Insight and events

With the nation being forced to spend the most part of last year indoors, the dream of becoming a homeowner and having your own space remains a priority for many aspiring first-time buyers.

Yet decades of rising house prices have presented challenges for thousands of those who are eager to step onto the property ladder. This seems all the more challenging today, with the average UK house price rising to a record high of £254,606[1]; a potential side effect of the ongoing stamp duty freeze, which has been a lifeline for so many residential buyers during the COVID-19 pandemic.

Combine this with the fact that that the Help to Buy scheme is set to end in 2023, and the number of residential products available at 90% LTV is much lower than it was compared to a year ago[2], those looking to step on the property ladder may well find their options limited.

However, as Help to Buy starts to wind down, shared ownership is one area where we could expect to see an increase in popularity.

How shared ownership could be the solution

With lower deposits accepted, shared ownership offers an alternative route onto the property ladder. Having begun back in the 1970s, the scheme offers first-time buyers the chance to find a place they can call home at an affordable price.

Properties are generally more accessible than standard mortgages, and more secure than private renting, with buyers owning a share of the property – not to mention living without the worry of suddenly being evicted.

One thing you may have not considered is that the Help to Buy changes mean that the scheme will only be available for first-time buyers. So, if your client wants to move house or upsize and are struggling to find a deposit, shared ownership may be the only solution.

Three things to consider for shared ownership

While this sounds promising for first-time buyers, finding a lender with the appropriate level of experience is essential to solving your shared ownership cases.

Kent Reliance for Intermediaries understands the demands that prospective buyers of today encounter, and fully supports shared ownership initiatives. We have the expertise required, flexible criteria, and ongoing relationships with housing associations, all of which can help us work with you to support your clients’ needs.

However, even with our support, there are three things you should consider when dealing with shared ownership cases.

• Loan amount – There may well be limitations on how much a buyer can borrow, so it’s important to know this from the start – especially if your client is looking to purchase a larger share of the property in the future. This can limit their options moving forward, so it’s important to check.
• Buyer ambitions – Each lender will approach shared ownership differently – we, for example, offer staircasing (buying additional portions of the property), while others will provide different rental or mortgages costs. These options benefit your clients in different ways, so understanding their preferences and goals from the start is vital.
• Housing associations – lenders will need to know as much information about the relationship between the housing association and shared ownership homes themselves. It’s important we have as much information, and are aware of anything that may impact the buyer when they come to sell their home in the future.

How Kent Reliance for Intermediaries can help

While many applicants may be turned away due to insignificant deposit levels, we can accept 0% deposits on part-buy and part-rent mortgages for shared ownership, with us accepting up to 100% mortgage share value.

We also offer 100% staircasing, which provides better flexibility and opportunities for buyers looking to purchase more shares in their property, and that’s why we’ll only consider properties with housing associations that permit this.

With our common sense lending, five-star service and detailed knowledge of shared ownership, we could help you provide solutions for residential buyers and help them take that all-important step onto the property ladder.

For more information about our shared ownership offering, contact your local business development manager or call us on 01634 888276.

[1] https://www.mortgageintroducer.com/halifax-house-prices-at-record-high-as-momentum-increases-in-march/

[2] https://moneyfacts.co.uk/news/mortgages/first-time-buyer-market-sees-strong-start-to-2021/