The number of households living in shared ownership properties could grow by 70 per cent over the next five years, research by the Council of Mortgage Lenders has revealed.
The trade body stated a government push to encourage more private developers to offer the schemes - which will see changes to eligibility - could see significant growth in the sector, which currently accounts for 1.3 per cent of all mortgages.
Earlier this year it was announced private developers would be given the opportunity to bid for government funding to develop shared ownership schemes.
The government stated £4.1bn of funding would be available to developers and housing associations.
If the growth predicted by the CML is realised the trade body stated lenders will have to treble their lending for shared ownership schemes or more lenders would have to enter the market to meet demand.
Hayley North, managing director of financial advisers Rose & North, said more innovation is needed in shared ownership if it is to grow as predicted.
She said: “In principle, shared ownership is a great way for people to get on the housing ladder.
“We would encourage more of this as it creates security for the tenant, lacking in the rental market, and long term investment opportunities for younger people or those with low deposits/incomes.
“Sadly, as this tends to be restricted to key workers or those on lower salaries, many people in London (the majority of those we work with) who are still struggling to get on the housing ladder tend to be excluded.
“Many years ago some lenders offered their own shared ownership mortgages, Bradford & Bingley's Stepladder mortgage for example, which were great news for anyone with a good salary but no deposit.
"It would be great to see this kind of innovation again so this market can be broadened even further. Many of the lower value properties in London now are only affordable for property investors, which is a shame as first-time buyers are then often priced out.”
