Shared ownership is crucial for many Londoners » Housing » 24dash.com

Homebuyers continue to be frozen out of the property market despite the fall in prices across the capital, according to the results of a survey published by Housing Options today (Thursday 4 December 2008).

The survey of more than 200 people revealed that part-buy, part-rent schemes offer low to middle income earners including both key workers and non key workers a vital entry point into home ownership. The results clearly demonstrate how important low cost home ownership products such as New Build HomeBuy are in the current financial climate, particularly in London.

Undertaken at the Housing Options Affordable New Homes Show in October 2008, the survey showed that while three out of five (58%) people interviewed felt the drop in the housing market made it a more suitable time for first-time buyers to enter home ownership, 68% surveyed felt their only route into home ownership in the capital would be via shared ownership products.

Graeme Moran, Managing Director of Metropolitan Home Ownership (MHO), which jointly delivers the Housing Options service with Tower Homes, said: “This survey shows the extent to which low to middle income earners want to get on the property ladder but need an affordable alternative to that available on the open market. It also proves that Housing Options continues to generate a high level of interest in affordable home ownership products, making them accessible and easy to understand for first-time buyers.

“Low cost home ownership is highly attractive to homebuyers because it offers greater affordability, security and stability – especially at a time when buying or renting privately carries greater risk.”

Indeed, 49% of people said that the difficulty in securing a mortgage and finding themselves in negative equity, were their most important concerns about getting on the property ladder at this current time.

Graeme Moran, said: “It is becoming increasingly more difficult for first-time buyers to secure a mortgage due to the higher costs involved and the need for much bigger deposits. MHO and Tower Homes are working together to lobby for increased supply and improved terms on mortgage finance to help homebuyers take advantage of lower prices. We are also offering customers more affordable and secure renting options compared to private landlords, through intermediate rent and the new Rent to HomeBuy scheme, where first-time buyers can rent a home at a discounted rate to enable them to save towards a deposit so they can buy a share in the property in the future.”

The survey revealed that 47% of respondents asked, who were currently renting privately, had savings of between £6,000 to £30,000 to put towards a deposit for a home. Savings of this amount would enable people to buy a share in a home on a part-buy, part-rent basis.

Nic Bealey, Director of Strategy, Marketing & Sales at Tower Homes, said: “Shared ownership schemes are proving popular because they provide a secure route into home ownership, even during an economic downturn. Homebuyers are less likely to over stretch themselves financially because they are thoroughly vetted for financial liability and therefore only purchase a share they can afford. When the time is right, they can increase their share until they own the property outright.”

Over half of those surveyed (56%) said that not wanting to waste money paying rent and the security of owning their own home continued to be the main reasons they wanted to get on the property ladder. The survey showed that the average rent for those currently renting privately was nearly £640 per month. For a little extra, homebuyers can start to build equity on an affordable share of a New Build HomeBuy property.

Example:

MHO’s Cordwainer House in Hackney
Full market value for a one-bedroom apartment: £182,500
*Prices start at £54,750 for a 30 per cent share
Minimum income for a single person: £24,657
Minimum income for a couple: £27,264
**Typical monthly housing cost buying with New Build HomeBuy: £751
***Typical monthly housing cost to buy the same property outright on the open market: £1,109

Steve Nunn said: “Part-buy, part-rent products present a lower risk of negative equity and a lower risk to lenders. Both the mortgage and deposit required are substantially less than what homebuyers would need if buying outright on the open market.

“It is clear from the survey that shared ownership schemes are vital to ensuring London continues to build sustainable, mixed communities for the future, attracting and retaining both key workers and other professionals, helping to maintain vital services and businesses working across the capital.”

Housing Options is the one-stop shop for first-time buyers to register their interest in and apply for low cost home ownership products. Housing Options is run by the Government-appointed HomeBuy Agents MHO and Tower Homes. At the heart of its service lies the website – www.housingoptions.co.uk – where prospective buyers can search for new affordable homes from a database of up to 2,000 available properties at any one time.

For further information on affordable home ownership opportunities in London, visit Housing Options at www.housingoptions.co.uk or call 0845 230 8099.