Common misconceptions include: there are no family homes, just starter flats in high rise buildings; it means taking a mortgage out with another home owner; and shared ownership homes are dingy ex-council flats tucked away around the back of a development.
In this article Homes & Property separates myth from fact.
Myth: There are no family homes, just starter flats.
Fact: Shared ownership homes account for an increasingly large proportion of developers’ affordable housing contribution (otherwise known as section 106).
There is a huge shortage of affordable family homes in London and shared ownership is one way of fixing this.
In fact, local councils and their planning departments see the provision of shared ownership family homes to encourage parents to bring their children up in the capital.
A fifth of all shared ownership homes listed on the Share to Buy portal are three- or four-bedroom homes and the largest proportion of enquiries since January on Share to Buy have been made by families (67.9 per cent).
A fifth were made by couples and 10.3 per cent by an individual buying alone.
As the Government’s shared equity loan scheme Help to Buy shuts for all bar first-time buyers from March, shared ownership for families will become even more important.
Case Study: David and Toni Glennon have bought a three-bedroom house in the L&Q development Beaulieu, 10 minutes outside Chelmsford in Essex.
Crossrail manager David and his wife Toni, who is a healthcare assistant, had been renting until their landlord sold the property.
“We’d fallen foul of the rental trap a few times. We used to rent a house and then one day the landlord told us that he’d sold it and we had a month to get out. Once Samuel was born, we knew wanted to find somewhere more permanent, where we could put down roots and not worry about moving,” says David.
“We looked at buying on the open market originally but saving for a deposit with a newborn baby and Toni on maternity leave pay seemed insurmountable.”
Shared ownership enabled the Glennons to stay in Chelmsford.
The couple put down a £20,000 deposit for a 25 per cent stake of a three-bedroom house with a garden and a drive.
One- and two-bedroom apartments are launching at Beaulieu in the autumn. Visit www.lqhomes.com.
Myth: Shared ownership means buying with another individual.
Fact: The shared aspect of the scheme is because you’re sharing ownership of your home with a housing association.
Buyers will purchase a share in a property, paying a mortgage on the share they own and rent on the remainder to their provider; you don’t have to buy or live in your home with anyone that you don’t want to.
In most cases, you can also choose to purchase more shares in your property until you own 100 per cent through a process known as staircasing. See our shared ownership explainer here.
Myth: Shared ownership is more expensive on a monthly basis than renting.
Fact: In many cases, the monthly payments for a shared ownership property is less than renting privately.
If you buy bigger shares in your home over time the rental payments will decrease but your mortgage payments will increase.
Kyri Ntaountakis says: “My rent is £666, the monthly service charge is £150 and my monthly mortgage payment is £400. I am now paying less per month than I was when I was renting and I am finally on the property ladder.”
This scheme is Reynard Mills in Brentford but is now sold out.
Myth: Shared ownership flats are second-class homes tucked away around the back of luxury apartments.
Fact: This has certainly been true in the past. However, more developments being built now are what’s known as tenure blind.
In a responsibly built residential scheme an onlooker should not be able to identify a council house, from a rental property, from a pad for private, from a shared ownership home.
Although this is not always the case planning departments are getting hotter on it.
Example scheme: The Patchworks by Peabody in Finsbury Park is a modern brick building and a stylish nod to London’s Victorian factories.
Brightly decorated inside with Zanussi kitchens, it’s a short stroll from the vibrant Upper Street in the centre of Islington.
Prices start at £139,500 for a 30 per cent share of a one-bedroom apartment. Visit www.peabodysales.co.uk.
Shared ownership options outside London
Myth: There are no shared ownership homes in rural schemes, just in urban tower blocks.
Fact: The housing affordability crisis is not limited to London, there are plenty of rural communities in the pricey south-east where local people who have grown up there cannot afford to get on the ladder.
The flow of buyers moving out of London props up house prices in the countryside.
Therefore, shared ownership is essential in villages too and well deployed across the home counties.
Example scheme: The Waterfront is a mixed private sale and shared ownership scheme in Shoreham-by-Sea in East Sussex.
It’s an hour on the train from London Victoria to the seaside town which sits beneath the South Downs.
One-bedroom apartments cost £111,000 for a 30 per cent share via www.sharetobuy.com.