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Homes for forgotten families: Towards a mainstream shared ownership market

By: Robbie de Santos
Published: August 2013

Homes for forgotten families

Low to middle income families, those typically earning between £20,000 and £40,000, were once able to afford a decent, family home of their own. Not any more. New analysis by Shelter finds that 1.8 million (73%) of these families are unable to afford the mortgage on a local three bedroom home.


Instead, more and more low to middle income families are living in insecure private rented accommodation, worrying whether their short tenancy will be renewed or their landlord will put up the rent. Other low to middle income families are stuck on the lower rungs of the property ladder, unable to afford enough space for their family.


Successive governments have launched more than a dozen piecemeal schemes to help families buy a home of their own over the last decade. And yet home ownership rates among low to middle income families has declined steadily in this time.


Help to Buy will be of little help. The mortgage indemnity scheme's 95% mortgages will make the mortgage costs on family homes higher than under the status quo. Family homes unaffordable to 78% of low to middle income families with these big mortgages.


We find that the shared ownership model can be most affordable for low to middle income families, particularly where smaller shares (12%) are available. Some 95% of low to middle income families would be able to afford a three bedroom home with shared ownership.


But shared ownership needs a shake up if it is to play a significant role in helping more low to middle income families in the future.


The market hasn't managed to achieve major scale because successive governments have kept launching new piecemeal schemes, changing the rules of the game, making it hard for consumers to know their options, and for mortgage lenders and the wider industry to get behind in a meaningful way. 


The market hasn't been designed around consumers need either. Applying for shared ownership has meant sifting through conflicting information on council and scheme websites – leading many to think that they are not eligible when they are. Once you are a shared owner, there are often restrictions on selling the home on the open market, and for shared owners to move from one shared ownership home to another. 


We need a lot more shared ownership, and it needs to operate much more like the mainstream market. This report sets out how a how a ‘high street’ shared ownership market would work to help these families afford a decent, stable home that meets their needs.


We want to see politicians lead the way in creating a bigger, more mainstream shared ownership market. A commitment of £12 billion over four years could provide affordable families homes for 600,000 forgotten families, and making substantial headway in reducing our homes shortage.


This would need to come alongside policies to build affordable and social rented homes, as well as the more fundamental reforms to our housing and land markets needed to deliver the long term conditions for building enough homes.