Do you need help when climbing the first rung on the property ladder?

By Jenn Taft

Getting on the housing ladder is an exciting time but it can be costly. Shouldn’t getting on the first rung be simple?

Ten years ago the deposit for a house could have been as small as £5k (my first one was in 2007!) but nowadays the deposit needs to be as hefty as possible. You needed an average deposit of £33k last year, and there were fewer first time buyers able to raise it. Saving this deposit can be tough and most find they have to remain at home to do so, along with 1 in 4 adults in the UK between the age of 20 and 34. The house prices are also still rising, making the housing market a daunting place for a first time buyer.

If it is this hard to get on the ladder, what financial schemes and options are available to buyers to move them onto and up the property ladder? Is anyone trying to help?

Shared ownership

Shared ownership is a scheme to help people get onto the property ladder without forgoing all the money they have. It involves the buyer,

- buying a percentage of the property through deposit and mortgage

- paying rent on the remainder of the value of the house.

Shared ownership has helped around 200,000 people get on the ladder and largely revolves around new-build estates. There are some prerequisites when applying for the scheme and these include your working status, where you reside prior to applying and whether or not you are a first time buyer. These criteria differ depending on the borough you live in.



Shared ownership works well for lower income households

It can work out cheaper than renting as the rates for the rental portion of the scheme are usually much lower than market rates.

Over time you can buy more shares of the house, so you own more and pay less rent.

You can keep purchasing more shares in the house until you own it outright.


The general resale of shared ownership properties hasn’t proven great.

You don’t usually own the house outright at the point of resale.

You may find yourself unable to move up the housing ladder in your next move.

Just be aware

You are expected to have around £4500 in savings and the same again available for the deposit for the mortgage part.

You will need to show you can afford the mortgage and the rent each month, on top of your usual outgoings.

Shared equity

Shared equity has a similar feel to shared ownership and tends to be offered by housing associations and dedicated house builders.

In a shared equity agreement you get a mortgage for a specific portion of the house, and a second lender loans you the money to pay the rest.

- Minimum buyer deposit of 5% of the house price.

- Minimum mortgage of 75% of the house price from a mortgage provider.

- Loan of up to 20% of the house price from a second lender.


You can provide less of a deposit upfront.

The loan is usually interest free for around 3-5 years.

You have a 100% initial share of the ownership.

There are no restrictions on selling your house on when you are ready.

If your house depletes in value, you will not have to pay the entire loan back.


When you come to sell your house, if it has risen in value you will be expected to pay your loan lender around 40% of the added equity.

Paying the lender extra equity could make it difficult to move up the housing ladder as it could reduce any future deposit on a more expensive house.

Just be aware

You will be expected to pay back the loan in full if you sell your house.

Starter Homes

Now that Help to Buy has ended, the government has announced a new initiative called ‘Starter Homes’. This will allow first time buyers to get a house with a large discount on the price. This discount could mean an easier transition to property ownership for those who are just short of the money needed.


- Available on new build developments.

- Discount of a minimum of 20% of the house price, but could be more.


The houses may not be built exactly where you want them to be. It is up to the developer where they want to build. You will either need to be a bit flexible in your search area or wait for the houses to be built.

Just be aware

The discounted price of these homes will be no more than £250k outside London, and £450k in London.

What next?

Importantly, you need to work out what money you have saved, what you can afford as a deposit and what you can afford to pay each month. You will also need to work out exactly where you want to live and whether the schemes above operate in your chosen area.

Take a look at the links below for some extra information:

Lifetime ISA – help from the government when you save

Shared Ownership – help with where to find agents for this scheme in your area

Shared Equity – a good breakdown of what the scheme involves and where it is in use

Starter Homes – popular questions answered and links to where the houses are.

Top Takeaway

For shared ownership you will need a deposit and a mortgage for part of the value of the house, and the ability to pay rent on the remainder. Generally the deposit is quite small, making buying more accessible, but the resale value of such properties is not great.

With the shared equity scheme you will need a deposit and mortgage totalling a minimum of 80% of the property value, and will take out a loan with a lender for the remainder of the value. You will have to provide less upfront but you may lose equity if your house increases in value.

Start homes have a minimum of 20% knocked off the price of the home. This makes the houses you want more affordable, but the houses are not always built in the exact areas you want.

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