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Shared ownership cheaper for first-time buyers

SHARED ownership is cheaper than buying outright or renting privately, according to new research from the National Housing Federation.

The monthly saving between buying outright and through shared ownership in the West Midlands averages £119 in total housing costs. And shared ownership is an even better buy in the South West, which includes Gloucestershire, where it is on average £284 less a month for first-time buyers.

Savings for first-time buyers who move from private rented housing to shared ownership are around £113 a month in the South West and £13 in the West Midlands.

The NHF research, published at the start of Shared Ownership Week 2013, confirms that the part buy-part rent deal is a truly affordable option for many first-time buyers who are priced out of the open market.

Nearly half of first-time buyers turn to shared ownership options like Bromford's HomeBuy, according to Elizabeth Humphreys, West Midlands Lead Manager at the NHF.

"Shared ownership is a desperately-needed affordable option for young people and aspiring homeowners. It's a great way on to the housing ladder," she says.

"You can buy extra shares in your home as time goes on and end up as an outright owner of your home. With about 166,000 people waiting for a shared ownership home across the country, it is essential that Government and lenders continue to support this product that is giving hope to thousands."

Bev Hall on HomeBuy

Bromford Homes Sales and Marketing Director Bev Hall, above, welcomes publication of the research and backs the NHF call for more support.

"Shared ownership remains one of the best-kept secrets of the property world and campaigns such as this do a great job in bringing shared ownership to the attention of decision-makers and more first-time buyers," she says.

"We're got many great stories from homebuyers like the Osborn family who tell us that shared ownership has transformed their lives by making the home ownership dream a reality. And demand for some of our newest shared ownership development is simply amazing − at Larks Rise, Coventry, we took five reservations in a single day and we've sold more than a third of our homes at Castle View, Stafford, in a matter of a few weeks.

"With so many people priced out of the open market, shared ownership really can offer them the hope they are looking for − and it's really helpful to have these NHF facts and figures to hand when we're explaining how it works.

"We've been saying for a long time to our customers that shared ownership is cheaper month by month than renting on the private market. We've now got the figures to show it's also cheaper overall than buying outright − and, of course, the typical deposit is much, much lower with shared ownership."

Average deposit halves for first-time buyers

According to the NHF, the average first-time buyer deposit on the open market in the West Midlands is now £25,295 while the average shared ownership deposit is less than half that at £12,215. And although the average West Midlands first-time buyer would need a gross income of £28,908 to afford a mortgage, the average shared ownership buyer's income is only £22,000.

The average first-time buyer now spends £652 a month on housing costs in the West Midlands, compared with £533 a month if in shared ownership. This means a difference between spending 49% and 40% of the average single person's take home salary on housing costs, says the NHF.

Shared ownership is also cheaper than renting, with the average monthly private rental cost in the West Midlands at £546.
The average first-time buyer in the South-West now spends £830 a month on housing costs, compared with £546 a month if in shared ownership − a difference of £284.

Shared ownership is also 17% cheaper than renting, with the average monthly private rental cost in the South West at £659.

The average first-time buyer deposit in the South West is now £32,209 while the average shared ownership deposit is less than half that at £13,065. And although the average South West first-time buyer would need a gross income of £36,811 to afford a mortgage, the average shared ownership buyer's income is only £22,800.

To find out more about Shared Ownership Week 2013 and how the figures were worked out visit the NHF website.

18 March 2013