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Feature: Bridging the gap after Help to Buy ends with enhanced shared ownership choices

By Kush Rawal, Director of Residential Investment at SO Resi

With significant cost of living pressures on individual and family budgets at present, it is even more important to avoid costly or ill-informed choices about homeownership.

Help to Buy has provided a popular route for many onto the housing ladder. However, it is now rapidly nearing its end. The scheme resulted in an increased number of first time buyers, with the annual figure now at a 20-year high. That number is expected to fall in the run up to the scheme closing for new applications in October this year and finally ending in March next year.

The balance to strike is between a desire by many to own their home, giving permanency and stability, but with consideration of the high cost of doing so. Help to Buy has facilitated the former with over 350,000 young people and families helped into homeownership since its launch in 2013. Of this total, 83 per cent were first time buyers.

However, the national average house price is £288,000, and an eye-watering £507,000 in the capital. That means first time buyers around the country need to find a deposit, typically, of £52,935, rising to twice that in London. Although Help to Buy has helped many to buy, in itself it has not tackled the expensive wall that large numbers of people struggle to climb.

That challenge has not been helped by the massive rise in property prices across the years. When The Queen first sat on the throne in 1952, the average price was £2,000, according to Savills’ research. It calculates that is the equivalent of £56,000 in today’s money. This puts even more emphasis on helping homebuyers than just assisting them to keep pace with inflation.

Shared ownership is one tried and trusted route that has been around since the 1980s and has recently been enhanced by the Government. Numerous homeowners today could not have realised their dreams without it. The average deposit paid in London by a SO Resi buyer, for example, is £27,000; around half of the national average and a quarter of the typical London requirement.

Moreover, through staircasing, an individual’s ownership percentage can be ratchet up over the years. Under the Affordable Homes Programme 2021-2026, that ownership can now start at 10 per cent and rise in one per cent increments in each of the first 15 years.

With the end of Help to Buy rapidly approaching, the focus will fall on shared ownership plus first homes and the mortgage guarantee scheme. The First Homes scheme, as it implies, is for first time buyers who get to buy a new home for up to 50 per cent off its market value. The Mortgage Guarantee Scheme is designed to help those with limited savings, who cannot reach the 10 per cent deposit mark, but still aspire to have a home of their own.

Put together, high property prices, out-of-reach deposit expectations and the ending of Help to Buy means a narrower band of choices for many. However, shared ownership, now enhanced with new provisions, has a long, successful history that will continue well to help future generations enjoy the benefits of owning their own home.