Share to Buy report: London first time buyers put down £19,000 extra per bedroom
Each extra bedroom in a first time buyer home in London can add almost £19,000 to the cost of a deposit, according to a recent report by property portal Share to Buy.
The report reveals that – without the assistance of home ownership schemes such as Shared Ownership – purchasing a three bedroom home in the capital, instead of a two bedroom property, pushes the average first time buyer deposit from £93,623 to £112,555. The difference – £18,932 – amounts to more than half a Londoner’s average gross income (£32,306). Similarly, upgrading from a one bed to a two bed property in London adds £16,216 to a first time buyer deposit.
Besides the financial impact, the report also highlights the added time cost to first time buyers who wish to scale the property ladder without Shared Ownership. It takes, on average, 2.2 extra years for a dual earner couple to save for a deposit on a two bed home compared to that of a one bed. Moreover, opting for a three bed property adds a further 2.5 years to their savings time.
With Shared Ownership, however, smaller deposit sizes mean the cost difference between purchasing a smaller and larger home is greatly reduced. Shared Ownership buyers in London can put down a minimum of £7,819.48 for a two-bedroom home and £8,390.6 for a three-bedroom home, meaning that upgrading to a larger property adds just £571.12 to the deposit – a fraction of what it would cost without Shared Ownership. Equally, it can cost a first time buyer as little as £1,483.51 in extra savings to upscale to a two bed home from a one bed, with the latter requiring an average deposit of just £6,335.97 through Shared Ownership.8
Shared Ownership offers buyers the opportunity to purchase a percentage share of a property (between 25% and 75% of the full market value) and pay a subsidised rent on the remaining share. Buyers can choose to purchase additional shares as and when they can afford to – also known as ‘staircasing’ – allowing them, in most cases, to ultimately buy their home outright.
Nick Lieb, Head of Operations for Share to Buy, the UK’s leading portal for Shared Ownership homes, comments: “Deposits are among the biggest stumbling blocks for buyers trying to get on the property ladder today. Because of the massive gulf in deposit sizes between one, two and three bedroom properties, many buyers are left with an unacceptable choice – postpone jumping on the ladder or settle for a smaller home than they may want or need. By allowing buyers to purchase a share in their home, rather than buying outright, Shared Ownership lightens the burden of a deposit and makes it easier for buyers to snap up the right property for them.”
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