More than three million prospective homeowners have missed out on the chance to own a home since the financial crisis in 2008, new research by Pepper Money has found.
The specialist mortgage lender identified that had pre-crash financial trends continued, 3.3 million more households would have been expected to buy a home.
The findings emerged in a white paper, Shared Ownership – A Vital Bridge to the Housing Market. It also revealed how shared ownership is playing a critical role in addressing the UK’s housing crisis, offering a vital route onto the property ladder for thousands who would have otherwise been priced out.
Rob Barnard, intermediary relationship director at Pepper Money, said: “For many people today, the dream of owning a home feels increasingly out of reach. So much so that our paper estimates that 3.3 million households have missed out on entering the housing market since the financial crash.
“House prices have soared, wages haven’t kept pace, and the cost of renting makes saving for a deposit harder than ever. That’s where shared ownership comes in, and we believe this should be an option for more people.”
What is shared ownership and how can it help first-time buyers?
Shared ownership is a way for people with a small deposit and lower incomes to get onto the property ladder. Buyers purchase a proportion of the property and rent the rest. This means they only have to stump up a deposit for the percentage they are buying. What’s more, they will also require a smaller mortgage so affordability is not such a great hurdle.
According to Pepper’s white paper, 25 lenders now offer shared ownership mortgage. There has also been a rise in demand for these products as, following the pandemic, higher living costs, interest rates and the uncertain economy have made it harder to access mortgages.
Indeed, Pepper Money reported a 21% increase in shared ownership lending over the past year alone.
Barnard added: “The pressures facing households today are forcing a growing number of people into more complex financial situations – not because they are irresponsible, but because life has become less linear. And shared ownership, by its very nature, serves those who are navigating life’s complications with resilience and ambition.
“Our shared ownership borrowers are a case in point. In 2023 to 2024, their average household income was £55,000 – significantly above the estimated £37,000 market-wide figure in 2024.
“They are older, more likely to buy as couples, and are in a strong position to meet their financial commitments even in a high-inflation environment. What’s more, 50% of Pepper’s lending last year involved customers with no adverse credit – these are creditworthy customers who simply sit just outside the high street mould.
“And yet, rigid box-checking would see many of these people turned away. We believe that’s neither fair nor sustainable – and that belief is what has sparked our white paper.”
How shared ownership ‘bridges the affordability gap’
Pepper’s white paper highlighted the significant affordability gap shared ownership has helped to bridge. Here’s what it found:
In 2023 to 2024, the average shared ownership buyer purchased a 40% stake in a home worth £313,100, putting down a deposit of £22,800 and borrowing £99,200.
By comparison, the average first-time buyer across England faces a deposit of £68,600, more than three times higher, and a mortgage advance of £223,000. In London, the deposit gap is even wider, reaching £155,000.
Pepper spotlights that the growth in the shared ownership market has partly been driven by economic pressures. Between 2001 and 2007, the house price-to-earnings ratio rose from 5.1 to 7.8, driven by low interest rates, strong economic growth and population growth (see Chart 2). This shift transformed the route to homeownership, making a tenure like shared ownership essential.
