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Two thirds of affordable housing in the UK bought by first time buyers, research shows

A review of affordable housing by major UK lender the Halifax has looked at low cost home ownership (LCHO) sector and, in particular, affordable housing schemes covering shared ownerships, shared equity, resale price covenants and other LCHO arrangements.
 
Using information from its own housing database for the 12 month period to the end of April 2013, from the Council of Mortgage Lenders, the HMRC and the department of Communities and Local Government (CLG) it found that first time buyers made up 65% in affordable schemes.

This is significantly higher than the 40% of all home purchases made by first time buyers over the same period. Overall, there were 14,737 purchases of homes made by all buyers under the various shared equity and shared ownership schemes in 2012/2013.

The schemes have particularly helped younger buyers, with 40% of all affordable home buyers in the age band 20 to 29, a significantly higher proportion than in the market as a whole where they make up 25% of all housing sales.

However, in spite of the success of affordable housing schemes amongst this group, there is a lack of understanding of the support available to first time buyers through the government initiatives such as NewBuy and Help to Buy. Just 30% of 20 to 45 year olds have welcomed the initiatives or think they work at encouraging and helping people to get on the property ladder.

‘Many of the affordable home ownership schemes available have been designed specifically to help first time buyers get on the ladder and boost new build sales. They can help people realise their ambitions to become home owners, whilst also providing the potential to boost levels of house building, which could help to alleviate housing supply issues,’ said Craig McKinlay, Halifax Mortgage director.

‘The recent introduction of the Help to Buy equity scheme may well play an important role in meeting demand by targeting all buyers, not just those buying for the first time. The Help to Buy mortgage guarantee, to be launched in January 2014, will also extend assistance to buyers looking to purchase existing properties as well as new builds,’ he explained.

Halifax has looked at the typical profile of someone buying a home under affordable housing schemes which include shared ownership, shared equity and other low cost house purchase arrangements.

The average price paid for properties purchased under the various affordable housing schemes in Britain is £167,955, some 10% lower than the £185,324 average for all house purchases.
 
Regionally, the highest average price paid by purchasers using these schemes is in London at £228,560, whilst the lowest is in the North East at £132,483. In London, the average value of a property sold in a scheme is 25% lower than the regional average for all housing transactions.

The average price paid by first time buyers using the schemes is £141,245, just under the average price paid by all first time buyers of £142,839 for all housing. Despite the lack of difference in prices at the UK level, first time buyers in London  pay an average price under these schemes that is a fifth lower than the average price paid by all first time buyers in the capital at £201,208 against £256,154.

In the past five years many of the schemes under the umbrella of affordable homes have been designed not just to help first time buyers purchase homes, but also to stimulate the new build sector. In the year to the end of April 2013, 75% of properties bought under affordable home ownership arrangements were newly built properties.

The research also shows that 16% of all affordable housing transactions in the 12 months to April 2013 were in the South East followed by Scotland at 14%, then the North West, the South West and the West Midlands all at 10%. These figures mirror the geographical distribution for all housing transactions. For example, 18% of all property sales are in the South East.

The average gross annual income of an affordable home buyer is £28,350 and the average income of those buying under these schemes is £4,344, some 13% lower than the average earnings for those in full time employment.

Regionally, the average income of buyers under these schemes varies from £46,721 in London to £24,518 in North West.

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