We created a legal framework to support Frontier Development Capital’s ‘Help To Own’ scheme.

Getting onto the property ladder is a great source of pride for many. It’s also a means of creating long-term wealth for families and individuals. But for a significant proportion of the population, it’s not that simple.

Demand for housing far outweighs supply in many parts of the country, and the subsequent increase in long-term prices means that those on low incomes struggle to save enough for a deposit.

Market renting to homeownership

This is the problem Frontier Development Capital (FDC) is trying to solve. The company created a financial model that provides a pathway to homeownership through market renting and set up NewCo My Generation Group Limited (MGM) to support the delivery of the scheme.

‘Help To Own’ allows tenants to rent a property over the long term. After 25 years of renting, they can purchase the freehold for £1. MGM instructed us to create a legal framework to bring ‘Help To Own’ to fruition.

“Help to Own is a unique concept that sits between traditional tenancy and intermediate homeownership models. Working with MGM, we identified the different obligations the parties had to each other and then worked through the legal challenges to make those obligations enforceable.”
Jonathan Cox, partner, Anthony Collins Solicitors

Creating the right framework

ACS put together a legal framework that identified what the blockers were and found ways to work around them. The final framework contained key features such as:

• No-rent deposit
• A Loyalty Premium which links to rental increases which can be taken as cashback/rebate if the tenant decides to leave the scheme, or use to extend the initial tenancy
• The option for tenants to leave at any time giving three months’ notice

HTO2 LLP was formed as a joint venture between the West Midlands Combined Authority and Wolverhampton City Council, who purchased 100 brand new homes at The Marches, Wednesfield, Wolverhampton. The homes were a mix of 29 x 2 beds, 50 x 3 beds and 21 x 4 beds reflecting the needs of the community.

“If you factor in that you require at least a 10% deposit and an excellent credit rating to get a mortgage … then you’ll understand how good this ‘Help To Own’ scheme is. This is a good scheme and it’s non-binding, unlike a mortgage. Buying and owning a house isn’t cheap but this scheme is giving certain individuals a helping hand”.
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Insatiable demand

A ‘Help To Own’ website was created through which applicants could apply. Applicants went through a strict process to ensure that only those who could not raise a deposit were considered for homes.

Over 4,000 people registered their interest in the scheme, with 563 applications submitted for the 100 tenancies available. Offers were granted and the profile of successful applicants revealed the reality of the problem: 37% were key workers, 75% were joint applicants, the average age was 34-39 years old, and the average household net income was just under £38k.

“ACS’ in-depth knowledge of housing law was truly invaluable to us. ACS recognised the potential impact HTO could have for people who are otherwise trapped in market renting; for them, HTO is life-changing. We are indebted to ACS for the advice we received, as well as the work undertaken to navigate the complexities of the scheme and reflect them in both the lease and loyalty premium agreements which we now use on each and every plot at our pilot site.”

Chrissy McKenzie, head of operations, Help to Own