Posted by: Property Booking
20 Apr 2018
A recent survey of Britons has once again ignited the debate about the issue of housing affordability and ways to counteract the feeling that property prices are spiralling out of reach of the average worker.
With average prices of a property in London now standing at just under £600,000 and the average house in the UK at £301,000, it doesn't bode well for young earners who feel somewhat overawed at trying to scrape together enough finances to meet the crippling mortgages.
The survey, by Bellway Homes, also highlighted that many believed the average salary needed to fund a one-bedroom apartment in London to be in the region of £70,000 or more.
However, there is an affordable and viable option to help young earners to get on the first rungs of the property ladder.
Purchasing a property under shared ownership can enable the investor to claim a share of up to 75 percent.
They would normally have to pay a 5 percent deposit on the share they are buying. The rest of the share - which won't be covered by the mortgage - will inevitably be a local affordable housing trust or through the local authority.
The buyer will benefit from paying reduced rental terms and will have the opportunity to purchase more property share when they can afford it or by increasing the share of their loan or mortgage. This element is known as 'staircasing' and enables the buyer to get a real grip on the property ladder.
Shared ownership does come with a few conditions - this type of option is usually only open to first-time buyers, a requirement on the income range earned, and any additional share bought will reflect the price of the property at that time.
Buyers considering shared ownership also need to figure that requirements may also include having to live or work locally to benefit from the scheme, the legal fees incurred with each new share purchased, and the potential for conditions of resale on the shares.
What shared ownership can do is open the door to two or more wage earners - or a family of low wage earners - being put within reach of getting on to the property ladder. This affords greater security for them and the great opportunity of increasing their share in the property at the right time.
The bonus is that to be eligible; potential shared property investors only have to be earning a minimum of £20,000 - and annual incomes of up to £90,000.
In fact, the government's Help to Buy scheme enables you to obtain a mortgage in the capital with a joint salary of £39,500 - nearly half as much as £70,000 cited in the Bellway Homes survey.
Another benefit is that a borrower does not have to pay Stamp Duty if their share is valued at under the minimum threshold.
For those considering the jump into shared ownership of a property, don't worry. It is comforting to know that more than 40,000 first-time buyers have already secured their home through shared ownership: around one in five new homes.
Property Booking offers an array of properties available for shared ownership London wide. Check out our website or for all the latest Property Booking news be sure to follow us on Twitter and Facebook.