The Resolution Foundation, a think-tank, said the fees presented “a ticking time bomb” for families because a one per cent rise in interest rates would also add more than £900 a year to the cost of the average mortgage.
And this is where Dr Telensky believes the ERR Rent to Buy initiative comes in to its own.
He said: “The rent to buy scheme we are offering simply makes it affordable for people.”
In the new scheme couples agree a sale price which is fixed for three years. They pay rent over 36 months which becomes the equivalent to a 20 per cent deposit of the agreed sale price.
Ricky Sharma, development director, said: “This is a solid way to help people who haven’t yet saved enough up for a deposit but want to own their home.
“It brings a new idea to affordable housing which is not shared ownership.”
The London road property, which used to be a massive B&B and burned down a decade ago has been turned in to ten one bed apartments. The property falls within Luton conservation area.
Ground Force star Tommy, who support the scheme, said: “The Government’s commitment to building hundreds of thousands of homes is threatened.
“Britain has plenty of young people ready to build a new life for their families by learning a trade but they come up against a brick wall when it comes to completing their skills-set – they need practical experience to prove they can do the job and they find it very difficult to get.
“That’s what happened here at London Road … people who wanted to learn a trade came along and did exactly that using start-of-the-art technology, fast-tracked the Government’s restrictions on practical training, got a top-notch qualification, renovated a good old building in a conservation area and built homes at affordable prices supported by a sympathetic rent to buy plan. Brilliant!”