Shared ownership is keeping alive the homebuying dreams of young Londoners who can’t afford to purchase a property outright. And soon this low-cost way of getting on the housing ladder will become easier and cheaper.
The Government is reducing the minimum equity stake from 25 per cent to 10 per cent, and is also giving buyers a right to increase their equity - known as "staircasing" - in one per cent increments. Moreover, a 10-year repairing obligation on housing associations will ensure buyers are not out of pocket when it comes to building faults or poor maintenance.
What used to be a niche sector of the housing market, restricted to public sector key workers such as firefighters and NHS staff, is now firmly part of the mainstream.
Traditional housing associations, many with charitable roots dating back decades, are the main providers. But registered private companies are offering shared ownership, too, and are set to plug the gap left by the watering down of Help to Buy.
Boosted by increased government funding, shared ownership has been rolled out to a much wider audience, and take-up has quadrupled over the last five years. The choice is extensive, with thousands of properties available across London and the home counties.
The big attraction of shared ownership is that it slashes the requirement for a big deposit and "bridges the gap" between costly and often unsatisfactory private renting and unattainable home-ownership, according to Kush Rawal, director of Metropolitan Thames Valley Housing, one of the South-East’s biggest shared ownership providers. This association says there is now huge demand from "career professionals" earning decent salaries but still priced out of the owneroccuper market: people working in finance and IT, retail, science and medicine, health and beauty, the design, media and charity sectors, and also the Civil Service.
In London, first-time buyers qualify for shared ownership if they earn up to £90,000 a year, while the salary limit is £75,000 outside the capital.
It’s a straightforward process. You buy a percentage share of a property - currently between 25 per cent and 75 per cent - and pay a fixed rent on the remaining share, which is owned by the housing association or charity. As time goes by and your financial situation hopefully improves, you can buy more shares until you own your home outright.
The maths show why shared ownership is now so compelling. According to Halifax bank, the average first-time buyer deposit in London is £132,685, whereas the average shared ownership deposit is less than £25,000 and can be lower than £5,000, because the deposit required is for the share you buy, not the full price of the property. And you only need to raise a mortgage on the percentage chunk you are buying, meaning your salary can be lower than it would otherwise have to be.
At The Boiler Plate and The Forum developments in Bow, east London, buyers need a five per cent deposit, of £4,813. These two Gateway Housing Association projects have been built on a former Victorian factory site where steam engines were made.
Prices start at £92,500 for a 25 per cent share of a one-bedroom flat (full price, £370,000). Combined mortgage and rent payments total £1,029. Call 020 8057 3232.
Bringing cool areas and designer homes within budget
There are plenty of opportunities to part-buy/part-rent a designer home in a cool London district - at Royal Arsenal Riverside in Woolwich; Fish Island in Hackney; Greenwich Peninsula and Nine Elms, to name a few. And there are even cheaper homes in pockets of the capital reaping the rewards of regeneration.
Take Walthamstow in east London, which is Zone 3 on the Tube and has 20-minute Overground trains to the City. For many years, it was under a veil, but steady improvements, including a town centre facelift plus new cafés, late bars and a farmers’ market, are encouraging people to settle. Artists priced out of Hackney are also moving in.
Walthamstow has a history of crafts and manufacturing, while a purpose built "people’s workshop" in Blackhorse Lane aims to encourage more locals to learn skills such as furniture making. Close by is the town’s handsome Victorian library, built by philanthropist Andrew Carnegie, while another area highlight is the William Morris Gallery, historic home of the influential Victorian designer and poet. The Chain is the latest town centre development, with 518 flats just a 10-minute walk from Walthamstow Central station. Prices start at £91,250 for a 25 per cent share of a one-bedroom home. Call L&Q on 0333 255 0770. The same housing association is selling shared ownership apartments at Deptford Landings in south-east London. Prices start at £125,625 for a 25 per cent share of a two-bedroom apartment (full price, £502,500). The scheme is close to Greenwich town centre and its majestic park. Call 0333 999 7836.
CANARY WHARF, E14
Dramatic atriums with soaring glass walls
Opting for shared ownership does not mean compromising on quality or location. Homes can be found in posh postcodes and trendy districts as well as gritty parts of inner London and suburban high streets.
To get planning permission, private developers normally have to build shared ownership blocks (subsequently managed by housing associations) alongside more expensive homes. Such projects include glamorous riverside schemes where private apartments may cost millions of pounds.
Often there is no difference in terms of architecture and interior design, while shared ownership buyers sometimes have a right to use residents’ amenities - gym, pool, 24-hour concierge, club lounges etc.
Aspect Apartments are part of the luxurious Wardian development of high-rise homes moments from Canary Wharf.
Taking its name from traditional "Wardian" glass containers used at the height of Empire to transport rare plants across the globe, the scheme comprises twin towers that bring botanical beauty, in the form of dramatic atriums and communal areas with soaring glass walls that enclose beautiful arrangements of exotic trees, lush plants and flowers.
Apartments have generous-sized terraces, set back to give protection from the elements.
Aspect Apartments are available through Notting Hill Genesis. Prices start at £150,250 for a 25 per cent share (full price, £601,000). This requires a deposit of £15,025. On-site amenities include a residents’ sky lounge while owners can opt for membership of a club offering business space, a cinema room plus a spa with treatment rooms, open-air swimming pool and gym. Call 020 3815 2222.
‘I am thrilled I decided to take this route’
Not only does shared ownership give low budget buyers the chance to find a home at a much more affordable price, often the total monthly outlay is less than if you bought outright. Private renting may sometimes be cheaper but shared ownership is a way of getting that vital first step on the ladder, with the prospect of building up some property wealth.
This is what appealed to business analyst Leanne Williams, 30, who put down a £7,000 deposit on a new one-bedroom flat at Clapham Park, a council estate regeneration where 2,500 new homes are being built.
"I was unfamiliar with shared ownership but am thrilled I went down this route," says Leanne.
Her monthly payments for a 35 per cent share are about £1,300, and though this is more than the £850 a month she was previously paying for a house share, she feels she has so much more.
"My apartment is my own. It’s on the fourth floor and has views over a courtyard garden, and I also have a balcony on the other side of the apartment, so I can watch the sunrise and the sunset, too. To have my own private outdoor space is amazing. I feel like it’s a win-win situation because every month I’m paying for my own property and investing in the future, whereas before I was paying someone else’s mortgage. I have set a target of reaching 50 per cent ownership in two years, and 100 per cent ownership in five years."
Prices for two-bedroom flats start at £142,500 for a 25 per cent share. Call 020 8607 0550.
‘Being close to good travel links was a priority for me’
Harlesden in north-west London is another gritty district on the up. Its lively town centre has been given a facelift, part of a £5 billion regeneration initiative that is seeing grim council estates replaced by hundreds of mixed tenure low-rise homes.
Among the newcomers recognising its potential are White City-based employees and junior City workers in search of well-connected, affordable housing.
Giovanni Barone, who works for a leading travel company, has put down roots here after renting for six years in various places. "My job involves a lot of travel so being close to good transport links was a priority."
He bought a 35 per cent share of a one-bedroom flat with balcony and private parking space at Helix, the final phase of development at New Stonebridge Park. Apartments cost from £85,000 for a 25 per cent share. Call Hyde New Homes on 0345 606 1221.
Local estate agents speak optimistically of major development activity under way at nearby Park Royal, an industrial zone being opened up for housing and amenities, and at Old Oak, a 195-acre swathe of train tracks and depots set to become a giant new transport hub linking Crossrail and HS2, the high-speed rail line between London and Birmingham, that will one day set the seal on regeneration in Harlesden.