Shared ownership demand will rocket when Help to Buy ends

Demand for shared ownership homes will rise to double the number of such homes currently being built when the government’s Help to Buy scheme comes an end in four years’ time, a new report has predicted.

Real estate group Savills is forecasting demand for share ownership homes will rise by more than 15,000 a year once Help to Buy closes down in 2023.

The firm said more than a third (38%) of around 40,000 first-time buyers – or 15,300 – using Help to Buy annually could not afford to buy their new homes without help from the programme.

If this demand was all to be switched to shared ownership, new supply would need to increase by 150%. Savills said more than 13,400 shared ownership homes were completed last year.

Lawrence Bowles, Savills’ residential research analyst, said shared ownership was the “natural successor” to Help to Buy.

“It also supports the delivery of much-needed new housing by allowing housebuilders to diversify the type of stock they build, increase rates of sale and reinvest their capital more quickly.

“By selling to housing associations in bulk at a slight discount they can move onto the next site fast,” Bowles added.

Savills admitted that the rent portion of a shared ownership purchase would rise at a premium to inflation so that monthly costs for buyers would rise faster than for full ownership.

Shared ownership buyers should ideally buy a greater share of their homes in the early period of ownership to reduce their exposure to rent rises, Savills said.

But shared ownership schemes need to convince potential renters that it is worth making the switch across, said the HomeOwners Alliance.

A report by the alliance on attitudes towards rented homes thought shared ownership was a bad idea.

The alliance cited a number of concerns including a triple whammy of part mortgage, part rent and upkeep costs as one reason why a third of respondents to its survey were put off shared ownership.

But Paul Hackett, chair of the G15 group of London’s largest housing associations and chief executive of Optivo, said it was crucial that the government invested in alternatives to Help to Buy, both now and in the long term, in order for the housing crisis to be solved.

“As Savills’ work shows, shared ownership already provides a sustainable, genuinely affordable route to owning a home for hundreds of thousands of people, but we need government to throw its weight behind shared ownership and increase grant funding for social rent to give everyone the opportunity to secure a home of their own,” he added.