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Could shared ownership be the answer for first-time buyers?

With the news this week that rents hit another record high of £713 per month in August, renting is evidently becoming increasingly unaffordable for many, particularly in London, where average rents have now hit £1,025 per month.

Several recent surveys have shown that mortgage payments are actually cheaper than rent in many parts of the country, but most would-be first-time buyers are either struggling to raise a deposit or have given up on the idea of home ownership as they believe they will be turned away for a mortgage.

Against this backdrop, shared ownership is perhaps one option for struggling would-be first-time buyers that is not given enough consideration.

And it is good to see one brokerage taking a proactive attitude towards increasing the number of options available for consumers in this sector.

That Mortgage Place is organising a meet and greet event next week in association with the Metro which aims to bring together housing associations and mortgage lenders.

Through a series of round table sessions, That Mortgage Place hopes the event will foster interaction between housing associations and lenders, thereby helping to iron out any communication issues between the two and raising ideas for new lending initiatives.

Lenders attending the event on Wednesday include Santander, Halifax, Leeds Building Society, Woolwich and Nationwide.

“As a specialist affordable housing brokerage, we witness first hand the miscommunications that can arise between housing associations and lenders,” says Ellie Manns, business development manager at That Mortgage Place.

“Often, these issues come about because lenders do not always understand the different processes required for shared ownership mortgages compared to standard mortgages.

“We hope the event will help to clear up any existing issues in the shared ownership application process, as well as encourage discussion about lenders’ appetites for further lending.”

While the event is certainly a step in the right direction and will hopefully get lenders and housing associations talking about new ways to help first-time buyers, it would also be good to see a similar event organised for consumers.

Shared ownership could be a viable option for many would-be first-time buyers and although it is not without problems, it will at least save them from a never ending cycle of extortionate rental payments.

However, many consumers will not even know shared ownership schemes are available unless more is done to raise awareness of the sector.

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  • Maurice Edgington 19th September 2011 at 11:53 am

    I agree with previous two comments. I would say though that my firm has been arranging shared ownership and shared equity mortgages via our sharedownershipmortgage.co.uk outlet for more than 10 years and I am not entirely sure that lenders and housing associations do not understand how shared ownership works. It is really about funding. Lenders, in my view, that already offer shared ownership schemes are the main lenders and they do not seem to have any issues apart from the loan to share values on new built homes. To offer a maximum of 85% of share on a new build house is clearly out of date and is restricting the sale of affordable homes because most shared ownerships coming on the market are new (the main scheme is New Build Home-Buy) Housing Associations understand it perfectly well at the higher management level but the ground staff often are poorly trained, unaware of lender requirements relating to leases etc. There is no point in higher level management attending seminars if the people at the bottome end are not properly trained. However, I am a firm supporter of shared ownership.

  • Jason Neale 19th September 2011 at 11:03 am

    Having attended the previous event arranged by That Mortgage Place, I would urge all housing associations to attend this event. It is a unique opportunity for everyone involved in the process to build relationships and have a better understanding of each others process.

  • ian marsh 17th September 2011 at 12:30 pm

    Any idea to keep the property markets moving is a good idea.
    How about offering for example a 10 year rental agreemnt for a fixed capital sum.
    This would establish a degree of security for both parties.
    There are of course a number of considerations for both sides but it is a lot cheaper than shared,buying or just renting.
    What us the typical term for a mortgage?Bet you its within 10 years and is very expensive to move-a cost sheet would help to compare for potential clients.