Explore the potential savings and benefits of Shared Ownership schemes for first time homebuyers. From cost comparisons to government-backed initiatives, discover key insights to guide your path to affordable homeownership.
The Rising Cost of Living and Homeownership Prospects
The cost of living continues to rise, making homeownership seem unachievable for many. However, recent research suggests that buying still holds financial advantages. Debbie Clark examines the figures and explores schemes to assist first time buyers in getting on the property ladder.
The average monthly cost of owning a home for first time buyers is now £971, which is 4% lower than renting an equivalent property, according to the latest Halifax Owning vs Renting Review. The analysis, based on housing costs for a three-bedroom home, reveals that owners pay £971 monthly compared to £1,013 for renters. While these figures vary nationally, the most significant difference is observed in London, where homeowners pay nearly £3,000 less annually than renters of similar homes. The East of England is the only region where renting is cheaper. Although the gap has reduced from its 2016 peak, these savings still amount to almost £500 per year for the average owner.
First time buyers of new build properties also enjoy significant monthly savings on energy bills, particularly relevant amid rising energy costs. The design, insulation, and energy-efficient features of new build homes result in savings of up to £1,200 annually in apartments and £2,600 in houses.
Savings can be even more substantial for first time buyers utilising the Government’s shared ownership scheme. Latimer, the development arm of the Clarion Housing Group, reports that shared ownership offers a typical monthly saving of £298 nationally and £250 in London compared to equivalent rental properties in each development’s local area.
Approximately 70% of Latimer’s buyers in early 2023 transitioned from private rented accommodation to shared ownership, signaling shared ownership as an attractive route into homeownership, steering away from the increasingly expensive rental market. Paul Walker, National Sales Director at Latimer, emphasises the surprising speed at which homebuyers can enter the housing ladder with shared ownership, citing more achievable deposit requirements.
Exploring Affordable Homeownership Schemes
Share to Buy’s website (sharetobuy.com) serves as an excellent starting point for those searching for an affordable home. After finding a suitable home, prospective buyers should register their interest with the housing provider, inquire about available schemes and incentives, and consider the associated costs beyond the mortgage, budgeting around £4,000 for solicitor’s fees, moving costs, and potential broker or mortgage arrangement fees. Most first time buyers will benefit from First Time Buyer Relief, paying 0% on the first £425,000 and 5% on the remainder for properties up to £625,000.
Shared Ownership Scheme Overview
Shared ownership is a Government-backed scheme enabling buyers in England to purchase a share of a leasehold home and pay rent on the remaining share. The goal is to make homeownership more affordable for those with lower incomes or small deposits. Eligibility criteria include being at least 18 years old, an annual household income below £80,000 (£90,000 in London), and not owning another property.
Buyers undergo a financial assessment to determine the affordable share, typically ranging from 10% to 75%. Besides mortgage repayments, buyers pay rent on the remaining share and a service charge for communal areas. The scheme allows buyers to purchase additional shares over time, benefiting from any increase in the property’s market value.
Deposit Unlock Scheme
Deposit Unlock is a new scheme developed by the Home Builders Federation and reinsurance firm Gallagher Re. The scheme aims to “unlock” 95% mortgages for those buying new build homes, with housebuilders paying to insure the mortgages. Participating lenders include Newcastle Building Society, Nationwide, and Accord Mortgages.
First Homes Scheme
First Homes is a Government scheme enabling first time buyers in England to purchase a home for 30-50% less than its market value. Eligibility criteria include being at least 18 years old, a first time buyer, securing a mortgage for at least half the home’s price, and an annual household income below £80,000 (£90,000 in London).
Save to Buy Scheme
Fairview New Homes introduces Save to Buy, a unique scheme helping first time buyers save for their final deposit through fixed monthly payments while living in their new home rent-free. The scheme, running until December, targets first time buyers aged 18+ in full-time employment with minimum savings of 1% of the house value.
Buddy Up Incentive
Fairview New Homes offers legal advice and fees worth up to £2,000 to encourage first time buyers to “Buddy Up” and buy a home with a friend. The incentive includes expert advice from PCS Legal and a lifestyle gift worth up to £500.
Ready to take the first step towards homeownership? Explore more in our full magazine! Read for free at First Time Buyer Magazine
First Time Buyer is an exciting bi-monthly glossy which takes a stylish and comprehensive look at all the options available, setting them out in an entertaining and informative way, and helping potential customers navigate their way through what is often a daunting and complex process. We dispel the myths, reinforce the facts and arm the reader with the tools necessary to make their homeownership dreams a reality.
