Genie: national scheme means you can buy a house without a deposit

Updated: 
For sale signPotential homeowners across the country now have the chance to buy a home without a deposit or a mortgage through the property ownership company Genie.

It's mainly aimed at first-time buyers and after a successful initial trial in the North East of England is now being rolled out across the country.


Instead of a mortgage or deposit, homeowners pay increasing monthly sums over a certain period, in return for shares in the house.

How Genie works
Homeowners who sign up to Genie are able to move into new-build properties in return for a monthly fee. The fee is set over a 30-year term and the price is fixed for each five-year period during the term.

As the payments are made, the owners are given shares in the house. Eventually they will own it outright. They also have the chance of making overpayments to reduce the term of the repayment.

Applying for a Genie house
Financial conditions apply but anyone can apply for one of these houses if they are at least 18 and earn £18,000 a year. On top of the monthly fee, there is also a £600 admin charge and you'll need to pay for all of your own legal fees.

However, there are a limited number of properties listed. Indeed there are currently only 15 to choose from.

For example, there is a three-bedroomed house in Blaydon in the North East currently listed with a market value of £134,950. If you were to buy this it would cost £700 a month for the first year, £721 for the second and £742.63 for the third. As you pay more you also own more of it, as you can see from the table below.

Year

Monthly fee

Share acquired

1

£700

3.50%

2

£721

7.00%

3

£742.63

10.50%

4

£764.91

14.00%

5

£787.86

17.50%



Selling the house
The aim of this scheme is to help homeowners who may not be able to save for a deposit or a mortgage. It's also rather flexible as you can make overpayments or sell the house.

When it comes to selling you can sell it back to Genie at any point.The price you sell it for will be based on the open market price. If it's increased in value since you first 'bought' it you will also get a share in this profit. But this works both ways - if it's decreased you'll get less back.

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Pros and cons
I think this is an innovative way to address the problems with the housing market.
It's especially attractive in the current economic climate as it has become almost impossible to save for a deposit while paying out for rent. Not only does it offer an affordable way to live somewhere, the money being paid isn't wasted as the homeowner will eventually own the property. And you can benefit from any price rises.

Your investment is also protected as the company is regulated by the Financial Conduct Authority, giving you an added layer of security.

However, if you are able to save for a deposit on your own you will ultimately be better off as there will be a much greater range of choice. And you'll be the homeowner straight away, rather than waiting 30 years.

When we first wrote about it, we pointed out that the main problem was its size. Although this is still a big issue, the national expansion means it's starting to seem like a slightly more realistic solution.

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