Shared ownership set to fill gap left by watered-down Help to Buy

A key category in our New Homes Awards this year, shared ownership homes are helping to keep young Londoners’ property-owning dreams alive,

SHARED OWNERSHIP is keeping alive the homebuying dreams of young Londoners who can’t afford to purchase a property outright. And soon this low-cost way of getting on the housing ladder will become easier and cheaper.

The Government is reducing the minimum equity stake from 25 per cent to 10 per cent, and is also giving buyers a right to increase their equity – known as “staircasing” – in one per cent increments. Moreover, a 10-year repairing obligation on housing associations will ensure buyers are not out of pocket when it comes to building faults or poor maintenance.

What used to be a niche sector of the housing market, restricted to public sector key workers such as firefighters and NHS staff, is now firmly part of the mainstream.

Traditional housing associations, many with charitable roots dating back decades, are the main providers. But registered private companies are offering shared ownership, too, and are set to plug the gap left by the watering down of Help to Buy.

Boosted by increased government funding, shared ownership has been rolled out to a much wider audience, and take-up has quadrupled over the last five years. The choice is extensive, with thousands of properties available across London and the home counties.

The big attraction of shared ownership is that it slashes the requirement for a big deposit and “bridges the gap” between costly and often unsatisfactory private renting and unattainable home-ownership, according to Kush Rawal, director of Metropolitan Thames Valley Housing, one of the South-East’s biggest shared ownership providers. This association says there is now huge demand from “career professionals” earning decent salaries but still priced out of the owneroccuper market: people working in finance and IT, retail, science and medicine, health and beauty, the design, media and charity sectors, and also the Civil Service.

In London, first-time buyers qualify for shared ownership if they earn up to £90,000 a year, while the salary limit is £75,000 outside the capital.

It’s a straightforward process. You buy a percentage share of a property – currently between 25 per cent and 75 per cent – and pay a fixed rent on the remaining share, which is owned by the housing association or charity. As time goes by and your financial situation hopefully improves, you can buy more shares until you own your home outright.

The maths show why shared ownership is now so compelling. According to Halifax bank, the average first-time buyer deposit in London is £132,685, whereas the average shared ownership deposit is less than £25,000 and can be lower than £5,000, because the deposit required is for the share you buy, not the full price of the property. And you only need to raise a mortgage on the percentage chunk you are buying, meaning your salary can be lower than it would otherwise have to be.

At The Boiler Plate and The Forum developments in Bow, east London, buyers need a five per cent deposit, of £4,813. These two Gateway Housing Association projects have been built on a former Victorian factory site where steam engines were made.

Prices start at £92,500 for a 25 per cent share of a one-bedroom flat (full price, £370,000). Combined mortgage and rent payments total £1,029. Call 020 8057 3232.