The rise in Shared-Ownership schemes, why are so many housing associations investing in those who can’t afford to buy on the open market?

With so much uncertainty around the future of the UK property market, and how the financial landscape could be altered in the coming months, it’s refreshing to see so many housing associations supporting those that need help getting onto the property ladder.

With mortgage rates at a relatively low level, and with so many supportive schemes on offer around the country, now is actually a great time to look to purchase a home. Yet for many, the thought of saving a five-figure deposit is a seemingly impossible task. In order to combat this issue, and to support those that aren’t able to save the required amounts for the deposits, a variety of government backed schemes are being put in place. Shared Ownership schemes are just one of the housing association backed schemes which are becoming more and more readily available and are proving particularly popular.

So, what is Shared Ownership?

Shared Ownership schemes are offered by a range of housing associations across the country as a means to support those that aren’t able to save the required amounts for a house deposit. The scheme offers those that can’t afford to buy on the open market, the opportunity to buy a portion of a home, with the rest being owned by the corresponding housing association. It’s designed to be flexible, and one of the biggest benefits of the scheme is that buyers won’t need to secure a huge deposit compared with a traditional mortgage. The minimum shares a buyer can purchase is 25% and the maximum at the point of original purchase is 75%.

In theory, this means that buyers could need as little as a 5% of 25% deposit, reducing the strain of saving for a hefty lump sum.

Why are more housing associations offering the scheme? 

Whilst the main reasoning behind more housing associations creating these schemes is that they understand the difficulty buyers face in the current economic climate, this of course is a profitable avenue. The housing association supports the buyer by absorbing the cost of much of the house deposit, and in return the buyer pays rent to the housing association on the percentage they don’t currently own. Buyers have the opportunity to purchase more shares in the home as they go, sometimes going on to owning the property outright in the future. This is known in the industry as staircasing

For more information on Shared Ownership schemes within your area, head to www.aster.co.uk and get in touch.