This is the verdict of a report by mortgage lender, Leeds Building Society, which believes the shared ownership scheme plays a vital role in putting homeownership within the reach of those who are struggling to afford a deposit.
The scheme allows buyers to purchase a proportion of the property and rent the rest. The benefit of this is the buyer requires a smaller deposit than if they were purchasing the entire property.
Indeed, buyers can purchase as little as 25% of the property (some schemes may allow a smaller percentage) making the deposit saving much less onerous.
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Shared ownership – in a nutshell
- Shared ownership enables people to purchase an initial share of a property, reducing the size of the deposit needed.
- They pay rent to a landlord, usually a housing association, on the remaining share and can choose to buy further shares later if they wish.
- To qualify your household must earn £80,000 a year or less (£90,000 in London)
- You can find out more about the shared ownership scheme here.
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According to Leeds, which is a shared ownership lender, many borrowers are opting to purchase a bigger share. The percentage purchasing a share of 50% or more has risen from 24% in 2019 to 37% in the first six months of 2021, according to the figures.
And its data also shows how an increasing number of buyers were moving away from new build homes. In 2019, 16% of all buyers taking a shared ownership product with the Society bought an existing property, by 2020 that had risen to 25%.
A similar pattern emerged in the first six months of 2021.
Martese Carton, head of intermediary distribution at Leeds Building Society, explained how shared ownership was most popular with first-time buyers as it helped them overcome the biggest hurdle they face when trying to secure their dream home – saving for a deposit.
However, she said supply was proving a challenge. “We believe our data findings highlight a lack of supply of shared ownership properties. Affordable housing schemes like shared ownership have the potential to help many more first-time buyers less well served by the wider market.
“This data also shows the scheme is providing an important stepping stone in the housing market, with existing shared ownership properties available because previous buyers have been able to move on into the mainstream housing market.
“Affordable housing schemes like shared ownership have the potential to help many more aspiring homeowners get a foot on the property ladder,” added Martese.
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