Average rents in London hit a record high of £2,713 a month earlier this year, putting those trying to save up for a property deposit increasingly under pressure with their monthly budgets.
That is the reasoning behind Fairview New Homes’ relaunch of its Save to Buy arrangement, allowing first-time buyers the chance to put their rental payments towards a deposit, while living in their new home.
Executive assistant Eleanora D’Aietti, 34, who moved into a one-bedroom apartment in Epping Gate in June 2023, was one of the first to use the scheme.
She was able to complete on the property in November 2023 and estimates it’s saved her £15,000 in rent.
“A friend told me about Save to Buy as she knew I wanted to get on the property ladder, but it felt a long way away,” she says.
D’Aietti put down a one per cent deposit of £3,339 on an apartment that cost £339,000. She then paid around £1,500 a month for six months to make her deposit up to five per cent.
Save to Buy enables first-time buyers to move straight into their new home with an initial deposit of one per cent, effectively exchanging on the property at this point.
They then make up the rest of the 10 per cent deposit (previously five per cent) by paying fixed monthly payments, 100 per cent of which go towards their deposit.
On top of this, Fairview will also add five per cent towards the deposit, meaning when buyers complete, they have a total deposit of 15 per cent and need only borrow an 85 per cent mortgage.
Once legally completed, buyers own 100 per cent of the property and Fairview has no share.
As well as only needing a starting deposit of one per cent, the biggest advantage is that those on the scheme don’t need to pay out for rent while trying to save up for a deposit, meaning they can become owner-occupiers much quicker.
“I would have wasted thousands of pounds on rent in the last three years if it wasn’t for Save to Buy. Instead, I’ve invested in an asset and my future, which is a great feeling,” says D’Aietti.
“Without Save to Buy, I think I’d have had to have waited at least three more years to buy a home in Loughton, or compromise and buy somewhere else if I wanted to become a homeowner sooner.”
She also appreciates the stability that owning her own home brings. “It’s great as no one can say they need the apartment back or I’m going to raise the rent. I don’t have to worry about that.”
D’Aietti took out a 95 per cent fixed term mortgage and pays £1,759 a month in repayments. Buyers have a choice of two major mortgage lenders when they sign up to the scheme.
“The whole process isn’t as daunting as it seems, so don’t be afraid to take the plunge!” she says. “It has changed my life for the better and I couldn’t be happier with my new home.”
Now completion has taken place, it’s as if D’Aietti bought in the standard way and she is able to sell the property on the open market or rent it out should she wish.
She would recommend the scheme to other first-time buyers but reminds them [whatever property they buy] to also budget for on-going costs like service charges, which inevitably increase every year.
The service charges at Printmakers Yard, where the scheme is currently being offered, range from £1,428 - £1,983 per year.
To be eligible for Save to Buy, you need to be a first-time buyer, in full-time employment (for a minimum of three months), have the one per cent deposit and be qualified by a third-party financial advisor to confirm affordability and credit score. The property also needs to be your only residence.
A buyer can take up to two years to complete, but Fairview expects most to do this within 6-24 months.
It calculates the monthly payment based on local rents and a buyer’s personal finances but, if you can afford to pay more, you can agree with Fairview to complete quicker.
Should your situation change, you can speak to an adviser who will look at your individual circumstances and, if you don’t proceed with the purchase, your one per cent deposit will be refunded, however your monthly deposit payments will be treated as rent and not be returned to you.
“The current London rental market is significantly hindering would-be buyers from saving for a deposit,” says Chris Hood, Sales and Marketing Director at Fairview.
“We’ve taken it into our own hands to mitigate that challenge for those that would otherwise be well on their way to home ownership, by eliminating the rental cost all together and allowing buyers to move straight into their brand-new home while they save.”
Fairview has just reopened the Save to Buy scheme for a selected number of plots at its Printmakers Yard development in Brentford. You can register your interest here
