First-time buyers have been “thrown a lifeline” from the shared ownership expansion unveiled by the UK Government according to reallymoving, a service providing instant quotes for home moving services.
From April 2021, the minimum share for those purchasing homes through shared ownership will be reduced by more than half, from 25% to 10% in hopes to make the scheme more accessible.
From April 2021, it will be possible to buy additional shares in instalments of 1% rather than the 5% or 10% it is currently. Buyers with a household income of £80,000 or less – or £90,000 in London – can take out a mortgage to buy a portion of the property, paying rent on the remainder to a Housing Association.
Rob Houghton, chief executive of reallymoving, said: “According to our data, just over 10% of First Time Buyers are currently using Shared Ownership. Competition for these properties is already very strong and making the scheme more accessible to those with small deposits will undoubtedly boost demand further – especially in the context of a general shortage of high loan-to-value (LTV) mortgages and Help to Buy regional price caps being introduced next spring. It’s therefore essential that the Government delivers on its promise to boost the new supply of shared ownership properties rapidly in order for the changes to have a positive impact.
“Based on the current average first-time buyer purchase price of £246,000 in the UK, buying a 10% stake in a shared ownership property could require a 5% deposit of just £1,230 – an irresistible prospect to those looking for an affordable way onto the housing ladder. Buyers should beware, however, that the new rules allowing for staircasing in 1% increments may sound appealing but could be expensive when legal and surveying costs are taken into account.”
This post has originally been featured in Property Wire.