Shared ownership becomes a trap for thousands
Wednesday 27th June 2012
Shared ownership schemes designed to help first-time buyers take their first step on to the housing ladder are leaving many trapped, unable to sell or move.
A study by Cambridge University into the effectiveness of shared ownership schemes has found that mobility out of the sector is poor.
Resales of shares in properties and ‘staircasing’ – the practice whereby buyers acquire more shares in the home with a view to attaining full ownership – are both being stymied.
Many who bought at the height of the market are now in negative equity, and cannot afford to take a loss on extricating themselves. Demand from buyers has also proved low, and the report also highlights mortgage difficulties.
The report found that out of 145,000 shared ownership properties sold since 2001, just 27,908 have staircased.
Anna Clarke, co-author of the report, said: “Overall it would appear that the shared ownership market has not been any harder hit than the wider housing market during the latest difficulties.
“However, mobility out of the shared ownership sector and rates of staircasing are not as high as might be hoped.”
The report, ‘Understanding the second-hand market for shared ownership properties’, calls for a major overhaul of shared ownership, including the introduction of a deposit large enough to give owners some protection during a housing market downturn, and an increase in the minimum of shares sold in a property.
Meanwhile, housing minister Grant Shapps has hailed the Government’s latest initiative, the 95% NewBuy mortgage scheme, as a success.
New figures from the Home Builders Federation show that 600 reservations have been made under NewBuy during its first three months.
Shapps said: “The NewBuy Guarantee is proving increasingly popular, offering those who dream of owning their own home the chance to buy a newly-built property with just a fraction of the deposit normally required.”
Five mortgage lenders and 17 builders have now signed up to the taxpayer-backed NewBuy scheme, which has repeatedly come under fire for its high mortgage rates and the fact that, while it will indemnify a developer who needs to repossess a property bought under the scheme, it does not protect the buyer against negative equity.
Yesterday, the Council of Mortgage Lenders called on the Government to consider making NewBuy purchases exempt from Stamp Duty, suggesting that people who could only afford a 5% deposit should not have to pay up to 3% tax.
(1) Comments | Report Abuse
DISCLAIMER:The views contained in these user comments are not endorsed by Introducer Today(nor its associates and advertisers) in any way and are provided by users who wish to publish their independent opinions on our news.Whilst every effort is made to moderate these comments,due to the instant nature of the posting not all offensive material can be removed instantly.Please help us keep the comments areas tidy by reporting details of any infringements to email@example.com
Editorial Contact Details - Rosalind Renshaw