Home ownership schemes for low-income households

Reducing homeownership risks for lower income households in England

University of York (Centre for Housing Policy)

October 2022

Researchers from the University of York's Centre for Housing Policy looked at different affordable housing schemes and assessed their effectiveness. They warned that people living in shared ownership properties could be hit hard by rising inflation and interest rates. Researchers found:

• The affordable homeownership schemes Right to Buy, Shared Ownership and Help to Buy are important routes to homeownership for people on lower incomes. Right to Buy and Shared Ownership have higher proportions of single people, women, people in routine occupations, people with disabilities and lone parents than open-market mortgages.  
• Homeownership comes with several risks relating to paying the mortgage, maintaining the value of the home, and keeping the home in good repair. These risks are not distributed equally, with households on lower incomes experiencing problems more frequently than more affluent households. Key risks related to affordable tenures include:
• Higher interest rates
• High housing costs
• The low initial entry costs of shared ownership are not maintained
• Consumer misunderstanding about the responsibilities of shared ownership persists
• However, these tenures also have features that help mitigate some of the risks of homeownership for lower income households. Such as:
• Shared owners are eligible for support with their rent via housing benefit, if needed.
• Equity sharing via shared ownership also limits the impact of negative equity in housing market downturns, while large sums of gifted equity in Right to Buy also cushions buyers from price falls.  

The report sets out some key recommendations for providers and central government.