Shared ownership is a viable option for renters aiming to get onto housing ladder

With the number of renters across the UK more than doubling since 2001, there has been a sharp rise in the volume of people who fear that they will never be able to afford to buy a home. 

The latest research by Halifax and YouGov found that two in five renters cannot see how they will ever be in a position to buy a property, despite a desire to own a place of their own.

It was also revealed that around three in ten private renters in the UK think it is now normal for people to rent for life.

Buy new analysis by Leeds Building Society has found that private tenants would be financially better off using shared ownership to acquire a share of a property rather than renting, while crucially this would also help people gain a foot on the housing ladder. 

London renters, in particular, could reap the benefits of shared ownership, according to the research. 

Leeds Building Society found purchasing a 25% share of a £600,000 one-bedroom flat in Islington, for example, with a £7,500 deposit, could save borrowers as much as £41,004 over a two year period, compared with the cost of renting a comparable property on the open rental market, which would typically cost about £3,900 per calendar month. 

They also have the option to increase the share of the property they own over time – known as staircasing – so could invest the money saved to buy a greater share of their home.

Matt Bartle, director of products at Leeds Building Society, commented: “Shared Ownership celebrates its 40th anniversary this year and remains a cornerstone of affordable housing in the UK. The scheme has enabled thousands of people to step onto the property ladder and remains a viable option, particularly for first time buyers.

“Time and again, the challenge of saving up for a deposit is named as the biggest obstacle facing anyone wanting to buy their first home. However, our 95% borrower share mortgages require a deposit of 5% of the share borrowers are purchasing, rather than of the entire value of the property, significantly reducing the size of deposit required.

“Recent changes to the scheme have made it more accessible than ever, with the only key restriction that borrowers must have a household income of less than £80k (£90k in London). A consultation on changes to Shared Ownership, including measures to make staircasing easier for buyers, has also recently been completed.

“For many, Shared Ownership makes financial sense as it immediately reduces the size of a deposit, purchasers own a share of their home and can build up equity if they wish, while the monthly cost can be cheaper than an equivalent privately rented home.”

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