Getting on the property ladder is a dream held by many people in the UK and spending more time away from the office, as a result of the pandemic, is likely to have increased their desire for a place to call home. However, requirements have changed significantly since the start of the year and there is more interest in homes with a garden, greener locations and having a separate office space.
With the UK facing a number of challenges related to the pandemic, options for first-time buyers in particular are limited. Shared ownership is one way that FTBs, those hoping to move to a new area or even those looking for a bigger home can take the next step on the property ladder, despite having a small deposit.
The supply of shared-ownership homes has increased greatly in recent years, from around 4,080 units in 2015/16 to more than 17,000 in 2018/19, according to figures from housing association Co-Ownership, and the number looks set to rise further. A growing supply has meant that, after a decade of decline, the proportion of 25- to 34-year-olds who own their home has increased, resulting in almost equal proportions of this age group living in the private rented and owner-occupied sectors, as Ministry of Housing figures found.
When clients buy a shared-ownership property, they have a choice about how to pay the stamp duty. This can be a one-off payment, based on the total market value of the property, or they can pay in stages, paying an initial share and then paying again if they choose to staircase. As the government’s freeze on stamp duty on transactions up to £500,000 until March 2021 also applies to shared ownership, it’s given aspiring homeowners an added incentive to act quickly.
Most UK adults say saving for a deposit is the biggest barrier to homeownership, so shared ownership can provide an alternative path. Buying a shared-ownership property with limited funds may become even easier following the government’s announcement of a new model that will reduce the minimum initial share that can be bought from 25 per cent to 10 per cent.
Adrian Moloney is group sales director of OneSavings Bank
