Dudley BS -Why you should be looking again at shared ownership

11 August 2021

Dudley Building Society, the specialist lender, believes that shared ownership needs to be given fresh consideration by the intermediary community as frustrated first time buyers continue to see house prices outpace income growth.

Enhancements announced by the Government to shared ownership rules which came into force in April make this method of home ownership far more attractive, but probably due to the pandemic, the positive implications do not seem to have cut through.

Changes include:-

Buyers can now purchase an initial share as low as 10 per cent, as opposed to the previous minimum of 25 per cent, making shared ownership entry easier for those with limited deposits
They can now staircase (purchase more equity in steps) in increments of 5 per cent, lower than the previous 10 per cent threshold
There is also a new gradual staircasing option for those paying in cash, which allows buyers to staircase by just 1 per cent each year, with no need to pay for a formal valuation

Talking about the need to ensure that mortgage advisers reconsider the place of shared ownership schemes, Dudley’s Commercial Director, Sam Ward, said “With property prices continuing to rise and home ownership as popular as ever, many first time buyers feel with some justification that their goal of owning their own home is not going to happen. Advisers, however, should be aware that shared ownership might just provide an answer, particularly now that the government has made it easier by lowering applicants’ minimum share to 10%.”

Sam added, “Our shared ownership mortgage is one of only a very few that lets advisers and their customers take advantage of the lower 10% share and represents a great opportunity for advisers to show first time buyers how shared ownership can be a realistic alternative when faced with increasing house prices.”