Kerri East, 22, and her sister Jodi, 19, wanted a place of their own but couldn't afford it in the booming Midlands location of Milton Keynes.
Their story is not unusual. The average age of first-time buyers in Britain is now around 34, says the Royal Institution for Chartered Surveyors. Britain's private rented sector has risen from 6% of households in 1993 to over 11% today, claims the Office for National Statistics.
But Kerri and Jodi's story has a happy ending, thanks to a shared ownership scheme run by the UK's biggest housing and regeneration group, Places for People.
In the kind of deal the government is keen to extend, the sisters bought a 50% share of a £157,000 two-bedroom house, with the remainder retained by Places for People.
"This was the only way we could have got a place of our own," explains Kerri. "With this scheme it's about £200 rent and £400 mortgage a month, which is much less than buying it outright would have cost."
Shared ownership is becoming a popular route into home ownership for people who cannot afford to buy outright.
It works like this. You buy at least a 25% 'share' of a property that has been specially built for a housing association or bought by one for renting out. The remaining share is owned by the housing association, and you pay rent on this portion. So instead of a big mortgage loan for the whole property, you have a smaller outlay for the combined loan and rent. Later, you can buy additional 'shares' of the house.
Many people qualify andsometimes priority is given to 'key workers', such as teachers and NHS staff.
The process is a mix of the normal mortgage application and a little public sector bureaucracy. An applicant submits an application form and then attends an interview. Their ability to pay the loan and rent will be tested, so individuals must supply payslips (or audited accounts if self-employed), National Insurance and Inland Revenue details, plus proof of savings and hire purchase accounts.
Most housing associations estimate it costs up to £3,000 to start out, with the money spent on the valuation, arranging a mortgage, searches, solicitors' fees and removal costs, plus around £400 payable on the exchange of contracts. Add one per cent for stamp duty if the property is worth over £60,000.
Shared ownership is most common in London because of the cost of housing. The problem is that demand far outstrips supply. In London in 2005 housing associations could provide only 20,000 homes under the scheme, compared with demand for over 120,000.
A Halifax spokesman says: "Many first-time buyers in the South find it very difficult, if not impossible, to get on to the property ladder. That problem is now spreading out to many other areas of the country."
Savills, a property consultancy, estimates that nearly 60% of households in Greater London can no longer afford property priced at £90,000 or more. Half of these households are council or housing association tenants - but the other 800,000 are on moderate incomes in private accommodation.
For those lucky enough to get a shared ownership property, though, the rewards are life-changing.
"Our flat is really lovely. adds Kerri East. "We certainly hope to increase our share in the future. It's great that we've got the flexibility to do that."Reuse content