With the wealth of options out there to help people onto the property market, it is no surprise that the number of first-time buyers has steadily been increasing, with numbers currently at an 11-year high. However, outside of the government’s Help to Buy scheme, it seems that young people do not understand their other purchasing options – chiefly that of shared ownership.
What is shared ownership?
Research carried out from YouGov found that although three-quarters of people in the UK have indeed heard of ‘shared ownership’, only 40% of 18 to 24-year olds were aware of the scheme. Furthermore, of that 40%, half of them revealed that they had no knowledge of shared ownership whatsoever, other than having heard of the name.
The scheme explained
Aimed mainly at first-time buyers, The Shared ownership scheme is a cross between buying and renting. Essentially, you buy a share of the home – between a quarter and three quarters – and rent the remainder at a reduced rate, with the option to buy a bigger share in the property at a later date. All shared ownership homes in England are offered on a leasehold basis, and the majority are newly built; however, there are some properties which are being re-sold by housing associations. At its core, the scheme is intended to help first-time buyers onto the market, but those who earn a household income (combined) of less than &80,000 or are renting a council/housing association property can also buy through the scheme.
A viable option?
Many of those questioned in the YouGov survey thought that shared ownership meant quite literally sharing the property purchase with friends, family or a partner. When the scheme had been properly explained, almost a quarter of the 18 to 24 year olds stated that they would be “very likely” or “fairly likely” to use the initiative in the future, the highest out of all of the age groups questioned – showing that the scheme appeals directly to the target market, with just the awareness of the scheme limiting participation numbers.
“Shared ownership as a method of purchasing has been around since the 1970s and offers a realistic way of getting onto the property ladder. It’s a proven formula that helps people secure a home, even where a traditional mortgage is not affordable, and its longevity is testament to its success,” said Jaedon Green, director of product and distribution at Leeds Building Society.
“The method is becoming increasingly popular for first-time buyers as it reduces the need for a significant deposit, which can be difficult for some to manage. The scheme also permits first-time buyers to combine it with a Lifetime ISA, maximising any deposit,” he noted.
Awareness limiting efficacy
The YouGov research has shone a light on the fact that almost a quarter of those aged 24 or under would consider shared ownership as a way to purchase property, once they fully understood what the scheme consisted of. With so many potential buyers being put-off from buying a property simply due to lack of awareness it is clear that the onus is now on educating the wider public, and specifically 18 to 24 year olds, to the benefits of the scheme in order to continue to grow first-time buyer numbers and support the property market as a whole.