Affinity Sutton launches report into home ownership choice
Affinity Sutton has launched a report outlining the findings of a pilot scheme to test buyers’ preference for flexible tenure options. Working with the Greater London Authority, Affinity Sutton conducted the scheme at The Residences, its development in Coulsdon.
The pilot formed part of an initiative outlined in the Mayor of London’s Housing Covenant, in which the Mayor outlined how, in his opinion, the intermediate market should operate in a way that is more similar to the open market, in order to provide more choice, greater flexibility and improve the customer journey.
Purchasers in the pilot scheme could choose which home they wanted (either a one or two-bedroom apartment) and then to decide whether to buy through shared ownership or equity loan.
Shared ownership allows the buyer to purchase 25-75 per cent of a property by raising a mortgage and they then pay a reduced rent on the remaining share. Only five per cent deposit is payable on the share they are purchasing. Over time, the purchaser can buy more shares until they own one hundred per cent of the property.
The equity loan option offers buyers the opportunity to own the property outright but they only have to pay 80 per cent of the asking price upfront. A deposit of just five per cent is required with a mortgage for the remaining 75 per cent. Affinity Sutton arranges an equity loan for the remaining 20 per cent which is interest free for the first five years. Buyers pay back the loan when they sell the property or after 25 years, whichever is sooner.
The pilot highlighted that purchasers valued having a choice of buying options, although there was a clear preference for shared ownership; for many buyers this was not just personal choice, but the only affordable option.
The most important considerations for buyers at The Residences were affordability, availability of deposit, size and location of the property and eligibility.
Some buyers were able to purchase a one-bedroom apartment with equity loan, but could also afford to buy a two-bedroom apartment through shared ownership, which highlighted the real choice available.
Those who chose shared ownership preferred its affordability and lower deposit requirements, along with the flexibility it offered in giving opportunity to staircase to full home ownership in the future. The equity loan appealed to those who could not afford to buy on the open market, but still wanted to own 100% of their property from the outset.
Yvette Ruggins, sales director at Affinity Sutton, comments: “The results of the pilot are extremely interesting. We simply wanted to find out if it improved choice, if there were any barriers, identify how it could be rolled out and what implications there would be for Local Authorities and funding.
“The pilot identified drivers of choice and customer motivations during the purchasing process. It also lays down the challenge to the industry and the Government to understand how both products can be used going forward.”
All the homes are now sold at The Residences. However Affinity Sutton has a large selection of homes available in London and the South East. For more information, visit affinitysutton.com.
