Shared Ownership : A vehicle for property investments and decreased household indebtedness and increased affordability

Abstract: There is a housing shortage in attractive urban areas in Europe and Sweden. The waiting lists for affordable rental housing are increasing and that in turn creates pressure on owner-occupied housing. Inflated asset prices and household debt have become a major concern for policy makers. Shared ownership is a mixture of equity and debt, therefore, a mixture of owner-occupation and rental accommodation. In the UK it´s used by the non-profit sector to help households to buy their own home. In this research a shared ownership model is developed for the Swedish property market. The model is commercially viable and used to extend traditional mortgage finance. The findings suggest that the proposed model can increase household affordability and lower their exposure to the financial markets. An investor will gain a market rate of return and access a market segment different from rental housing, shared ownership is an investment in owner-occupational housing. The major drawback of the model is the relationship between the bank and the investor. The bank will require priority to the collateral which results in a complicated and inflexible model. Further research should investigate the possibility of sharing collateral which would result in a simpler and more flexible model.