The Blog

What Is This 'Shared Ownership'?

Shared ownership is simple and it works. I feel passionate about it and its ability to help first time buyers who can't otherwise afford to buy a home.

The most typical question I am asked is: "So what is this 'shared ownership' - this 'part buy part rent' thing?" I go on to explain that it's a fantastic product, supported by the UK Government, that helps people to get a foot on the property ladder. The purchaser buys as much of a share in the property as they can afford, and pays a low rent on the remainder. In time, they can buy the rest and own the property outright.

Shared ownership is simple and it works. I feel passionate about it and its ability to help first time buyers who can't otherwise afford to buy a home. I hope that my recent shortlisting for the First Women Awards 2013 in association with Lloyds Banking Group will help raise awareness of everything that is special about shared ownership.

But what is so special about it? First of all, it's affordable. In London and the South East of England, properties are amongst the most expensive in the world. Hard-working, aspirational people on low to middle incomes don't stand a chance of owning a place of their own - most rent on the private market, a tenure that isn't designed, in this country, to be long-term or secure. Younger people are living with their parents for longer, having no 'nest' of their own to fly to. Some start to form young families of their own - together, but living apart out of necessity, not choice.

But high property prices in the South East are old news. First time buyers have always found it more difficult to leave home here than in more affordable parts of the UK. The reason shared ownership has recently become so indispensable is that we're going through, arguably, the biggest housing crisis in a generation. There aren't enough homes available, and those that are, aren't affordable.

A first time buyer in the South East on an average annual income of £27,500 needs to borrow 7.1 times that salary to afford a first time buyer property valued at (a pretty average) £195,638. In London the situation is worse. With an average income of £33,460 and an average house price of £333,629, the mortgage multiple rises to a staggering 9.9! Deposit requirements are also prohibitive, except to the lucky people with an account at the bank of mum and dad.

Shared ownership, on the other hand, requires mortgage deposits based on the share. Therefore, compare a deposit of £4,890 for a 25% share of a £195,638 property, with the 10% (£19,563) deposit required on the open market. Nearly £5,000 is still a large sum of money - but much more realistic for those who are prepared to save up. Our typical shared ownership customer is 35, earning an annual salary of around £27,000. And the product is flexible enough to help even our 'untypical' customers - households with incomes of up to £60,000 nationally and up to £77,200 in London.

The homes we sell at Moat for shared ownership are high quality, attractive and desirable. Most are new build but there is also a strong resales offer. Homes have to conform to strict Government guidelines, so their space standards are generous and their quality of build and finish is high. Additionally, items like kitchen appliances and carpets are often included, easing the strain on the pockets of people moving into their first home.

Demand for shared ownership is understandably high with so many people priced out of the market. The number of homes for shared ownership is insufficient to satisfy even a fraction of the demand and Government support is vital for the provision of more. The latest offering - Help to Buy - will go a long way towards helping people to buy a home, but it is not as affordable as shared ownership with its preciously low entry point (for a 25% share purchase).

It often surprises people to know that shared ownership has been around for over thirty years. It has helped around 200,000 households to achieve their dream of home ownership. It's been the cornerstone of our success as a housing association, and with time, effort and effective promotion, we can make sure that it continues to meet the needs and aspirations of hardworking households for another thirty years.

Marilyn DiCara is shortlisted for the 2013 First Women Awards.

The awards ceremony will take place on Wednesday 12 June and is hosted by Real Business in association with Lloyds Banking Group.