While the UK is an amazing place to move to for migrants, it is also one of the world’s most expensive countries to live in as far as housing costs are concerned. With social housing being practically non-existent (due to shortage of supply and government failures to deliver new social housing stock), the vast majority of migrants are going to need to find alternative routes to gaining affordable housing during their stay in the UK. In the sections below, we have looked at a few of the schemes available in the UK which offer the opportunity to get on the housing ladder for those who may need a little help.
Help To Buy Scheme
The Help to Buy scheme was launched to help first-time buyers get a foot on the property ladder. Due to the steep, almost continual rise in house prices and the lack of mortgage availability to those with low deposits, the Help to Buy scheme was devised as a clever way to help bridge the gap for those stuck in the middle. In essence, Help to Buy is a guaranteed loan scheme offered by the British government, which works in conjunction with several high street mortgage lenders to help ensure that you can meet their mortgage deposit criteria. The scheme also helps applicants to access lower interest rate mortgages due to the bank’s reduced exposure to risk.
The scheme has been something of a success, and it has helped many who are struggling to get on the property ladder. The recession of 2008 has encouraged mortgage lenders to be stricter with their lending criteria, which has lead to a significant absence of the 100% mortgages that used to help those without deposits to get a foothold on the housing ladder. The Help to Buy scheme has helped many individuals get mortgages at competitive rates that they may not have been able to previously access because of the stricter lending rules that are now in place. One of the downsides of the Help to Buy scheme, at least for migrants, is that you need to be a UK resident to be able to qualify for the scheme. This is fine for those who have come from the European Union or those who have Indefinite Leave to Remain, but for those in the UK on a visa, Help to Buy is not an option.
Another option for those looking to get a foothold on the property ladder is to use the Shared Ownership scheme. Shared Ownership allows those who cannot afford to buy 100% of the property the chance to buy a smaller percentage and pay rent on the section of the property that they do not own. While allowing buyers to get on the housing ladder for smaller percentages, the scheme also allows buyers to “staircase” (buy a larger share of the property at a later date) when perhaps their financial situation has changed. For many first-time buyers, this is is an excellent option that allows ultimate flexibility to get on to the property ladder at an earlier stage than they might have otherwise been able to.
While, in theory, the Shared Ownership scheme sounds ideal, it does have drawbacks. While “staircasing” sounds like a great idea, you need to have significant legal work performed in order to buy more shares of your property. If you are only buying an extra 10% (which is currently the minimum additional share you can buy), you can still pay in excess of £2,000 to have this legal work done. So while the option is great, the costs can be prohibitive. There is also the matter of getting a mortgage – as it is a specialised scheme, there are only a handful of lenders who are willing to offer Shared Ownership mortgages. For migrants, this presents potentially even bigger challenges: while there is nothing in the rules to stop migrants applying for the scheme, in reality, many people have struggled to get mortgages due to their immigration status and shortage of applicable history in the UK. So while Shared Ownership is great, it is best to do your research first and ensure that you’ll be able to get a mortgage before committing to any scheme.
Intermediate Market Rent
If you’re not currently in a position to buy a property, there is another option which can help you to get your foot on the ladder. The Intermediate Market Rent scheme offers a great chance for those who are trying to escape the private rental sector to access a rental property and begin to save for a deposit. Due to rents in the UK being prohibitively high, it is often the case that those in the private rental sector do not have enough spare money available to begin to save for a mortgage deposit. The Intermediate Market Rent scheme helps to cure this problem by reducing the rental price of the property by 20% (the rental value is based on the property’s market rate minus 20%) to give you some breathing room to begin your savings (which you will be expected to do).
The scheme is generally offered by housing associations, which means that not only will you have the security of a tenancy but also so the support of a housing association when it comes to problems like home repairs. While the scheme is available across the country, properties are scarce due to the excellent value that they offer. There is also the issue of migrants struggling to get these properties as not only is the system only open to UK residents (British citizens, EU citizens and those with Indefinite Leave to Remain), it is also generally based on a system of priority. If you wish to find out more about the Intermediate Market Rent scheme then speak to your local housing association, or consult some of the best immigration lawyers in London, who will be able to give you some advice on the properties that they offer.