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Shared ownership 'best-kept secret' for buyers

Shared ownership is one of the property world's best-kept secrets, says Bromford Homes Sales and Marketing Director Bev Hall.

A "secret" that offers real hope for aspiring homeowners at a time when, according to the Council of Mortgage Lenders, the typical age of a first-time buyer who does not get help from relatives stands at 31.

And a new UK Economic Outlook report from business advisors PwC predicts that many will find it harder than ever to get their first foot on the property ladder.

Bev highlighted the benefits of shared ownership during an online Guardian debate about the future of HomeBuy and what can be done to make it work better.

"Shared ownership remains one of the property world's best-kept secrets," said Bev in a response to Guardian panelist James Cartledge.

"We need to do more, much more, to ensure that aspiring home-owners and even people in the property sector understand what it is, how it works and what it can do for many hard-pressed working people."

HomeBuy offers aspiring homeowners the chance to buy between 25 and 75 per cent of their 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.

Bev said: "Buyers can, of course, go on to buy 100 per cent of their property and The Guardian refers to a study showing that only one in five shared ownership buyers since 2001 have done so.

"We have two things to say on this. Firstly, let's not forget that some customers are really happy with their tenure, don't want to staircase to 100 per cent and there is no pressure for them to do so. What they've got is affordable, it's secure, it gives them what is arguably the best of both worlds.

"Secondly, we're seeing a change in the demographic of our shared ownership buyers. More of those buyers are people who, before the credit crunch, would probably have been able to buy outright.

"Now, with the housing shortage and consumer credit squeeze, that is no longer possible − unless, of course, they can make a withdrawal from the Bank of Mum and Dad.

"These are typically young working people who can afford the five or ten per cent deposit for a 25 or 50 per cent share in one of our shared ownership homes. People are more likely to progress in their careers, to increase their earnings and to staircase their share up to the 75 per cent maximum and even to buy outright.

"This is a definite trend and we'll be really interested to see the results of another report like the Cambridge study in two or three years time. We would expect to see a rise in the number of people staircasing up to 75 per cent or even full ownership.

"In the meantime, yes, we do need to make HomeBuy work better - most of all, we need to raise awareness and to find a more effective way of marketing shared ownership because most first-time buyers don't know about it − rather than design a new alternative, as is suggested in the Guardian debate."

Bev has the facts and figures to prove that buying your home through shared ownership is cheaper than renting privately and buyers to put the uncertainties of private renting behind them.

"First-time buyers keep telling us that security is one of the most important factors for them when it comes to shared ownership. If they rent privately, they can in effect be turned out of their home at the end of, say, a six-month contract and have to start all over again," said Bev.

"With many lenders requiring fairly large deposits, shared ownership is indeed a good way for many people to get into the home-buying market and here in the Midlands it's possible to do so for as little as £25,000," she said.

"That means a £2,500 deposit if you're putting up ten per cent of a 25 per cent share and for that buyers get a brand new energy-efficient home built for ease of maintenance.

"When buyers come to us, we go through their finances with them and work out what they can really afford − whether they are buying a 25 per cent share or anything up to the 75 per cent maximum through staircasing.

" Long-term affordability is a key issue. Personal circumstances change if they do Bromford will be understanding and will work with anyone who finds themselves in financial difficulties. Compare that to the alternatives!"

17 July 2012