A brighter future

MATILDA BATTERSBY reports on some of the most innovative schemes to help Key Workers secure homes.

Mortgages are calculated on income multiples, which means you can typically borrow four times your annual salary.

This may make it harder for Key Workers to afford homes, even if you have saved a deposit.

Certain lenders, like Teachers Building Society or Tembo, offer mortgages specific to Key Workers, but there aren’t as many options as you might hope.

“High street mortgage lenders don’t target Key Workers because they don’t need to and because their rates are so competitive. If you need to borrow more and you’re a Key Worker, look at building societies,” says Nicholas Mendes from mortgage adviser John Charcol.

“Building societies can be more creative with their criteria than a high street bank. Kensington Building Society, for example, has Hero Mortgages offering higher income multiples to police officers, firefighters, NHS staff, teachers and members of the Armed Forces. Being able to borrow five times your salary rather than four can make a big difference. Public sector salaries tend to go up, which gives these lenders confidence. The only downside is the rate of interest is higher, so you pay more for your loan over the long term.”

Single family housing

Housing security is not only about homeownership. According to the English Housing Survey, 38% of private renters have no expectation of being able to buy in future. Build-to-Rent (where developers build entire communities designed for long-term rent rather than purchase) are projected to increase five-fold over the next decade to 380,000, according to the British Property Federation.

Single Family Housing is a new build-to-rent model which might suit Key Workers. It offers deposit-free, pet-friendly rentals on single plots (so in the form of houses, rather than flats).

The developments are in suburban areas often on the outskirts of towns or in rural locations. Contracts can be up to five years. The Single Family Housing market in the UK has attracted £2.8bn in investment in the last 12 months. There are currently 9,400 homes up and running, with a further 11,900 in the pipeline.

“The single family housing proposition focuses on great lifestyle with great service. We believe this offers people more than bricks and mortar and genuine pride of place for the long-term,” says Johnny Caddick, chief executive at Moda Living, one of the biggest players in the single family housing space.

Rent to buy

Another barrier to homeownership is not being able to save for a deposit. HomeNow is a private landlord which lets tenants choose their homes and earn equity from them over five years.

“Renting has become a trap, making it impossible for people to save for a deposit. We provide homes people need and give them the opportunity to earn capital. If they look after the home or do work to it, the value goes up. We want to empower people to make their homes their own. Obviously, if they need repairs we do them, but the cost of that gets taken from their equity share. So it’s up to them,” says HomeNow founder Jonathan Potter.

“Residents feel like homeowners and will hopefully one day own the property themselves. After five years they can use the equity they’ve earned as a deposit to get a mortgage and buy the home from us. They still receive the equity if they decide not to buy it.”

HomeNow is three years old and currently has 30 properties across Kent, Surrey, Essex and the Midlands. It differs from the government’s Rent to Buy (only available in England) which offers a 20% discount on market rental rates.

Cashback from developers

Some of the larger housing developers offer deposit contributions to Key Workers. Barratt Homes, for example, offers buyers of their new-builds £1,000 towards a deposit for every £20,000 spent. The scheme is “a thank you for the support provided to our communities” by NHS staff, teachers, police, firefighters, the prison service and other Key Workers (we suggest you check the eligibility small print). A Key Worker buying a £325,000 home would get £16,250 towards their deposit.

Taylor Wimpey also offers Key Workers a discount of up to £15,000 off the price of a new home. In both cases, terms and conditions apply. Do get in touch with them to find out more.