A new scheme in London, which would see property buyers be able to secure affordable housing without the need for a deposit or even a mortgage, is trying to get off the ground.
Gentoo Group, a social enterprise operating primarily in the north east of England, plans to partner with developers to provide consumers access to affordable housing under a 30-year repayment contract. At the end of the contract period, the buyer would own the property outright, just as they would when paying off a mortgage.
The Genie Home Purchase Plan, as the scheme is known, will use a recently agreed £40 million (approx. $81.4 million) loan finance facility from the Greater London Authority, with the aim of delivering 2,000 new homes within a decade.
Such schemes are not known to currently exist in Australia, however the success or failure of this UK venture may see similar partnerships emerge locally, particularly if housing affordability continues to deteriorate in the larger capital cities.
While the very notion may sound confronting to many brokers and other mortgage-related professionals, if such a measure were to be replicated here in Australia, it could potentially become an additional product offering brokers could extend to anyone seeking to get onto the property ladder who doesn’t meet the existing deposit and lending criteria.
Richard Blakeway, London’s deputy mayor of housing, land and property, said: “The idea that Gentoo have come up with through the Genie product, of allowing people to effectively purchase their home through their monthly payment, is offering something new and exciting for the housing market.
"Genie is very suitable for London, where for many people the aspiration is to own a home but the reality is that they will never be able to raise the deposit to do so.
“It offers more choice for Londoners and more options for people who want to be able to buy a home.”
In explaining how the idea for the new venture arose, Peter Walls, the group’s chief executive, said: “We created Genie after asking ourselves the question where are our children going to live? We recognised that there is a large section of society who would like to own their own home but who have been unable to.
“Genie is an ethical and unique product that helps people to access affordable homes in the locations they want to live.”