Association to attract first time buyers with ‘no deposit, no mortgage’ plan
Gentoo bid to raise £50m for ownership scheme
Gentoo is hoping to raise £50 million from institutional investors to fund the roll-out of a new home buy scheme across the country.
The Sunderland-based housing association, which manages 38,000 homes, piloted its Gentoo Genie home purchase plan on six properties in May, with four of the properties being taken up. The scheme requires no deposit or mortgage, with buyers paying a £600 start-up fee for legal and administrative costs.
Applicants, whose incomes are assessed for eligibility, pay a monthly fee to a trust that holds the title deed, growing a stake in the property over 20 years.
The monthly fee is fixed for the first five years and can then be altered to allow the buyer to increase their equity share. The 20-year period can also be extended and buyers can purchase the whole property.
One of the pilots, for a three bedroom property in Sunderland, has an initial fee of £630 per month, £350 of which is spent on equity and the rest on rent.
After 20 years, if the buyer does not increase the share, they will own a 69 per cent stake in the property. Homeowners can opt out of the plan by selling the property back to the association or on the open market.
Gentoo is now in talks with institutional investors and housing associations, about forming a joint venture to roll out Genie to 500 properties across the country in February.
A Gentoo spokesperson said investors would make a return from the cashflow generated from buyers’ payments. Andrew Taylor, deputy chief executive of Gentoo, said: ‘Genie was developed with young professionals and families in mind, as our market research indicated that these groups were the most focused on homeownership as a means to secure their future.’
Gentoo is speaking to two landlords in London, as well as associations in Birmingham and the south west.
Marilyn Di Cara, director of sales and marketing at Moat and chair of a partnership of housing associations promoting shared ownership, said: ‘Anything that helps first time buyers is a good thing, but there are risks - what happens to the calculations of your equity share if market rents change rapidly over time?’
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