Opinion: The success of shared ownership
Published by Max Salsbury for 24dash.com in Housing and also in Communities, Finance
Changes to shared ownership lease to be discussed at National Housing Federation’s Shared Ownership Mortgages Conference
Shared ownership schemes were first offered by housing associations in the 1970s to help more people afford their own homes.
Since that time, the concept of shared ownership has evolved, which has had an effect on the supply and demand for properties through the scheme.
Here Kush Rawal, assistant director of sales & marketing at Thames Valley Housing, looks at shared ownership's market successes.
Shared ownership is not a new product. It has been around since the 1970s and a large number of buyers have been benefiting from this scheme for the last 40 years.
Despite there being a lack of awareness amongst some potential buyers on what exactly shared ownership involves, we have seen a record number of first time buyers turning to these types of schemes, which provide an alternative way of getting onto the property ladder.
There are lots of people living and working in London and the south east of England that want more security than renting.
It was originally thought that increasing house prices and tighter mortgage lending would result in fewer people wanting to own a home and a long term rental market being established.
However, the appetite to own a home has not changed and during 2012 the number of first-time buyers entering the housing market reached 216,000, the highest in five years.
We have had a record number of enquiries for our schemes over the past year but the biggest issue we have faced is the lack of supply, particularly in popular parts of London and the south east.
Compared to 2008, there are around 20 percent fewer homes available through shared ownership. As a result of this lack of supply and increased demand, we are experiencing a high number of enquiries for properties even before they have launched.
For example, at our Merton Road development in Wimbledon we received over 380 enquiries prior to launch for the nine apartments. The launch day was attended by 59 potential buyers resulting in all nine apartments being reserved on the spot.
We always expected there to be a huge amount of interest in the properties at Merton Road as they are in such a popular location and there is a lack of more affordable properties available in this part of south west London.
However, we were amazed by the level of enquiries we received both before the launch and the number of attendees on the open day. This reinforces that first time buyers are exploring alternative routes to get onto the property ladder and demand for shared ownership is not diminishing.
According to research conducted by Thames Valley Housing, the typical shared ownership buyer is aged between 25 and 34 years old, working in office management and buying their first home. Over 85 percent are working full-time.
The average amount of time a homeowner will stay in a shared ownership property is five years, compared to the open market average of six years.
Seventy percent more young professionals are registering for Thames Valley Schemes. Five years ago these buyers would have only searched on the open market, but shared ownership is an increasingly sensible alternative to private renting, where there is no ownership interest at all.