Shared ownership must be affordable

September 3, 2019

The Government has announced plans for a new national model for shared ownership which it says, will help thousands of lower earners step onto the housing ladder.

Known as ‘staircasing’, one of these steps will allow people to buy their home in 1% increments, rather than being forced to save up to 10% at a time.

The Government’s announcement is welcomed but unfortunately, it raises a number of questions about administrative costs that were not answered in the example that the Government gave, below.

£150,000 shared ownership property:

  • A family in a £150,000 shared ownership 2-bedroom property could buy an initial 25% stake with a mortgage for £37,500 while paying subsidised rent on the remainder.
  • They would then have to save up £15,000 at a time to increase their stake, and decrease their rent – which is beyond the reach of many.
  • Under the Government’s plans, shared owners would be able to save up 1% at a time – or £1,500.

The National Federation of Builders (NFB) welcomes any scheme to make homes more affordable but challenges the Government to explain how costs from surveyors, solicitors, mortgage adjustments and stamp duty are factored in, especially as they are typically charged every time a repayment is made.

Richard Beresford, chief executive of the NFB, said: “The Government must ensure that improvements to shared ownership are not a fee trap. Saving £1,500 but paying £1,800 in fees will not help homeowners. Shared ownership must be affordable from start to finish.”

Rico Wojtulewicz, head of housing and planning policy, said: “Shared ownership suits some people and allows them to get on the property ladder, however, the Governments main objective must be to bring forward genuinely affordable housing, rather than focussing on affordable financial products.”

More information can be found here, at the Homeowners Alliance website.

National Federation of Builders

The National Federation of Builders is a United Kingdom trade association representing the interests of small and medium-sized building contractors in England and Wales.

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