Blog: Affordable housing and 95% LTV shared ownership mortgages

It speaks volumes for the shared ownership sector when the biggest mortgage lender in the UK raises it LTV criteria on newly built homes from 90% LTV to 95% LTV.

There are already a number of lenders in the 95% LTV shared ownership space, but Halifax’s move opens the market up even more. This is good news for borrowers because shared ownership is on the rise in terms of demand, sales and new homes being built.

Halifax says that the average house price in May was £289,099, so a minimum 5% deposit for a 25% equity share would be just £4,000. As one of the biggest barriers to buying property is raising the deposit, you can see why shared ownership is an attractive way for people to start their home ownership journey.

There is no denying that demand for affordable housing is strong, but supply is limited. The government has pledged to build up to 90,000 new shared ownership homes in the next five years via its Affordable Homes Programme. This will be a significant boost to the sector and a step up from the 76,500 built in the previous five years between 2015 and 2021.

Who buys shared ownership homes?

As shared ownership is classed as affordable housing it should be no surprise that around 80% of shared ownership properties were bought by first-time buyers in 2020 and 2021. This is very similar to Help to Buy before the rules were changed in April 2021, restricting the scheme to first-time buyers (FTBs) only.

The latest shared ownership data from the Department for Levelling Up, Housing & Communities for England also found that 72% of buyers were under the age of 40.

Just over half (52%) of homes were purchased by households consisting of one adult, 29% were bought by households made up of two adults, and 13% by households with children. The other 6% were older persons.

The data also showed that the average price of a shared ownership home last year was £275,100, with an initial equity stake of £109,800 (41%) and average deposit of £17,700.

Interesting, the average price increase of shared ownership property over the past 12 years has risen by 67%, exactly the same as the wider housing market. Over the same time period, the average share of the property bought remained relatively steady between 37% and 43%.


Leeds Building Society is the market leader in the shared ownership market, so I asked both Leeds and Halifax how they see the future of this sector and the importance of 95% LTV mortgages.

Halifax head of strategic partnership and housing Andy Mason says: “Home ownership is getting increasingly difficult as house prices continually increase more than wages. Saving a deposit, getting a big enough mortgage or more often than not both, are the biggest challenges for FTBs.

We see shared ownership as a very helpful way to help people own at least some of their own home, who otherwise would have to continue to rent for a longer period. We want to be helpful to people struggling to buy their first home, hence our move to 95% LTV for shared ownership purchases.”

Leeds Building Society head of corporate accounts James O’Reilly comments: “The affordable housing sector, particularly shared ownership, is a very important part of the market as it allows those people who can’t afford to buy a home outright to get on the housing ladder.

“Our focus is to put home ownership within the reach of more people. That means that as the market leader in the shared ownership market, we will continue to play our part in helping people overcome the barriers faced in buying a property, whether that be helping those with smaller deposits, FTBs or those buying through shared ownership schemes.”

“Although it only represents a small proportion of the total households in the UK, shared ownership has been very successful in helping people with smaller deposits onto the housing ladder. With the Help to Buy scheme closing shortly, it’s important that the supply of affordable housing is increased to support those borrowers who do not currently have large deposits.

“We will continue to work closely with government and other interested parties so that we can continue to put homeownership within the reach of more people.”

Just Mortgages new build division financial services director John Doughty