38 Skyline | Edition 6 | Autumn 2023
No longer in the shadow of other schemes , is now the time for shared ownership to shine ?
Richard Walker , Head of Intermediary Sales at Virgin
Money asks the question .
Some first-time buyers are now finding it more difficult to purchase their first home because of the current mortgage market conditions .
According to figures from the ONS , the average house price increased by more than £ 50,000 in the three years to February 2023 . At the same time , the cost of living crisis is impacting disposable household income .
Higher mortgage rates also mean affordability has been squeezed , which is why affordable housing schemes remain so important .
With the end of the Help to Buy scheme , potential first-time buyers now have fewer options available to get their foot on the property ladder .
Next in line
The biggest of the remaining affordable homeownership schemes is shared ownership .
It may have been in the shadow of the shared equity scheme for the past decade but , in fact , shared ownership is well-established , flexible and accessible , with 153 specific mortgage products supporting it as of May 2023 , according to Moneyfacts .
There ’ s an array of other affordable housing options , such as First Homes , Right to Buy and Help to Build , alongside private sector alternatives to Help to Buy that have been introduced in recent years .
It makes for a more complicated sector with smaller schemes on offer that won ’ t be accessible to everyone .
And this means brokers are well placed to support first-time buyers to work out which is right for them . Getting up to date on shared ownership now will prepare you for the possible growth of this sector .
The basics
With shared ownership , the buyer purchases a share of a property , usually from 25 % but it can now be as low as 10 %. Your client usually takes a mortgage , on which they ’ ll need to put down at least 5 %.
They pay rent on the remainder to the landlord , usually a housing association or council .
As and when they can afford it , they can make further purchases of shares – called staircasing – and potentially ultimately own the whole property .
As part of government plans to make shared ownership more flexible , they may be able to purchase extra shares of as little as 1 %.
Access to mortgages
Not every lender supports shared ownership purchases , but plenty do , although criteria differ significantly .
That ’ s why you need to have a good understanding of which mortgages your
client can access , particularly if they have a modest deposit . Virgin Money will lend up to 95 % loan to value on shared ownership houses and flats , including new build .
Our new-build offers are valid for seven months with a further seven-month extension if needed .
Actions to take now
Here ’ s what you can do to ensure you ’ re confident advising your clients in the shared ownership sector :
1 Understand the shared ownership scheme so you can confidently explain it to borrowers .
1 Find out about any schemes in your local area .
1 Signpost your clients to government information on the basics of shared ownership , so they can find out more .
1 Know which lenders support shared ownership and how their criteria differ .
1 Remember it ’ s not just about purchase options but also the shared ownership remortgage market . Make sure you understand which lenders operate in the refinance sector too .
1 Have a working knowledge of other affordable housing options , so you can give your clients the full picture .
To find out more about shared ownership from Virgin Money , get in touch with your dedicated Business Development Manager and they ’ ll do everything they can to help .
intermediaries . virginmoney . com / virgin