Shared ownership is being promoted as a potential solution for first-time buyers struggling to get onto the property ladder because they can’t get a big enough deposit.
The scheme, which allows buyers to purchase a percentage of a property and rent the rest, provides an affordable option because a smaller deposit is required.
Buyers can purchase between 25% and 75% of a property and require a minimum of 5% deposit for their share.
However, if a buyer were to purchase half of a £200,000 property they would only need to raise a deposit on £100,000. Therefore the 5% share would be much smaller than if they were to purchase the whole property.
Leeds Building Society, which provides mortgages for shared ownership buyer, said there were concerns many would-be purchasers were reluctant to use this option, however, because of real or perceived barriers.
In a recent YouGov poll Leeds discovered few people knew enough about shared ownership and this meant there were potentially many people who were not benefiting.
Not just for key workers
Andy Moody, Leeds Building Society’s chief commercial officer, said: “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.”
Housing associations said shared ownership’s main benefits were:
- Bringing down the size of deposit a buyer needs
- Encouraging greater diversity in communities
- Supporting regeneration by bringing more professionals and key workers into neighbourhoods
- Allowing more people to get on the property ladder
You can read more about shared ownership in this feature.
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