Housing

Interest in shared ownership ‘booming’ as young people flock to sign up

More young people are turning to shared ownership as a route to homeownership, but many are still confused as to what it means and how it works

Shared ownership properties at Clapham Park Courtyard. Image credit: Supplied

Shared ownership properties at Clapham Park Courtyard. Image credit: Supplied

Increasing numbers of younger people entering the housing market are turning to shared ownership as a way of financing their homes, a new report has claimed.  

New findings from housing association Metropolitan Thames Valley Housing and Cambridge University, which researchers said provide the most “up to date and in-depth” data on shared ownership, found interest in the scheme was “booming” as young professionals and those without children snatched up properties. 

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Shared ownership is sometimes referred to as “part-buy, part-rent” and is designed to support people who cannot afford a full mortgage. Tenants buy a share of their property and pay rent on the rest. When they can afford to, they increase their number of shares until they own the property outright. 

According to the new report, which is an overview of the sector in 2020, 72 per cent of shared ownership purchasers were aged between 20 and 40, with those in their late twenties most likely to purchase.

Half of those who bought their homes under shared ownership were single adults without children and 35 per cent were childless couples. 

Dr Gemma Burgess, acting director of the Cambridge Centre for Housing and Planning Research said: “There is consensus that the UK has a housing crisis and that greater effort needs to be made to increase housing supply. 

“Shared ownership has an important role to play in delivering new build housing supply and in meeting the need for affordable homes. 

“The Government should do all it can to make it as easy and simple for providers to increase their pipeline of shared ownership homes, to reduce cost and complexity from the system, and to ensure that grant levels are sufficient to ensure a strong supply of shared ownership going forward.” 

After surveying 24 housing providers, researchers found the average value of a shared ownership property was £265,000. The average initial share bought was 42 per cent with a deposit of £24,600. 

The Government has put shared ownership at the centre of its affordable housing policy and says the model can reduce the amount needed for a deposit and result in lower monthly payments.

This was echoed in the new report, which read: “Shared ownership providers, lenders and wider industry stakeholders interviewed for this research were all very positive about what shared ownership offers to customers. 

“In many parts of the country, interviewees felt that shared ownership is the only realistic route into homeownership for households with relatively low deposits.

“The product offers flexibility as it opens homeownership at a range of possible price points to households with modest deposits.” 

But the scheme has been criticised by experts who say those who purchase a property through shared ownership could fall foul fluctuating house prices and unexpected costs, with some even finding themselves trapped and unable to leave their agreement. 

After receiving submissions from The Law Commission, the new report also found some members of the public didn’t fully understand how the scheme worked. 

“Members of the public do not always understand exactly how shared ownership schemes operate, or the precise nature of the legal arrangement which the purchaser of a shared ownership property is entering into,” the researchers were told. 

Kush Rawal, director of Residential Investment at Metropolitan Thames Valley Housing, added: “We are pleased that this report, the first of many that we plan to commission, proves the valuable role that shared ownership has in helping people take their first steps on the property ladder.

“It’s also confirmed what we already knew – that people are often confused and uncertain about what it all involves. 

“For this reason, we are determined to guide people every step of the way, with simple, clear and transparent language that ensures that there are no surprises down the line.” 

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