Tuesday, 16 September 2014

L&Q launches rent to buy product

London and Quadrant housing association is to launch a rent-to-buy product which it says will help low-paid workers save for a deposit.

The association, which owns and manages 60,000 homes in London and the south east, will launch a product which offers homes at 65 per cent of market rent.

To be eligible, tenants have to be on the social housing waiting list and be employed in low paid work. They will be incentivised to pay their rent on time and maintain their home, and after five years they will be able to buy a stake in the property.

David Montague, chief executive of L&Q, speaking about the product at a debate at the British Academy in London, said: ‘We know mortgage availability is tough but for that reason we can use corporate finance to create rent to buy products to enable people to move into a home they love, to pay a discounted rent and to save for a deposit - all done off the back of a housing association’s balance sheet.’

The latest product is an adaptation of Up to You, a scheme piloted last year aimed at those who cannot get access to shared ownership schemes due to mortgage unavailability, offering homes at 80 per cent of market rent.

Readers' comments (13)

  • Kass, we await your comments...

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  • I think the statement that L&Q manages 7,000 homes in London and South East is nowhere near the truth.
    I am sure those with rent to buy real life experience will let us know how they feel about this.

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  • L&Q manages 60,000 homes, not 7,000, apologies for the error, which has now been corrected.

  • Good to see innovative intermediate housing products. The intermediate market is a huge one and people on the broad range of middle incomes need to be catered for. The issue of how much a family would need to save to raise a deposit to buy remains an issue. A modest family home in London still averages £200k. A 20% deposit on even a 25% share would be require a low income family to save almost £170 per month every month for 5 years (with more put aside for legals fees and associated purchase costs) and this all assumes values will not increase over the period they are saving. Is this really achievable? It would be interesting to know what rate of purchase is required for this product to stack up financially for the association.

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  • Another clunker. Approved by Labour, gathering dust on the shelf and as financially coherent as a gerbil taking out a life insurance policy.

    The CPS should be called in on these products.

    Bring back RTB, and extend it to HAs.

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  • RTB is the largest single disaster to hit social housing in the last 30 years. We need a million extra social homes, where have they all gone?

    Oh yes, we sold them off on the cheap, didn't replace them and many of the new owners do not have the means to maintain them, meaning on many estates the social stock has benifited from the decent homes programme and the privately owned ones are falling into disrepair.

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  • Sidney Webb

    Whoeveryouare and are you the same anonymous as the previous anonymous?
    I think you wil find that a large proportion of the privately owned, falling into disrepair, family sized homes on the former social housing estates are privately rented. For instance over 60% of the homes brought under RTB in Westminster are now owned by someone other than the original tenant.
    L&Q, to quote the great post-porterist slogan, 'every little helps'. If the scheme enables people to avoid homelessness and exploitation at the hands of Dame Shirley's greatest pals, then it is worth it as a stop gap until sanity returns and social housing is built on a scale to stabilise house prices and rent values, as well as ensure that the waiting list is small.

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  • PSR: Are you seriously advocating RTB as a stop gap measure?

    Major point: Those of you who live in London, life exisits outside the M25!!!! Debates on this site do not take into account that london accounts for roughly 13% of the population, therfore MOSTpeople, housing etc is OUTSIDE LONDON

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  • Actually, I think 60% of all original rtb leaseholders are still living in the homes they bought.

    Presumably, they would still be renting if they hadn't bought and therefore the idea that this stock has been taken out of use - or stolen, as anonymous has it - is patently nonsense.

    Anonymouse's second criticism that it was bought on the cheap is also a bit of sub-Marxian nonsense. RTB leaseholders got a discount in relationship to the number of years of their tenancy. They had probably paid for it many times over by the time they bought it and then some.

    I could tell you that RTB leaseholders have done a great deal socially to end the monopoly of those Stalinist slabs of disaster, the monotenure estate, but why bother. Much too subtle for our boy.

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  • Sidney Webb

    Not a support for RTB but a pragmatic recognition that, even if only a stop gap solution, the scheme is better than homelessness.

    The funding for the building of the L&Q properties will be on the basis of being towards ownership so to use for other means would involve restructuring the cost.

    Yes, there are a lot of people living outside of London who can not afford any available housing option within the city, that is in part a symptom of what is wrong. Worse still is it is not much easier to afford housing outside of London, without leaving the UK.

    Solutions that work in London will work elsewhere too. Boris's grand idea to extend the LTS zones into the home counties would also help by reducing travelling costs for the longer distance commuter.

    It may sound socialist to suggest, but unless there is a holistic approach - housing - transport - healthcare - social wage - investment - then there will be failure. If our righter than right London Mayor can realise this then it must be within the wit of IH commentators.

    MR - Westminster's own sats is that 60% of leases have been assigned. The point is that without RTB those wishing to own would have purchased property purpose built for ownership, leaving the stock purpose built for rent for those requiring it. This turnover prior to RTB meant that when children became adults they had a starting point in the socially rented sector; people on low wages had an affordable and secure homes; and business had a contented and local workforce. RTB effectively removed all useful family sized homes from being available for social rent, which is why there are now waiting lists so long that they may as well be for a graveyard plot instead. A great example of this is Fords at Dagenham where workers walked to work or took a short bus ride. After Thatcher had her way Fords had a stomping great car park for all the employees now travelling an average of 25 miles each way to get to work and expecting wages to reflect the extra cost and time. Housing is crucial to the economy - getting it wrong destroys enterprise.

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  • Progressive Solutions Required. You begin with a moniker of profound New Labour euphemism and the logic doesn't get much better.

    Anyhow, where's ILAG, when you need him. He just might point out that the arrival of 3m immigrants on these shores in the last 13 years might have had something to do with the supply of social housing as it has with every other public service.

    But hey ho someone's who appears to know RTB stats for one London borough off by heart just happened to miss the really big one.

    Tell me, if you're watching television and an elephant turns up will it not get a mention when you tell us what happened the following morning?

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