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Thu 11 Oct 2018

Step onto the property ladder

The high price of housing, the capital’s rising population and Brexit jitters are combining to shut first-time buyers out of the property market, according to Professor Tony Travers of the London School of Economics.

A slow-down in new homes completions is adding to young buyers’ woes, confirmed by a report from the Office of National Statistics, which shows a 10 per cent plunge in under-40s home ownership.

“London’s population was 6.6 million in the Eighties and is now near nine million, adding two Birminghams and a Leeds. Yet we are building homes at half the rate needed,” Travers says.

He adds that tighter migration policy post-Brexit could exclude foreign construction workers from the industry, further slowing housebuilding.

At the recent Conservative Party conference, Prime Minister Theresa May scrapped a cap on council borrowing to allow them to build more low-cost homes and suggested a levy could be imposed on foreign buyers purchasing property in the UK.

However, these policies alone won’t get young Londoners on the property ladder, say experts.

Many renters are now turning to online investment funds, relying on charitable housing schemes or sharing with strangers to boost their saving capacity in a bid to overcome their first hurdle to home ownership — the need for a hefty deposit.

Here are some new approaches.


Rose Jones, 32, has rented in London for the past nine years because she has never been able to afford to buy.

To bolster her savings she has invested with Bricklane, an online platform that buys and manages rental homes. “I liked the idea of investing in property to help me to save,” she says.

From £100:some investors in the Bricklaneonline rental home platform use profits to boost their deposit savings

The minimum investment is £100 but the typical investor sinks £3,000 into one of two property portfolios: a collection of rental flats in regional city centres such as Birmingham, Manchester and Leeds, or a London fund with lettings in popular or regeneration areas such as Clapham or Acton.

Investors have made 8.7 per cent from the regional fund and 10 per cent from London, through price appreciation and rental income.

Bricklane investors can sell their stake every two weeks at market value — provided there’s a willing buyer. Otherwise they have to wait for the fund to sell a property and free up cash.

One criticism is that Bricklane buys housing stock that could be made available to first-time buyers.

In response Simon Heawood, the company’s chief executive, says Bricklane acts as a responsible landlord providing good-quality rental homes.

How to invest in a Bricklane ISA
Here’s how a wannabe first-time buyer might invest in a Bricklane ISA to help amass a deposit:

  • Property in mind: a two-bedroom flat in Hackney costing £350,000
  • Typical deposit needed: 16 per cent, or £60,000
  • Savings already made: £10,000
  • Additional savings per month: £600

At present, says Bricklane boss Simon Heawood, these savings in a cash ISA would be eroded by inflation.

If the £10,000 is put into a Bricklane ISA, he says, the deposit total would be reached two to five years faster, based on the average house price increasing by four per cent a year.


“Increasing numbers of would-be buyers are looking at alternative ways to increase their deposit pots,” says Stuart Williams, director at investment company Thirlmere Deacon.

One method he suggests is to club together with friends to purchase a buy-to-let property in a high-growth area.

“They can sell after two or three years for a profit, increasing their deposit pot at a quicker rate than just saving,” he explains.

As long as the rental income covers the mortgage payment, of course.


The Westminster Home Ownership Accelerator Scheme, run by affordable housing charity Dolphin Living and the local council, has helped six households move from renting to buying over its three-year lifespan.

Working Londoners with a nest egg of £22,000 but a household income of less than £90,000 can rent one of 50 Dolphin Living flats at 65 per cent of the market rate for three years while saving.

Meanwhile, their deposit will be topped up by the council, accruing at the same pace as the average borough house price.

The top-up rate can be 7.5 per cent per year but won’t go lower than three per cent, even if house prices fall.

Over three years, savings can rise between £21,000 to £54,000 at which point Dolphin Living helps the tenant to buy a shared-ownership property in London.

How to save for a deposit for your first home

Next month the charity will launch its second accelerator scheme: 26 apartments in Westbourne Park Baptist Church which also includes the updated church, children’s library and community hall.

But there’s no “quick fix”, cautions Stuart Williams. Even the altruistic Dolphin Living initiative pushes the buyer into shared ownership rather than helping them to purchase outright.

Equally, the property investment funds and ISAs are pegged to the performance of the housing market which looks progressively unstable as Brexit looms.

“Think carefully about where you put your money if you are planning to use it towards a deposit,” cautions Paula Higgins, chief executive of the HomeOwners Alliance advice organisation.

“You need to be able to access it when the time is right to buy and not be dependent on what property prices are doing.”


Anyone with between £1,000 and £100,000 can buy a slice of luxury in central London with CapitalRise property investment company.

It’s free to join and members fund high-end developments at addresses such as Eaton Square in Belgravia, Grosvenor Square in Mayfair and Yeoman’s Row in Knightsbridge.

Ballet dancer-turned-personal trainer Anita North put £5,000 into CapitalRise in December 2016. Just 13 months later she was repaid £5,549 — a return of 11 per cent.

“As I’m self-employed my income can be irregular and I need to take hold of my financial future. I have become an active investor using different online platforms,” says the 27-year-old mother of two.

She and her husband are saving to buy a home in London or Hampshire. The average return is 10 per cent per year.

Over the past eight months £3 million has been repaid to investors, from high net worth individuals to more everyday customers, explains chief executive Uma Rajah.

However, the flats or townhouses must be sold before an investor can cash in, or they must find another party to buy their stake.

Savvy investment: Anita North with her husband and daughters Audrey and Allegra in their Putney rental home (Adrian Lourie)

Amber Hylton, 28, has worked in the music industry and the FinTech sector and is renting in south London.

“Although I’m employed full time, I don’t believe that anyone in my generation who wants financial freedom can afford not to diversify their investments,” she says.

“Leaving cash in the bank in this low-interest rate environment is just not viable.”

She has put £6,500 into CapitalRise and made returns of 10.5 per cent a year on the super-prime development Hyde Park Garden Mews.

Super-prime investment: Amber Hylton rejected low interest in the bank for 10.5 per cent with CapitalRise (Juliet Murphy)


If investing in a property scheme feels just a bit too risky for you, there is another novel way of boosting your savings for a deposit on your first home.

Clare Graham, 29, a retail manager, and her primary school teacher partner Behn Kiverago, 38, took a break from mainstream renting and moved into the former electricity board offices in Bethnal Green as property guardians — tenants who live communally and pay cheap rents as stewards of a disused building.

They paid £950 per month, which was £1,000 a month less than they had been paying for a one-bedroom flat in Kennington.

Securing their future: Behn Kiverago and Clare Graham became live-in property guardians, paying lower rent in order to save the deposit for their new home​ (S Saunders )

Within eight months they’d saved enough to put a deposit on a shared-ownership property in Margate, Kent.

“We did it because renting in London is so expensive and Bethnal Green was ideal for work,” says Clare, who found the property through Live-In Guardians.

“It’s fun and you meet people. There is an app called Arthur Online, to report any issues.”

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