In a ‘spotlight’ report, Savills noted that at the moment shared ownership occupies a “similar but much smaller” place in the market to Help to Buy, with the firm’s analysis showing that given the same deposit, monthly costs for the two schemes are much the same.
Because of these similarities, Savills said there was “significant overlap” in the target markers for the two schemes, which had “helped suppress” take-up of shared ownership over the last five years.
The report continued: “Once Help to Buy ends, as Government states it will in 2023, shared ownership will become the main route to home ownership for those unable to access the market. This could increase demand for shared ownership homes by over 15,000 homes per year.”
Shared ownership has taken a hit
David Sheppard, managing director of Perception Finance, said that demand for shared ownership had taken a hit due to the popularity of Help to Buy.
He added: “When Help to Buy goes, assuming there will not be a ready replacement from the Government, shared ownership will no doubt pick back up for those that cannot afford to buy outright but it will still never be the first choice for any buyer I believe.”
Sheppard noted that lenders have not really left the market despite Help to Buy’s dominance, and suggested that when the government scheme ends lenders who have focused on Help to Buy may become more interested in shared ownership.
“Good advice is key as if someone can get enough deposit together for a normal purchase then this of course opens up a wider range of properties and the ability to negotiate on price also,” he concluded.
A shock is on the way
James Mole, managing director of London Belgravia Wealth Management, noted that lenders were failing to offer “anything particularly new at the moment to entice people to use them”.
Mole added: “I think once Help to Buy is removed, unless something replaces it the purchase market will slow further. I think it could be a big shock to the market if they don’t replace it.”
Do buyers even know about shared ownership?
However, if shared ownership is to pick up the slack from Help to Buy, it needs to become more well known among potential buyers.
A study by Leeds Building Society last year found that awareness is poor among young people, with as few as 40 per cent of those under 25 knowing of the scheme.
Jaedon Green, director of product and distribution at Leeds, warned that it was “misunderstood and underused” by many of those who it was designed to help, adding: “The fact that almost a quarter of those aged 24 or under would be likely to use shared ownership once they found out how it worked shows the importance of increasing awareness and educating those who would benefit most from shared ownership.”