Homebuyers missing opportunities in affordable housing schemes

A lack of affordable housing is widely regarded as the key reason that prevents buyers from stepping onto the property ladder yet it seems that many homebuyers are in the dark as to the opportunity that shared ownership and shared equity schemes offer. Nearly three quarters (72 per cent) of respondents said that they would not consider buying a house through a shared equity or ownership scheme, almost a fifth of whom believed that it would be too expensive to pay both a mortgage payment and rent monthly. However, the reality is quite different.
Example*
A typical two-bedroom shared ownership property that costs £160,000.
A 75 per cent share would cost £120,000
Deposit of 15 per cent is £18,000
Mortgage £102,000 on a 3 year fixed rate of 5.79 per cent would cost £652pm on a repayment basis over 25 years
The rent would be £91.66pm
Total monthly cost = £743.66
Many borrowers will also be able to access mainstream mortgage rates meaning that they don't have to choose from a reduced range of products or pay a premium. Of those who said they would consider a shared equity or ownership home, over two thirds (69 per cent) said it would make home buying more affordable for them.
The location of a property is for most buyers a key driver behind the decision of whether that home is right for them. Whilst 68 per cent don't know about any affordable housing schemes in their area and 15 per cent of those who were not interested in the schemes said that the area and type of property available via affordable housing schemes would put them off buying, a savvy four in ten of those who would consider the schemes said that buying a shared ownership or equity home would enable them to live in an area they couldn't normally afford. These buyers, who are challenging the common misconception that affordable housing schemes are located in undesirable areas, are benefitting from buying in sought after new developments or in communities that already have a large portion of owner-occupiers. Nearly half (44 per cent) said that it would allow them to get onto the property ladder.
Alarmingly nearly a third (31 per cent) of people don't want to find out more about how to get onto the property ladder with the help of an affordable housing scheme and one in ten don't know where to turn for help and advice.
Stephen Noakes, Halifax commercial director for mortgages, commented: "Affordable housing provides a great leg-up onto the property ladder and shouldn't be overlooked. Many people don't know where to turn to find out more about these schemes or wrongly believe that they aren't eligible, but talking to a housing authority or developer is a good place to start. When it comes to looking for a mortgage, buyers could be surprised to hear that they can usually qualify for a mainstream deal.
"For those who think they are priced out of the market we would encourage them to consider an affordable housing scheme. Once a portion of a home is purchased, most schemes will allow the owner to ‘staircase' – a process that enables them to slowly increase the amount of the home they own – as and when they can afford it, providing valuable flexibility."