Getting onto the property ladder before the pandemic was already tough; trying to get on it now can seem like an impossible dream now that the requirements for buying a home have shifted even further away from affordable. But could Shared Ownership help some of the prospective first-time buyers, and how much does the average aspiring home owner really know about the scheme?
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Shared Ownership is now in its fortieth year, and it can help first-time buyers onto the property ladder. The main benefit, which is especially relevant now that lenders want larger deposits as standard, is that it allows the buyer to purchase an initial share of the property, reducing the amount of the loan and the deposit required. The buyer then pays rent on the remainder of the loan and has the option of buying more equity if and when that becomes possible.
But is Shared Ownership for everyone, and can the scheme be improved to make it more accessible to more first-time buyers? A YouGov study commissioned by Leeds Building Society into the future of the scheme has found that despite enabling people to have a stake in properties and stay long-term in locations they wouldn't have thought affordable, there is low awareness of the scheme and its potential benefits.
The Housing Association also said that there's still a lack of suitable land in locations close to amenities and good transport links, and a need for a greater variety of deals to suit the different product needs of customers.
At the same time, the benefits of Shared Ownership are manifold: not only do more people get to get onto the property ladder, but neighbourhoods also benefit from a greater diversity of residents.
Ella Cheney, Shared Ownership Programme Manager at the National Housing Federation, says, 'Shared ownership is a really great option that could help get tens of thousands of people onto the property ladder. But the main issue is that many people just don't know enough about it. This is why housing associations are committed to raising its profile, showing what shared ownership is and helping to tackle some of the myths that surround it.'
Andy Moody, Leeds Building Society’s Chief Commercial Officer, adds, 'When first time buyers repeatedly cite raising a large enough deposit as the main obstacle stopping them from buying a home, it’s surprising more don’t consider shared ownership.
'Coronavirus has shown us how much we value our key workers, but some people still think shared ownership is only for public sector workers living in London and the South East. The truth is it is helping purchasers from a variety of backgrounds secure homes across the UK in locations they may not previously have been able to consider.'
Critics of the scheme have argued that Shared Ownership can work out expensive with the maintenance fees that are added onto the mortgage and rent payments, and that buying up more shared can be costly. Selling can also be tricky, with the housing provider having the right of first refusal to buy back the share in many cases. An expanded and improved scheme could look into improving flexibility for owners and reducing at least some of the fees associated with building up equity.