Shared ownership applications rise

The number of people applying for shared ownership schemes is at its highest since the initiative was launched 30 years ago, it has been revealed.

But banks turned away up to £500 million of business on shared ownership products last year because they view the loans as "sub-prime", the National Housing Federation said.

The volume of applications increased in the first half of this year as people felt the financial pinch of the recession.

Lucy Thornycroft, a policy officer at the federation, said that housing associations are consistently reporting record high levels of demand for the schemes, including one in London, which reported a two-fold increase in interest from the same period the previous year.

The scheme enjoyed popularity even before the credit crunch took hold, with four applications made for every low cost home available in 2007/08.

Shared ownership schemes have been running in the UK for 30 years. The initiative was launched in 1979 to give lower-earning families an opportunity to purchase a share in a new home. The scheme has been used by more than 155,000 households since its launch.

David Orr, chief executive of the federation, said: "Thirty years on and demand for shared ownership homes is as strong as ever, but the banks' current reluctance to lend on these properties mean thousands remain empty and unsold.

"There's no evidence whatsoever that people buying shared ownership properties pose a greater risk of defaulting. This discrimination is denying thousands of people with good credit ratings the chance to own their own home.

"The banks which have been bailed out with billions of pounds of taxpayers' money should now take on a greater role and take a lead in committing mortgage funds for shared ownership properties."

Under the scheme, eligible people can buy between 25% and 75% of a property from a housing association, and pay rent on the remaining share.

Householders may increase their share over time and ultimately own the property outright. The average annual income for a household on a shared ownership scheme is £27,000.

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