A scheme offering first-time buyers the chance to buy properties with a 5% deposit is being set up by a residential property fund.
Mill Group’s scheme requires a minimum 5% contribution from buyers towards the home.
Buyers pay rent to the investor during their tenure, which is frozen for five years and will be lower than market rates.
The rent can be renegotiated after five years or buyers can purchase the investor’s share by moving to a standard mortgage.
Mill Group expects buyers will have saved enough deposit to move to a mortgage within five years but they can buy out the investor at any stage. The firm says affordability will be judged in the same way as a mainstream mortgage.
Mike Wisgard, marketing director of Mill Group, says: “We are bringing new funding to the market and believe we can get it moving.”
Mill Group is to launch a £100m fund in the Greater London area in Q3 and has been engaging with local councils. It says more investment funds are looking to enter the market which could generate up to £30bn over the next five years.