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Cost of deposit in London 10 times higher for mainstream FTB buyers

First time buyers using shared ownership are able to buy more expensive properties with a lower deposit than those taking mainstream products, according to new data from Leeds Building Society.

In 2021, the average purchase price of a home bought by a Leeds Building Society shared ownership borrower was nearly a third more expensive, when compared with members who bought their first property outside the scheme.

In Greater London, last year, the average mainstream first time buyer needed a deposit more than 10 times higher than the average £11,024 deposit* needed by a shared ownership purchaser, according to the research.

In the South East, the average deposit for the Society’s mainstream buyers was 6.7 times higher than for shared ownership purchasers last year. In the South West it was 6.3 times higher, in the North East the gap was 5.7 times, in the West Midlands it was 4.8 times higher and in Wales the difference was 3.8 times.

The average shared ownership buyer was 4.6 months younger than the average first time buyer using the Society’s mainstream products.

According to data from the Office for National Statistics** the gap between average house prices and incomes grew between 2010 and 2020 across all but one of the UK’s regions. Areas seeing an increase included London (up from 8.7 times to 12.5 times) the South East (up from 7.7 times to 9.6), while the North East was the only region where there was a slight fall (5.4 times to 5.1).

“Our data shows that the deposit needed by first time buyers in London can be as much as the price of a property in other regions of the UK,” says Martese Carton, Director of Mortgage Distribution at Leeds Building Society.

“As the gap between incomes and property prices continues to grow, affordable housing schemes like shared ownership can bring home ownership in reach of more people, as it reduces the size of the deposit needed, which is consistently stated as one of the biggest hurdles to home ownership.

“We believe there’s a lack of supply of shared ownership properties, which have the potential to help many more first time buyers. We’d like to see greater Government support for increasing the supply of affordable housing.

“We’re always looking for ways to widen access to home ownership so we’ll continue to monitor trends closely to ensure our products and lending criteria are meeting borrowers’ needs.”

Shared Ownership enables people to purchase part of a property initially and pay rent to a landlord, usually a housing association, on the remaining share. Borrowers can then purchase further shares if they wish to increase the proportion of equity they own outright.