A report unveiled on Thursday 4th November 2010 by Standard & Poor’s, the credit ratings agency, revealed that far more homeowners in the North West are in negative equity than anywhere else in the UK. The figures reported that 10.7% of homeowners in the North West owe more than their house is worth, compared to just over 1% in London and the south-east.

This news, coupled with the report’s findings that homeowners with little equity are more than twice as likely to fall behind on mortgage payments than those who put down at least of a quarter of the purchase price, will reinforce lenders’ reluctance to lend unless buyers can put down 20-30 per cent.

For a buyer with little deposit to put down on a purchase, options are limited in the current climate. However, Farleys have acted for many property developers and buyers who are using shared ownership schemes where lenders are unwilling to offer a large enough mortgage for the full purchase of a property.

Shared ownership allows buyers to part own and part rent a property, with an option to acquire a greater share of the property over time, known as ‘staircasing’.  This provides a great alternative to purchasing a property for people who are currently struggling to obtain a larger mortgage.

Setting up shared ownership schemes also provides developers with a means of meeting criteria for affordable housing, also helping them to find buyers for properties they may be struggling to sell in the current climate.

Until the housing market improves, developers and buyers will need to explore alternative ways to sell and buy properties – if lenders are unwilling to help then a shared ownership scheme may be able to!