Affordable Homeownership: Exploring Shared Ownership and the First Homes Scheme in Coventry and Warwickshire for 2024

Are you facing challenges in stepping onto the property ladder and affording a mortgage in 2024? Well good news, there are innovative schemes designed to make homeownership more accessible. In this blog post, we’ll delve into two promising options available in Coventry, Kenilworth, Leamington Spa, Stratford upon Avon, Warwick and the rest of Warwickshire – Shared Ownership and the First Homes Scheme.

Shared Ownership:

How Shared Ownership Works:

Shared ownership, a part-buy part-rent scheme, offers a lifeline for those with lower incomes striving to own a property beyond their typical price range. This approach allows you to purchase a portion of the property and rent the remaining part. The beauty of shared ownership lies in its flexibility, enabling you to increase your ownership percentage over time through a process known as ‘staircasing.’

Shared ownership eligibility:

You must be at least 18 years old.
Outside of London your annual household income must be less than £80,000.
In London, your annual household income must be less than £90,000.
Shared Ownership purchasers are often first time buyers but if you do already own another home, you must be in the process of selling it.
You should not be able to afford to buy a home suitable for your housing needs on the open market.
You must show you are not in mortgage or rent arrears.
You must be able to demonstrate that you have a good credit history (no bad debts or County Court Judgements) and can afford the regular payments and costs involved in buying a home.

Advantages of Shared Ownership:

Affordability- Lower upfront costs make homeownership accessible to a broader demographic.
Future Mortgage Opportunities- The ability to borrow more on the mortgage in the future facilitates the gradual transition to 100% ownership.
Long-Term Planning- Shared ownership can serve as an excellent long-term strategy for acquiring full property ownership.

Considerations for Shared Ownership:

It is crucial to be aware of potential downsides:

Limited Resale Market- Selling a shared ownership property may be challenging due to a smaller pool of potential buyers.
Housing Association Involvement-The housing association’s ownership share means decisions, such as renovations, require their permission.
Property Value Increase- You may not benefit as much from the property’s increased value, as appreciation applies only to your share.

First Homes Scheme:

What is the First Homes Scheme?

Exclusively designed for first-time buyers, the First Homes Scheme provides the opportunity to purchase a new build property at a discount of 30-50% of the property value. This discount extends to both the initial purchase amount and the property’s future resale value. Priority is given to those with a connection to the area, with key workers enjoying preferred status.

Eligibility for the First Homes scheme

First-time buyers only- You must be a first-time buyer to qualify for First Homes. You and anyone you buy with, must not have owned property in the UK or abroad. The property you want to buy under the scheme must also be your main residence and not a second home or a buy-to-let investment.
Income limits- There is a combined household income limit of less than £80,000 to qualify for First Homes. A higher threshold of £90,000 applies if you’re buying in London.
Property value- The home you would like to buy must be worth less than £250,000 at the discounted rate. This rises to £420,000 if you’re buying in Greater London.

Advantages of the First Homes Scheme:

Significant Discounts- A minimum 30% discount makes new build properties more affordable for first-time buyers.
Smaller deposit- Only a 5% deposit needed, helping those who may have struggled to save a large deposit
Area Connection Priority- Those with a connection to the chosen area receive preference in the application process so if you live in Coventry/ Warwickshire and want to buy in Coventry/ Warwickshire you will be given preference.

Considerations for the First Homes Scheme:

As with shared ownership, there are trade-offs to consider:

The discount applies to the initial purchase and the sale- this reduces the amount of equity you could gain in the property from house price appreciation.
Selling restrictions- you must sell to someone else using the first homes scheme
Only available for new builds- not suitable if you like a character property and it limits the availability of the scheme

Both Shared Ownership and the First Homes Scheme present viable pathways to homeownership in Coventry, Kenilworth, Leamington Spa, Stratford upon Avon, and Warwick. Consider your financial goals and priorities to choose the scheme that aligns with your aspirations.