We know the benefits of homeownership, so why do buyers face an uphill battle?
A paradox of the pandemic, and the financial upheaval it has caused, is that the housing market has remained surprisingly resilient throughout.
The extension of the stamp duty holiday and a shift in homeowner priorities, from larger gardens to rural locations, has ensured the market remains buoyant as transactions continue to tick over. And now, with government backed 5% deposits becoming more widely available again, it would seem that the criteria for first time buyers is more accessible.
The reality paints a rather different picture.
The main challenge first time buyers face is being able to get a mortgage. The 5% deposit mortgage guarantee scheme is a short-term solution to encourage banks to keep lending to first time buyers during Covid-19. We’ve yet to see the impact, but we do know it is not enough to ensure that everyone has the opportunity to own their own home.
Without support from the bank of mum and dad and a good salary, many people will continue to be excluded from homeownership, so long as the market maintains its current trajectory.
Affordability remains the number one issue and Government officials know they face an ongoing challenge turning ‘generation rent’ into ‘generation buy’.
The barriers to homeownership mean individuals, couples, and young families across Northern Ireland will continue to struggle. High deposits are just the tip of the iceberg. Prospective home buyers often talk about being trapped in the rental market, or that being employed on a temporary contract or in a low paid role simply doesn’t make them attractive to mortgage lenders.
Yet, we know the positive socio-economic impact homeownership has. For instance, in a recent Co-Ownership survey 78% of our customers revealed they felt improved health and wellbeing when they became a homeowner, whilst 79% said they felt more financially secure. Illuminating statistics when you consider how it must be the opposite for those that remain in shared or rented accommodation.
Our organisation works hard to communicate that there is more than one way to own a home. In the last 12 months alone, despite the closure of the market in the early months of the pandemic, we have supported more than 1000 individuals and families in Northern Ireland who would have been unable to obtain a mortgage otherwise.
Since we began our work in Northern Ireland more than 40 years’ ago, we have supported over 30,000 first-time buyers. Over 20,000 of these have gone on to successfully buy us out, proving that our model is an effective, alternative route to home ownership. We support around 10% of first-time buyers in Northern Ireland every year.
We can support buyers up to the value of £165,000 so people can afford to buy right across Northern Ireland and the economics just make sense. Many of our customers tell us that their mortgage plus their Co-Ownership rent is less than what they were paying when renting.
Successful applicants will buy a share of a home they can afford, between 50% and 90%, through lenders offering Co-Ownership mortgages, so already there is a lot more leeway, especially when you consider that a deposit isn’t always required. Co-Ownership covers the cost to purchase the remaining share and as they become able to, co-owners can increase their share bit-by-bit until they own all their home.
Recent efforts to help first time buyers are a welcome step in the right direction, but we need to do a lot more to help the current generation of young people that have been so badly impacted by Covid. We need to see first-time buyers break free from ‘generation rent’ and reap the benefits to be had within four walls of their very own.
For more information visit co-ownership.org
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