LCHO, which includes such schemes as shared equity and shared ownership, has been promoted by past and present governments as a means to enter into home ownership for families and individuals who cannot afford to purchase on the open market without assistance. The Halifax review shows that shared ownership and shared equity are by far the most popular LCHO schemes for buyers, accounting for 87% of total sector transactions – up from 79% in 2007/08.
Since the start of the recession many of the schemes have been designed as an incentive for house builders to invest in new home provision as well as to help buyers with affordability. While seven out of ten LCHO buyers are in full-time employment, average annual gross earnings stood at just £23,502 for LCHO buyers in 2009/10. The average age of the buyer is 36, up from 34 in 2007/08.
Low Cost Home Ownership schemes are nonetheless operating in a challenging environment. Total housing transactions in England have fallen by 41% in the two years to 2009/10 and this has impacted LCHOs too. The sector has suffered since the financial crisis began in 2007 with the number of LCHO transactions recorded by providers registered with the Tenant Services Authority falling by 44% (2009/10) over the period since 2007/08.
Nitesh Patel, housing economist at Halifax, said: "The Low Cost Home Ownership sector is small, but it is very important as it brings together builders, buyers, mortgage lenders and the government in helping some buyers onto the housing ladder.
"The sector has not been immune to the difficulties of an uncertain housing market, and there is still much work to do. However, schemes such as FirstBuy should have a positive impact, and we support efforts such as these to ensure that affordable housing is more readily available."
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