Give the people what they want

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Key workers prefer using low-cost home ownership schemes to renting, says Steve Walker – just look how popular they are

Government-sponsored home ownership schemes can provide affordable housing to public sector workers who cannot afford London prices – the level of support from people who use them proves it.

Keys to the Capital is a partnership of four housing associations (Boleyn and Forest, Metropolitan Home Ownership, Notting Hill Ownership and Tower Homes). It got a £115m grant from the starter home initiative, the largest single allocation under the scheme.

The partnership will help more than 3400 key workers, 155 teachers, 1617 NHS staff, 528 police staff and 118 others buy their own homes during the next two years.

Successful applicants get up to 40% of the purchase price of their chosen property as a loan (up to a maximum of £35,000), leaving them to fund the balance through a normal mortgage. The properties cost between £80,000 and £160,000. They are not required to pay back the loan until they sell. The scheme is regulated and part-funded by the Housing Corporation and is in big demand among those eligible. Some 8000 people have applied and 400 have already bought or are at an advanced stage.

Securing the support of all 32 London boroughs, the Metropolitan and City of London police forces, and the Association of London Government was key to the scheme's success. Engaging an even larger number of stakeholders – 32 education and housing departments, hundreds of schools, all police stations, as well as the NHS and all its trusts – was a mammoth task, started last autumn.

How it works
The scheme's partners have established low-cost home ownership programmes, so all of the processes we employ can be plugged in to deal with SHI. Additional staff had been recruited even before the announcement of SHI. All four RSLs are using Towers' very sophisticated IT database, which helps to coordinate management information.

SHI has been fitted into our normal operations without major problems. We had a long lead-in period, which helped.

The bulk of our time is spent helping key workers find the right property and deal with vendors and solicitors. The application stage is well-rehearsed and therefore simple. We work with estate agents to find the homes.

Most of the time, property isn't difficult to find, but it can be in short supply in west London and a couple of other boroughs. About half our buyers find property near where they already live, but if they live in price hotspots they have to buy in the next borough or slightly further afield.

The scheme uses more than 40 different eligibility criteria including borough and profession. Its partners zoned themselves locally to ensure maximum local delivery, focusing on the highest priority cases first.

The service was brilliant and there were no obstacles. I had a clear direction on what to do next christopher nartey

Marketing was done locally, with minimum fanfare. Keys to the Capital was aware of the problems of running a programme with limited funding, and as part of the London Home Ownership Group – the group of 18 low-cost home ownership registered social landlords active in London – it knows the extent of demand.

The scheme targeted its marketing mainly at social sector tenants. Some 122,000 enquiries were received last year, resulting in 35,000 eligible applicants, none of whom could afford to buy without help – and that's just part of the overall demand in London.

Detractors of the initiative argue that equity purchases push prices up. But the scheme will account for less than 2% of all purchases in London over the next two years. And this argument is not used by the detractors when RSLs buy up street property.

Herein lies an issue. The rented housing movement is eagerly awaiting an announcement of a challenge fund to produce key worker homes for rent. It is clear there is virtually no data to support the demand and aspirations of key workers for what will need to be sub-market renting.

Just who has the information that proves key workers need or want rented options? Does anyone have the household composition and financial data?

No doubt there are many key workers who would like to pay low rents. But these are generally new recruits who are more than likely to move on promptly. Ask employers where their main priorities lie and they will opt for retention, not surprisingly.

KtC's 8000-strong database shows key workers want to buy, not rent. Most are prioritised by employers for retention.

So there we have it. The only data available proves key workers and employers want ownership. And housing professionals who say that ownership under the scheme is a drop in the ocean and is driving prices up want housing for rent.

Starter home stats

First announced in the government’s housing green paper in April 2000, the aim of the initiative was to help around 10,000 key workers, particularly nurses, teachers and police. It would allow them to buy their homes in areas where high prices would otherwise prevent them from living in or near the communities they serve. Under the scheme, owners would have shared ownership of their properties, so that a key worker could buy an affordable share, such as a quarter or half of the value of the property. Rent is then paid on the share owned by the manager of the starter home scheme. Under the initiatives, different schemes operate in different areas and the government made £250m available between 2001 and 2004. Last year £230m was allocated to help 8000 key workers buy their first homes in areas where high house prices are affecting recruitment and retention. The remaining £20m was allocated to schemes through a bidding process in 2002, providing £10,000 interest-free loans to 2000 key workers to buy their first homes in high-cost areas outside London.

The average Keys to the Capital homebuyer …

… is 30 years old
… has a household income of £27,097 and £5647 in savings
… buys a house for £121,450 with a loan from Keys to the Capital of £28,600

‘Sharing was driving me crazy’

Catherine Pearce (above) and Nigel Lane are nurses at St Mary’s Hospital in Paddington, west London, and Chelsea and Westminster Hospital in Fulham, south-west London. They were accepted on the Key Homebuy scheme in March and moved into a new home in July. After living in shared accommodation for four years, they had decided it was time to stop paying off their landlord’s mortgage and start paying off their own – and living in shared accommodation was “driving me crazy”, says Pearce. She found out about the Key Homebuy scheme for NHS workers through an open day at St Mary’s Hospital. After registering with Notting Hill Housing Organisation, Pearce and Lane received an equity loan to help buy their own home. They researched affordable areas, registered with local estate agents and found a Victorian-style house in south London, close to shops, a five-minute walk from the station – and with the big bath that Pearce had always wanted. They are also relieved to have put a foot on the property ladder and that the money they are now paying monthly is paying off their own mortgage rather than someone else’s.

‘I feel safe in my new home’

Diana Vince has been a teacher for more than 10 years and has taught all over the world. For the past three years she’s being working in Kingston, Surrey, teaching children with special needs. The birth of her son Harry prompted a drastic search for a new home. She had previously being renting a room in a shared house at £350 per month. “I couldn’t believe how high the property prices were,” says Vince. “It got to the stage where I was seriously thinking about leaving London because all I could afford was a studio. I know lots of my colleagues at school are in the same boat.” She got information on Key Homebuy from Tower Homes. After being accepted on to the scheme, Vince went out on the open market and found the perfect home for her and Harry. “It’s an end-of-terrace, two-up, two-down house in Morden, on the outskirts of south-west London, and as soon as I saw it I just knew it was the one,” she says. “It felt safe and had a garden – perfect for my boy to grow up in. “The mortgage and the bills come to £900 a month, which is pretty much what I’d be paying for rent alone if I had a two-bedroom place. “I wouldn’t have been able to afford it without Key Homebuy. We need more schemes like this.”

‘Owning a property has given me security and space for my son to play in’

London primary school teacher Christopher Nartey needed more room for his family, but couldn’t afford to buy a home of his own at London prices – until he discovered Key Homebuy, the low-cost home ownership initiative from Keys to the Capital. Now the Narteys are happily settled in a home of their own. It’s a three-bedroom semi-detached house in Redbridge, north-east London, with a garden and parking. The Narteys’ new home is a far cry from the family’s old home in a tower block, which they rented for more than 10 years. “I really wanted a house instead of a flat, as I especially needed more space for my son to play in,” says Nartey. “I have moved to an area of my choice. Without this scheme I couldn’t have raised a deposit to purchase the type of property I have at the price. “Between them, the government and Keys to the Capital have addressed a problem and have given me a feeling of security. Owning a property has given me security I wouldn’t have in renting.” He heard about Key Homebuy from the school where he works. Keys to the Capital circulated information to all teachers through the London Education Authority. “I read about Key Homebuy in an LEA bulletin in the staff room and contacted Metropolitan Home Ownership directly,” says Nartey. “My application was acknowledged within a week and then I was called in for an interview. I was apprehensive before the interview, but once it was over, I had a clear direction as to what had to be done next and that the scheme could work for me. All the assurances were given to me at the interview. At no stage did I feel stressed or feel that I couldn’t speak to Metropolitan regarding any queries or problems I had. “The service was brilliant and there were no obstacles. I received all the information as and when I needed it each time I called.” The Narteys’ new home had a full market value of £160,000. This was reduced by £26,000 thanks to the Key Homebuy loan. Nartey says: “Without Key Homebuy I would have had to move further outside London to purchase a property of the same standard, which would have increased my travelling time to school in east London. The scheme has worked for me and I am happy to recommend it, particularly for newly qualified teachers who stand to get the maximum loan offered.”