Shared ownership offers hope for first-time buyers
Shared ownership offers frustrated homebuyers a ray of hope at a
time when many of them are said to be stuck without any real
prospect of ever getting on the housing ladder.
Hall, Sales and Marketing Director of Bromford Homes,
highlights HomeBuy* shared ownership in the wake of a hard-hitting
National Housing Federation report that charts the growing
affordability gap for thousands of first-time buyers.
Figures gathered by the Federation create a grim picture of the
plight facing many first-time buyers and ordinary families across
the West Midlands, with the cost of buying your own home soaring by
more than three times the rate of an average salary over the past
According to the Federation, homebuying hopes in the West
Midlands are frustrated by a 45 per cent increase in the gap
between house prices and wages between 2001 and 2011.
At the same time, getting a mortgage is said to be a lot harder,
with the amount of deposit needed for a traditional outright sale
in Staffordshire − one the region's worst-hit areas
− rising by 367 per cent.
Bromford Homes property expert Bev Hall welcomes the report for
the clear and punchy way it highlights the problem facing so many
first-time buyers − and in particular the much larger deposits
needed for a typical mortgage when buying a home outright.
She said: "We share the Federation's view that it has been
getting harder for thousands of people to buy a home of their own.
And we support the Federation's call that we, as a nation, need to
start building more homes that ordinary hard-working people can
"The figures quoted by the National Housing Federation speak for
themselves − and one of the most telling numbers is the
deposit that first-time buyers have to come up with for a typical
mortgage on a typical home.
"That's why we believe HomeBuy shared ownership has such an
important role to play and offers many frustrated first-time buyers
a real ray of hope.
"Shared ownership remains a really affordable alternative for
first-time buyers. Rather than buy a property outright, it allows
people to buy anything from 25 per cent to 75 per cent of a new
home and get that all-important foot on the property ladder without
having to find a really huge deposit.
"It's made the difference for many, many first-time buyers and
continues to offer an affordable solution at a time when the gap
between incomes and house prices is high and getting a mortgage is
that much harder.
"In fact, we are starting to see more applications from people
who, before the credit crunch, would probably have been able to buy
"These are typically young working people who for time being can
only afford the five or ten per cent deposit needed for a 25 or 50
per cent share in one of our shared ownership homes.
"In the longer run, however, they are people that are more
likely to progress in their careers, to increase their earnings and
to staircase their share and, in time, to possibly buy
The National Housing Federation's research found that in 2001
the average price of a home in the West Midlands was £95,015, and
the average salary was £15,636.
Over the next ten years the price of a home rocketed to £171,707
− an increase of 81 per cent − whereas wages rose just 25
per cent to £19,531.
The ten worst-hit areas highlighted in the West Midlands include
Telford and Wrekin, Sandwell, Dudley, Wyre Forest and more than
half the Staffordshire boroughs.
Turning to deposits, the Federation says that ten years ago the
deposit for a typical 90 per cent mortgage (available in 2001) on a
traditional outright sale was £9,502. By 2011 the amount banks were
willing to lend was less, and so the deposit needed for a typical
75 per cent mortgage leapt to £42,927.
Announcing the figures, Gemma Duggan, West Midlands lead manager
for the National Housing Federation, said: "These shocking figures
show that it is getting increasingly hard for thousands of people
in the West Midlands to buy a home of their own in the current
"Staffordshire Moorlands makes it into the top ten nationally
for parts of the country that have seen the gap between income and
house prices growing the most. It's no wonder that people can often
feel like they have to win the lottery to be able to buy in their
"A shortage of homes means the price to buy them is being pushed
ever higher by the market, and out of reach of millions of hard
working families. Unless we start building more homes people can
truly afford, to match the demand, this will only get worse."
* HomeBuy enables people to purchase
between 25 and 75 per cent of a home and pay subsidised rent on the
remaining share. Buyers can increase that share through a process
known as staircasing and even buy their home outright when - and if
- their finances allow.
20 August 2012