Shared Ownership can save millennials from rental rut
A new report by the Resolution Foundation has found that up to a third of young people face living in private rented accommodation for their entire lives. The report revealed that 40% of ‘millennials’ – those born between 1980 and 1996 – were living in rented housing by the age of 30, and that a record number of 1.8 million families with children currently rent privately, which is up from 600,000 just 15 years ago.
However, home buying schemes such as Shared Ownership offer an alternative route onto the property ladder, giving buyers the chance to find a home to call their own at a much more affordable price.
Here at Share to Buy, we recently carried out our own report, looking at budding buyers who wanted to purchase their own home in London. Our results showed that, if buying on the open market, a first time buyer could take 11.2 years to save for a deposit for a one bedroom or studio apartment in the capital!
The figures showed that the median income of a first time buyer in London now averages at £66,111, which is more than three times the average UK salary and exceeds the mean earnings of those working in the Finance and Insurance Services in London. The report also revealed that the typical deposit required to purchase a one bedroom or studio apartment is £77,407, and £112,555 for a three bedroom home. With many buyers unable to ‘go-it-alone’, over a third reported that a proportion of their savings came from a gift or loan from family or friends.
However, the same study showed that Shared Ownership buyers in London have a much lower average deposit of £24,358 – less than a third of the typical open market requirement. Minimum deposits for Shared Ownership homes in London average at just £6,335.97 for a one bed, or £8,390.60 for a three bedroom home. The medium household income of London-based registrants on Share to Buy is £42,000 – almost 40% less than the average first time buyer in the capital!
Nick Lieb, Head of Operations for Share to Buy, comments, “There is no doubt that home ownership is becoming increasingly out of reach for many of those looking to buy. Our figures show that schemes such as Shared Ownership are often the most achievable – and perhaps only route onto the housing ladder for many first time buyers. At Share to Buy, we are proud to be working with some of the sector’s largest home ownership providers, who are battling a challenging market and dwindling funding to deliver truly affordable homes across the country.”
Shared Ownership offers buyers the opportunity to purchase a percentage share of a property (between 25% and 75% of the home’s full market value) paying 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 to ultimately own their home outright.