First-time buyers using shared ownership are able to buy a more expensive property, with a smaller deposit, when compared to those using mainstream mortgage products.

New data, based on Leeds Building Society customers, shows that in 2021 the average property purchase price made by a shared ownership borrower was almost a third more expensive when compared to members buying their first home outside of this scheme. 

In addition, those buying outside of shared ownership needed higher deposits, particularly for those purchasing in London and the South East, where house prices are higher. Of course this mainly reflects that  buyers are only purchasing a share in the property.

However Leeds BS says that given high deposits are one of the main bars to home ownership, schemes like this may help people get a first step on the housing ladder. Its figures show that in Greater London the average first time buyer needed a deposit more than 10 times higher than the average £11,024 deposit put down by a shared ownership purchaser.

In the South East, the average deposit for the Society’s FTB’s was 6.7 times higher than for shared ownership purchasers last year. In the South West it was 6.3 times higher, in the North East the gap was 5.7 times, in the West Midlands it was 4.8 times higher and in Wales the difference was 3.8 times.

The data also shows that the average shared ownership buyer was 4.6 months younger than the average first time buyer using Leeds BS mainstream products. 

According to data from the Office for National Statistics the gap between average house prices and incomes grew between 2010 and 2020 across all but one of the UK’s regions. Areas seeing an increase included London (up from 8.7 times to 12.5 times) the South East (up from 7.7 times to 9.6), while the North East was the only region where there was a slight fall (5.4 times to 5.1).

Leeds BS director of mortgage distribution Martese Carton called for greater government support for increasing the supply of affordable housing to extend the shared ownership model.

Carton says: “Our data shows that the deposit needed by first time buyers in London can be as much as the price of a property in other regions of the UK.

“As the gap between incomes and property prices continues to grow, affordable housing schemes like shared ownership can bring home ownership in reach of more people, as it reduces the size of the deposit needed, which is consistently stated as one of the biggest hurdles to home ownership.

“We believe there’s a lack of supply of shared ownership properties, which have the potential to help many more first time buyers. We’d like to see greater government support for increasing the supply of affordable housing.

“We’re always looking for ways to widen access to home ownership so we’ll continue to monitor trends closely to ensure our products and lending criteria are meeting borrowers’ needs.”