Shared ownership is becoming increasingly popular with shared ownership completions more than quadrupling over the last five years, a new report has found.
The report by the University of Cambridge and SO Resi, the shared ownership brand of housing association Metropolitan Thames Valley Housing (MTVH), revealed that the number of shared ownership completions per year has increased from 4,084 in 2015/16 to 17,021 last year.
Shared ownership homes have become so popular that demand for them is now considerably greater than supply, with up to 10 people enquiring about each home in some areas.
The report, based on surveys with 24 housing providers and interviews with industry and user groups, reveals a growing interest in the tenure following the COVID-19 pandemic.
“In many parts of the country, interviewees felt that shared ownership is the only realistic route into home ownership for households with relatively low deposits,” the report revealed.
“The product offers flexibility as it opens home ownership at a range of possible price points to households with modest deposits.”
The report, written by Dr Gemma Burgess, acting director of the Cambridge Centre for Housing and Planning Research, is intended to be the first annual report into shared ownership in England.
The shared ownership model allows home buyers to purchase a share of a new build or resale property, typically between 25% and 75%. They then pay a subsidised rent to a housing association on the remaining share, with the option to increase their share over time and usually to buy the property outright.
The model requires purchasers to pay a smaller mortgage and deposit than if they sought to buy the home in full, making it more affordable than other forms of home ownership.
The report revealed that most shared ownership purchasers are aged between 20 and 40, with single adults without children (50%) and childless couples (35%) making up the largest groups of purchasers.
The average value of shared ownership properties purchased in 2018/19 was £265,000, with purchasers buying an initial share of 42% of the home on average and paying a deposit of £24,600.
The government currently plans to amend the shared ownership scheme to change the minimum share of the property that home buyers can purchase from 25% to 10%. Housing providers will also be responsible for repairing and maintaining the property for the first 10 years of the tenure, rather than this responsibility falling on the purchasers.
The report warned that the planned changes to the scheme could limit providers’ ability to provide shared ownership homes, affecting the scheme’s viability.
“Most survey respondents thought that the option of purchasing a 10% share and lack of responsibility for repairs and maintenance for the first ten years in particular will make the new model more attractive to buyers and will increase demand,” the report read.
“However, most survey respondents believed that the proposed changes will reduce the supply of shared ownership properties that they are able to build.”
“The unintended consequences of these changes to the product should be carefully considered before changes are implemented.”
The report also revealed a lack of public understanding of shared ownership, with members of the public not always understanding how such schemes operate or the legal agreements involved, especially with regards to leasehold. This is despite the shared ownership scheme having existed for over 50 years.
Dr Burgess concluded: “There is consensus that the UK has a housing crisis and that greater effort needs to be made to increase housing supply. Shared ownership has an important role to play in delivering new build housing supply and in meeting the need for affordable homes.
“The government should do all it can to make it as easy and simple for providers to increase their pipeline of shared ownership homes, to reduce cost and complexity from the system, and to ensure that grant levels are sufficient to ensure a strong supply of shared ownership going forward.”
Kush Rawal, director of residential investment at Metropolitan Thames Valley Housing, said: “We are pleased that this report – the first of many that we plan to commission – proves the valuable role that shared ownership has in helping people take their first steps on the property ladder.
“It’s also confirmed what we at SO Resi already knew; that people are often confused and uncertain about what it all involves. For this reason, we are determined to guide people every step of the way, with simple, clear and transparent language that ensures that there are no surprises down the line.”