Demand soaring for shared ownership

Deliberate undervaluing by mortgage lenders and surveyors are hitting house sales, say estate agents

Shared ownership schemes are experiencing their largest volume of applications since the scheme was launched 30 years ago, the National Housing Federation has said.

But the body, which represents England's housing associations, said lenders are refusing to provide loans because they "mistakenly view them as potentially sub-prime".

Applications in the first half of this year have soared as the credit crunch has taken hold.

Lucy Thornycroft, a policy officer at the Federation said: "Many housing associations are consistently reporting their highest ever levels of demand for shared ownership schemes."

She said one London housing association reported a two-fold increase in interest in its affordable home ownership schemes from the same period the previous year.

The initiative was popular even before the financial crisis with four applications made for every low cost home available in 2007-08.

However, recent figures show banks turned away up to £500 million of business on shared ownership products last year, despite the strong demand.

This left 9,000 low-cost homes empty, even though 90,000 households had expressed interest in moving into them.

Shared ownership schemes have been running in the UK for 30 years now.

Former Housing Minister John Stanley launched the initiative on July 27, 1979, to give lower-earning families the chance to buy a share in a new home. Since the launch over 155,000 households have used the scheme to get a foot on the property ladder.