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Finance starved young people denied home ownership

Despite the recent extension of the Stamp Duty threshold, mortgage finance is still hard to come by. The number of mortgages fell to a nine month low last month with large up-front deposits and a continuing lack of credit being blamed for housing market problems. Stamp Duty also still affects the majority of buyers in London and the South East. 

Of the survey of 24 to 40 year-olds across London and the South East:

·         86% see buying a property as an important issue

·         Two-thirds believe that the next 18 months would be the right time to buy

·         47% would consider “co-ownership” with a private investment partner

With the average age of first time buyers rising to 38 years-old, Mill Group believes that the housing market must explore alternative models of home ownership or risk a lost generation of home owners.

Co-investment is a new model for home ownership where the buyer acquires a share of between 25% and 50% of the property with an institutional investor buying the rest. The buyer then pays the mortgage and a monthly fee to cover the cost of their share of the capital investment and can increase the share of the property owned at any time.

David Toplas, CEO of Mill Group said:

“The research shows that despite many young people keen to buy their first property, there are still huge barriers in place which are excluding an entire generation from getting on the property ladder.

"Few potential buyers can get the funding to buy a property by themselves which is why we believe co-investment models will help kick-start the private residential sector and give young people the leg up they need”. 

Yolande Barnes, head of Savills Research department, who has advised Mill Group, said:

“This has the potential to be a more significant development in private housing finance than the buy-to-let mortgage. The number of mortgaged owner occupiers has been shrinking for the past ten years because of the high costs of housing market entry and this has only worsened since the credit crunch.”

“People who neither qualify for social housing nor are able to raise the equity for a deposit are the fastest growing housing segment in the UK. Most of them currently rent in the private sector but, with this type of new model, there is now another option for the deposit starved which helps towards their ultimate goal of outright owner-occupation.”

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