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Shared ownership - not just for first-time buyers?

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 23. February 2023

Interested in speaking to mortgage brokers about shared ownership. 

Just Mortgages said that the term should be rebranded/repositioned as it can be misleading and imply that it is only good for first-time buyers, whereas it can have much wider appeal. 

  • What cohorts of borrowers can use shared ownership apart from first-time buyers? 
  • When would you recommend shared ownership/what should borrowers keep in mind going down this route?
  • Have you seen an increase in shared ownership enquiries/recommending shared ownership more since Help to Buy ended? 

5 responses from the Newspage community

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Editor
Justin Moy
Managing Director at EHF Mortgages
Shared Ownership is very much an option for a number of different types of buyers, in particular, we have helped many that have divorced and have sold their homes, to find that affording a new property with enough space for children is expensive. Shared Ownership has made it affordable to stay nearby, not needed to disrupt schooling and stay on the property ladder.

Shared Ownership is a really viable option for those who are looking to buy on their own, with smaller deposits, or with more junior incomes compared to those in the local area, typically the South East. With only 5% of the share needed as a deposit, it's a great alternative to renting privately. As property prices have increased over the years, the number of SO enquiries has definitely increased, and with Help to Buy now defunct, it is the main scheme to use.
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Gareth Davies
Director at South Coast Mortgage Services
We've certainly seen an uplift in shared ownership enquiries recently. We're also finding that aside from your FTB, one of the more frequent buyer types is someone fresh from marital separation. A new single parent whose sole income isn't sufficient to pass affordability tests for standard ownership. Another common theme we see is the misconception that the scheme means costs will be cheap. It's surprising how much the monthly costs equate to once you factor in the mortgage, rent and estate/service charges.
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Gary Bush
Financial Adviser at MortgageShop.com
I noted the suggested name change for Shared Ownership by another firm and wonder if they are aware these schemes used to be called, back in 1992, DIYSO (Do It Yourself Shared Ownership) - I think anything is better than DIYSO and Shared Ownership kind of describes what it is, does it not?!
We see all ages and circumstances of clients for Shared Ownership, first time buyers, retirees, downsizers, upsizers, divorcees, people with no deposit, people with bad credit - it's clear to us of the benefit of these brilliant methods of home ownership, havings arranged our first in 1992.
We would always recommend shared ownership, especially if the market price for the amount of bedrooms a client wanted to purchase was just out of reach - borrowers need to be aware of the additional costs other than rent like monthly management costs.
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Luke Thompson
Director at PAB Wealth Management
We have seen customers who have used shared ownership as a way to upsize in the past when they have perhaps been looking to move from a flat into a house perhaps following the birth of a child and they need a bigger property.

I think in an ideal world if customers can afford to buy a property via a traditional route this is definitely something they should try to do. But Shared Ownership can offer a way onto the property ladder for some customers who may not be able to do so in the conventional manner.

It is important to remember however that housing associations can put restrictions in place including how much of the property you can own in the future which may make it difficult to sell the property. Rents and service charges can also increase so it is important to budget for these future rises.
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Joshua Gerstler
Chartered Financial Planner at The Orchard Practice
"I have had a few Shared Ownership enquiries recently from clients who are getting divorced. They cannot afford to own outright due to living off only one salary and having maintenance payments to make and Shared Ownership is proving a popular way to stay on the property ladder."