In the property sector, shared ownership remains something of a niche concept — but could this gap in knowledge be preventing aspiring homeowners from finding a house that is both affordable and desirable?
What is shared ownership?
Home Reach's shared ownership scheme allows buyers to up to 75 per cent of a property and pay a subsidised rent on the remainder. Over time, you may choose to increase your share by way of a process called staircasing, which would thereby reduce your monthly rent payments. Eventually, you may purchase 100 per cent of the property and stop paying rent entirely.
For example, let’s say you’re interested in a home worth £200,000 and have decided to buy a 25 per cent share (£50,000), as well as saved up a deposit of five per cent of that share (£2,500). You would then pay off your mortgage on a monthly basis as you would under more traditional circumstances, but then also pay rent on the remaining £150,000. The combined cost of mortgage and rent repayments can end up as less than that of the mortgage repayments on a house purchased outright.
Home Reach has a number of eligibility criteria if you’re interested in partaking in our shared ownership scheme, perhaps most crucially that your annual household income is not in excess of £80,000 (or in excess of £90,000 if you live in London). However, unlike similar schemes, we are not only open to first-time buyers but also both to ex-homeowners who can’t afford outright home ownership at this moment in time and people who are currently living in a shared ownership property elsewhere.
Home Reach properties are new-builds available through housebuilders across England, complete with modern fixtures and fittings. So why don’t more people know about shared ownership — and could they benefit from being made aware of it?
A gap in knowledge
Shared ownership schemes were amongst the flagship housing policies introduced by former Chancellor George Osborne back in 2013. These were then carried forward under Theresa May’s administration. However, despite the schemes having been around for seven years now, research by financial institution TotallyMoney in 2018 demonstrated that an astonishing 75 per cent of millennials don’t understand how part buy - part rent schemes work.
According to TotallyMoney’s surveys, a mere 28 per cent of 18–24-year-olds actually know what shared ownership is, in spite of the fact that they represent the very demographic that Osborne’s 2013 policy was primarily aimed at. Furthermore, only six per cent of those surveyed had leveraged such a scheme to secure their first home.
Overall, notwithstanding significant investments in various first-time buyer schemes by the government and the associated publicity surrounding them, TotallyMoney found that just 19 per cent of property buyers had actually used a government buying scheme when purchasing their first home in the past 10 years.
It seems clear that a huge number of people — and not only millennials — could be missing out on the numerous and varied benefits of partaking in a shared ownership scheme. Despite TotallyMoney finding that 40 per cent of first-time buyers had required financial assistance from family and friends when securing their home, only a very limited number of them had utilised government-backed shared ownership schemes—and even fewer had considered options such as shared ownership.
How could more people be benefiting from shared ownership?
Home Reach’s shared ownership scheme makes home ownership more flexible and more affordable than it’s ever been, giving buyers the ability to purchase a share in a property as small as 25 per cent, with a deposit as little as just five per cent of said share — as opposed to a deposit worth five per cent the value of the entire property. Rent paid on the remainder also tends to be lower than on the open market. Rent is generally 2.75 per cent of the share of the property that you don’t buy.
In our previous example, in which we considered a hypothetical 25 per cent ownership of a property worth £200,000, annual rent would therefore be £4,125, amounting to just £343.75 a month. What’s more, shared ownership properties offer much more freedom when it comes to decorating and other home improvements than do rented properties, enabling you to truly make your house your home.
If your circumstances change at any point, Home Reach will help you up and sell with no strings attached. Perhaps best of all, heylo housing’s shared ownership properties are new-build and, if you’re the first person to live in your house, it probably comes with a warranty, meaning that any fixture or fitting that is broken or otherwise defective maybe covered on your warranties.
Here at Home Reach, we believe passionately that shared ownership is often the best way of getting one foot on the property ladder if you don’t have the funds to take out an entire mortgage right now. We believe that home ownership should never be shrouded in jargon, exclusivity and hidden fees, which is why Home Reach is available with over 90+ developers across 250 sites in England, with teams onsite to help you find the homes that are right for through Home Reach’s shared ownership schemes on new builds. Get in touch with us today and find the house you never thought you’d call home.