The Intermediary – March 2025 - Flipbook - Page 52
RESIDENTIAL
Opinion
Shared Ownership:
The path to
affordable homes
W
hen I meet
with our
intermediary
partners,
I oen get
a mixed
reception when I wax lyrical about the
many benefits of Shared Ownership,
which can oen be misunderstood.
Some brokers regularly place
Shared Ownership mortgages with us
and are familiar with the solution it
offers for lower income households,
while others admit to feeling a lile
confused about the benefits, and the
cases in which it can help would-be
buyers take their first steps onto the
property ladder.
For aspiring buyers, this is the
hardest time in living memory to
get onto the property ladder. Shared
Ownership schemes are one of the
most effective ways to reduce deposit
and affordability hurdles, making it
possible to buy at an earlier age and to
begin to grow their equity sooner.
However, we recognise the need to
continue to improve the experience
for shared owners, and that lenders,
brokers and buyers alike must be fully
aware of the nuances of the scheme.
We’re pleased to be part of the Shared
Ownership Council, which launched
a pilot Code of Practice designed to
improve information for buyers.
I’m passionate about the benefits of
Shared Ownership and I’m pleased to
be able to share the findings of a new
report that we recently commissioned
using market lending data. It reveals
that Shared Ownership is more
affordable than private renting in
the vast majority of geographical
areas. What’s more, due to capital
repayments and house price increases,
shared owners can be significantly
beer off than private renters as a
result of equity growth.
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The Intermediary | March 2025
The model of part-rent, part-buy is
widely accepted as the most effective
for reducing the deposit hurdle,
but the long-term financial impact
compared to private rent is less well
understood, and many brokers have
preconceptions about what it means
to be a shared owner. As one of the
biggest Shared Ownership lenders, we
want to help brokers and their clients
to beer understand this tenure, and
help put homeownership within reach
of more people.
The research was carried out by
industry experts Bob Pannell and Peter
Williams and incorporates wholeof-market lending data. The report
indicates that monetary gains for
shared owners are significant. Of 294
local authorities, Shared Ownership
is forecast to be more affordable than
private renting in 93% of areas at
year 10, rising from 77% in the first
year. And across 83 ‘high rent’ local
authorities, where rental payments
make up over 30% of income, the
scheme will be more affordable than
renting in 98% of areas in 10 years.
Factoring in capital repayments
and expected house price increases
on the share purchased, based on
conservative assumptions, shared
owners would be on average £29,000
beer off as a result of equity growth,
rising to £42,000 in London, in
addition to incurring lower monthly
costs. Coupled with the lower
deposit requirements, the findings
demonstrate the far-reaching benefits
of Shared Ownership.
Currently, only the highest earning
10% of households can afford to buy
an average-priced home of £298,000.
However, the overwhelming majority
of people in England aspire to buy
a home. It is extremely important
that we raise awareness among the
mortgage community of the role
MARTESE CARTON
is director of mortgage
distribution at Leeds
Building Society
Shared Ownership plays for low and
medium income households.
Shared Ownership extends the
promise of homeownership to more
people and will make the majority
financially beer off over time. At
Leeds Building Society, we have
continued to call for long-term
solutions to the housing crisis facing
renters and homeowners. We believe
that increasing the supply of Shared
Ownership homes could help the
Government achieve its objectives
to deliver 1.5 million new homes, as
well as supporting more people into
affordable ownership.
Maintaining a strong Shared
Ownership sector is key, not least
because it provides lower income
households the flexibility to vary the
size of property share purchased and
alter their mortgage size and deposit.
This report provides new and
significant evidence of the benefits
of buying a Shared Ownership home
compared to renting privately. The
findings are another reason why we
are proud to be part of the Shared
Ownership Council, working
alongside peers in the industry
towards a shared ownership sector
that is focused on progress, and
enables more people to access this
form of tenure.
Without any doubt, the majority
of shared owners will be materially
beer off by making this choice. I’d
urge our partners across the industry
to think about how they can raise
awareness for this tenure, which can
support aspirational first-time buyers
and make homeownership dreams a
reality for many more people. ●
