The challenges and uncertainty created by the Covid-19 pandemic clearly forced many prospective home buyers or movers to pause or rethink their plans.
But the strength of the market’s bounce back following the first 2020 lockdown has shown this hesitation was by no means true for all, with first-time buyers being a notable exception.
However, average property prices in the UK have continued to rise; by summer this year they were c.11 per cent higher than at the start of 2020. Even though the labour market is currently active, wage increases are unlikely to do much to close the ever-widening gap between salary levels and the cost of a home.
The government’s support for affordable housing schemes, and the investment to leverage increased supply in this important area, shows it’s widely accepted that a sizable proportion of purchasers, particularly first timers, need some extra help to be able to achieve home ownership.
For more than 40 years the shared ownership scheme has been quietly and effectively offering generations a way onto and up the housing ladder. Created during an era of rapid house price growth and economic uncertainty, it has paved the way for newer schemes such as Help to Buy and more recently the First Homes scheme.
As a leading lender in this sector, we know our intermediary partners are always focused on finding the best solution to meet their client’s specific needs and individual circumstances.
It’s important to us that advisers are familiar with shared ownership and the potential benefits it can offer home buyers, particularly those clients where other types of property purchase seem to be out of reach.
Publicity for more recent affordable housing initiatives may have pushed shared ownership out of the limelight and some misconceptions about it persist; for example, that it’s only for key workers or available in London and the South East. As might be expected, there have been more shared ownership transactions in these areas and where property prices are highest, but we are also seeing strong use of the scheme elsewhere in England including the South West and Midlands.
Saving enough for a deposit is a difficulty confronting buyers in all parts of the UK; shrinking the size of this deposit hurdle is where shared ownership can bring the first rung of the housing ladder back within reach.
As with anything regarded as outside the norm, consumers will seek out and benefit from expert advice and insight to unpick the detail, work through the costs, and guide them through the process. In turn, advisers can support more of their clients to make use of what is forecast to become the UK’s fourth mainstream tenure, after private ownership, private rental and social rental.
The government’s changes to shared ownership this year demonstrate the continuing importance of the scheme as a way for more people to make their home-owning aspirations a reality.
These moves, most notably to reduce the minimum initial purchase share from 25 per cent to 10 per cent and enable staircasing (buying a greater share) in smaller slices, starting from just one per cent, are intended to broaden the scheme’s appeal further. New buyers will also benefit from greater certainty on responsibility for repairs, and the security of longer lease terms for their rental share.
The government’s confidence and commitment to shared ownership is being restated, even as other affordable housing schemes are wound up or superseded. For example, having already been significantly modified in scope to focus purely on first time buyers, Help to Buy is due to end in April 2023 so applications may start to tail off in 12 months’ time as consumers turn to other options.
If the government can deliver on its ambition to boost the building of new homes, a significant proportion of these will be affordable housing, particularly shared ownership. A recent consultation paper stated the intention that approximately 50 per cent of new homes delivered will be available as affordable home ownership and most of these homes will be the new model for shared ownership.
The uncertainty of the last two years would discourage anyone from predicting the future but we believe there’s every chance shared ownership may well be around and still going strong in another 40 years.
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