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Demand soars for affordable homeownership schemes

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18/02/2021
Help to Buy and Shared Ownership schemes are popular with first-time buyers, although both are changing in April
Demand soars for affordable homeownership schemes

More first-time buyers are using government schemes to help them onto the housing ladder than ever before, according to reallymoving.com.

The price comparison site for home movers said that 17.2% of first-time buyers used either a Help to Buy Equity Loan or Shared Ownership in 2020, compared to 15.4% in 2019 and 13.1% in 2018.

Shared Ownership was the most popular option last year, accounting for 10.1% of all first-time buyer transactions, compared to 7.1% opting for a Help to Buy loan.

Schemes changing in April

Changes to both Help to Buy and Shared Ownership come into force at the beginning of April 2021.

The new Help to Buy scheme, running until 2023, will be restricted to first-time buyers only and will operate with regional price caps in place to help target help to where it’s needed most.

Developers offering Help to Buy under the revised scheme will be required to sign up to the new Property Ombudsman, providing greater assurance of high building standards and sustainability.

The new Shared Ownership scheme will allow buyers to purchase a minimum share of just 10% compared to 25% previously, making it more accessible, and will permit staircasing in instalments of 1%, rather than 5% or 10% currently.

A new 10-year period will be introduced for maintenance and repairs, whereby the landlord or Housing Association will be required to cover costs rather than homeowners, allowing them to staircase more quickly.

Rob Houghton, CEO of reallymoving, said: “Based on the current average First Time Buyer purchase price of £249,000 in the UK, buying a 10% stake in a shared ownership property could require a 5% deposit of just £1,246 – an attractive prospect for those looking for an affordable way onto the housing ladder.

“We’re now seeing record levels of First Time Buyers using either Shared Ownership or Help to Buy, with the impact of the pandemic boosting demand further as buyers struggle to raise even larger deposits required by lenders, on top of higher house prices.”

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