Many first-time buyers (FTBs) are not aware of affordable homeownership schemes that could help them get on the property ladder, research has found.
Many first-time buyers (FTBs) are not aware of affordable homeownership schemes that could help them get on the property ladder, research1 has found.
A recent survey asked renters in London about their perceived barriers to homeownership.
Nearly half (48%) cited affordability as a key obstacle to buying their first home, whilst a quarter (23%) believed that there is a lack of schemes to support FTBs.
Shared Ownership
The research highlighted a knowledge gap regarding Shared Ownership, which offers first-time buyers a more affordable route to homeownership. In this scheme, the buyer purchases a share of a property (between 10% and 75%) from an organisation such as a housing association or local council. The purchaser will then pay a mortgage on the proportion that they own and pay rent on the rest. There is the option to buy more shares of the property in future - a process called ‘staircasing’.
Lack of awareness
According to the research, even though 86% of respondents had heard of Shared Ownership, only half could explain what it is. Also, 37% think the scheme is too complicated which is stopping them from using it. An advantage of Shared Ownership is that the buyer will usually need to pay a lower deposit as they are only buying a proportion of the property. Since affording a deposit is a key challenge faced by FTBs, the research suggests that information about Shared Ownership should be more widely accessible.
Deposit difficulties in the capital
Affording a deposit is a particular challenge in London, where house prices are notably high. Flats and maisonettes have therefore become popular choices among FTBs in the capital; however, the average price of this property type is still high (£436,902)2. A 10% deposit on the average London flat would therefore cost £44,000 but 81% of those surveyed said they cannot afford to pay more than £40,000. In fact, on average respondents could only afford to pay £22,963 upfront. The research found that women are disproportionally affected by this barrier, as single men have saved £11,500 more than their female counterparts.
Going to great lengths
Prospective FTBs in London are going the extra mile to achieve their property dreams. Half (48%) of 18 to 24-year-olds surveyed said they plan to work more in order to afford a deposit. Many have resorted to the Bank of Mum and Dad, with a quarter of 35 to 44-year-olds relying on financial support from their parents.
We’re here to help
Buying your first home can be daunting, but we are here to guide you through it. We can help you understand what you can afford and advise on schemes that could help you get on the property ladder.
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Your home may be repossessed if you do not keep up repayments on your mortgage .
1 NHG Homes, 2024
2 HM Land Registry, 2024
