Posted Oct 18, 2023
Guinness Homes research reveals one in four non-homeowners fear they will never be able to get on the property ladder.
Taking the leap from renting to owning your own property is a major step, however, with interest rates remaining high and other economic factors to consider, many potential buyers believe they will never be able to get their foot onto the property ladder. At Guinness Homes, we believe that everyone should have access to affordable housing, leading us to look closely into what's preventing prospective buyers from purchasing their first home.
The big picture
Our survey of 1,747 UK adults found that one in four non-homeowners (27%) believe they will never be able to buy their own home. Although high interest rates remain a concern, almost two-thirds (65%) of those aged between 18 and 24 years said they would like to buy at some point in the future, and 49% of those under 34 are actively looking to buy due to fears that they will be priced out if they wait any longer. This confirms that despite the roadblocks, home ownership remains an attractive goal, particularly among younger age groups.
What’s blocking buyers?
Between high-interest rates and the cost-of-living crisis, when asked if there is anything currently holding non-homeowners back from buying their own home, 44% claimed that a ‘lack of funds’ was the main barrier, and one in five (19%) claimed that high-interest rates are putting them off from buying due to concerns about not being able to afford mortgage repayments.
Other reasons given were a lack of affordable properties (29%), and a lack of available property (24%) in the area where they want to live, with 54% of UK adult consumers believing they would likely have to move out of their area to afford a home.
The research also uncovered confusion around the affordability of buying versus renting a home, with 51% of respondents, including both homeowners and non-homeowners, believing that buying a home is more affordable than renting. However, younger age groups are less convinced, with one in three (36%) 18-24 year-olds in the UK believing renting is cheaper than buying.
The strengths of shared ownership
The statistics show that many feel the current housing supply is not meeting their needs and demonstrate the hopelessness many are feeling towards being able to buy their own home. At Guinness Homes, we believe that this perception is misplaced and there are still plenty of opportunities for hopeful buyers to get on to the property ladder. Many remain unaware of shared ownership as a viable and affordable route to getting the keys to their first home: something we believe everyone should be able to achieve.
Shared ownership provides the market with an affordable alternative to traditional homebuying, with buyers purchasing a share in the property, with the opportunity to increase this share over time. With purchase percentages typically starting at 25%, coupled with a low monthly rent paid to the developer on the unpurchased shares and a small service charge, shared ownership takes away the pressure of finding a substantial deposit or having to pay interest back on a large mortgage, as most commonly done when purchasing 100% of a property.
A look at the numbers
For example, if someone purchases 50% of a property worth £200,000, their share is then worth £100,000. Of that 50% share, buyers can then pay a deposit as low as 5%, equating to £5,000, making it more affordable for prospective buyers with lower incomes, first-time buyers, or anyone looking to downsize.
The shared ownership pathway gives buyers the chance to increase their share in the property over time, depending on each individual's financial situation in a process known as ‘staircasing’. As a result, their monthly rent is further reduced, and the affordability is increased.
Potential buyers are struggling nationwide
It's clear that the impact of the economic uncertainty has been felt far and wide, and the current cost of living is affecting many people’s thoughts about being able to own their own homes. Our research found that in London, 61% believe that they will never be able to buy their own home unless they leave the city. But it’s not just the capital that has these fears; a significant proportion of non-homeowners in Leeds (25%) and in the South West (46%) also said they would need to move out of the area to buy a home.
The Guinness Homes’ pathway to homeownership
Our developments in South London (Signal Park) and Leeds city centre (Points Cross) provide affordable, high-quality shared-ownership apartments, intended to enable buyers to purchase a home in an area they know and love.
For those looking to buy in the South West, we’re pleased to announce that shared-ownership apartments are coming to our McArthur’s Yard development in Bristol this autumn.
Our research showed that in cities across the UK, affordability concerns remain at the top of public consciousness, with many believing that relocating is the only viable solution. However, we believe that through shared ownership, more people can access the housing market and increase their chances of buying a home. With many still unaware of shared ownership and what it really entails, we’re dedicated to spreading the word, as we help many more people find their perfect home.
About Guinness Homes’ home buyer research:
Guinness Homes’ home buyer research is based on a study of 1,747 UK adult consumers (18+) in full or part-time employment, retired or full-time parents. The research was conducted in May 2023.