The emergence of a “secondary” market, with part-buy, part-rent homes advertised in shop windows and on the internet, is expected to tempt thousands more young Londoners into shared-ownership and make it easier for existing owners to move up the property ladder.
Sceptics claim young people are being lured into an untested sector of the market, with part-owners potentially stuck in flats nobody wants to buy.
For shared ownership to work as a complete housing solution there needs to be a buoyant resale market. People want to move on or trade up and take any equity gain with them.
Housing associations welcome this mobility and are keen for others to benefit, so they seek to match sellers with buyers on their waiting list.
With shared ownership, you buy a share of your home, between 25 per cent and 75 per cent of its value, from a government-funded housing association which retains the remainder, on which you pay a discounted rent.
The combined monthly payments are usually lower than the cost of renting privately in the same area, and you get a foot on the property ladder because the up-front costs are lower. Instead of a 20-30 per cent deposit on the full purchase price, you put down five to 10 per cent of the equity share you buy.
Shared-ownership resales: Cozenton Point in Rainham through Currell
Opening up the market to mainstream estate agents will help “demystify and de-stigmatise” the sector, says Martin Fillery of estate agent Currell, which has launched a resales division covering London and the commuter belt.
“Many people find shared ownership confusing. Often buyers ask if it means living with someone they don’t know, which is definitely not the case.
With resales, the qualifying criteria are less strict — buyers do not have to already live or work in the borough where the property is located.” Many of the homes available are at sought-after private developments, occasionally in posh postcodes.
Fillery adds: “The profile of shared-ownership buyers is changing and now covers not just public sector key workers but career professionals such as junior doctors, lawyers and accountants. It is the future of affordable housing in London.”
Traditionally, housing associations have demanded sellers give them rights of first refusal, typically eight weeks, to find a buyer. Peabody and Tower Hamlets Community Housing are among associations using Currell to market flats during this “nomination period”.
Resales start at £38,750 for 25 per cent of a one-bedroom flat at St Joseph’s Court in Abbey Wood, and rise to £75,000 for 25 per cent of a one-bedroom flat at Heron Place, Royal Docks. Call 020 7704 5618 or visit firstname.lastname@example.org.
CLIMB THE STAIRCASE
A decade ago, when shared ownership was a niche sector and house prices were lower, the typical first share bought was 50 per cent. Today it is often 25 per cent, while the ability to “staircase”, or increase your share to outright ownership, is more financially challenging, increasing the need for a resale marketplace.
Perhaps the chief benefit today is not the chance to own 100 per cent, but access to a good-quality home at a slightly lower cost — to own a stake, get a rental discount and secure tenancy.
Sellers must pay estate agency fees, typically 1.5 per cent, for finding a buyer, and cannot sell if they are in arrears with rent or service charges. Even if you only own a share, it is possible to sell 100 per cent of the property if there is a willing buyer. The housing association lets you increase your share to 100 per cent and sell the property on the same day.
Buyers must do their own research into location, price and what the neighbours are like. With flats, always check the length of the lease. Some lenders are reluctant to advance a mortgage if it is less than 80 years.