Social Housing Speed Read – developments in shared ownership
30th January, 2017
We look at the latest developments in shared ownership, including research published last week by the Chartered Institute of Housing and Orbit Housing Group.
The research looks at how shared ownership has developed so far, and what the future might hold for this tenure.
Shared Ownership – a new, mainstream housing tenure?
Last week we looked at the principles of shared ownership, where (usually) first time buyers are able to purchase a share in their home (up to 75%) and rent the remaining proportion from their Social Landlord. By purchasing additional shares in the property through “staircasing”, tenants can become either the freehold owners, or full leaseholders.
The research sets out the results of polling carried out by Ipsos MORI, and includes market analysis by Rightmove and Savills.
The polling suggested that there is a large consumer demand for shared ownership, and as we reported last week the housing sector is already increasing the number of shared ownership homes delivered each year.
The polling also showed that more people knew about, or were aware of shared ownership, and that its affordability as a housing solution appealed to many people who wanted to own their homes.
A separate report from the Council of Mortgage Lenders suggests that lenders default risks are comparable to those experienced with general first-time buyers on the open market.
The affordability of shared ownership is clearly one of its strengths, and polling found that younger households (understandably) are enthusiastic about the idea. As house prices continue to increase, the “affordability gap” is a barrier to traditional home ownership, for many.
The CIH is supportive in its views on shared ownership, and as this housing tenure grows the need to develop a charter, or “common set of standards” is recognised in the research.
The chair of the National Housing Group has described shared ownership as “a great alternative” to either renting, or traditional home ownership.
What does the future hold for shared ownership?
CIH and Orbit’s research shows the potential of shared ownership, and also shows that the housing sector is enthusiastic about an affordable, sustainable type of housing which could bring many people closer to home ownership.
Demand for shared ownership homes has so far outstripped supply – the Government’s ambitious home building targets are a key ingredient in the success of shared ownership. The report argues that rising living costs nationwide will make shared ownership “the most feasible option” for many.
There are also questions over whether shared ownership will become a national housing solution, or, instead, a type of provision more popular in the priciest parts of the country.
Savills’ research has shown that the highest demand for shared ownership housing is in the south of England.
Shared ownership isn’t risk-free, for “owners” – the 2008 case of Richardson v Midland Heart Ltd saw a tenant lose her long leasehold interest, when the property was re-possessed (using Ground 8 of the 1988 Housing Act) for rent arrears.
Perhaps this clear lacuna in the law should be closed before shared ownership expands further, as shared owners find themselves with less security of tenure than lessees or even assured tenants, and exposed to great financial risk. The CIH charter will hopefully address this issue which is a serious anomaly in social housing.
Shared ownership housing is rapidly gaining publicity. Whilst it isn’t a new concept, the housing sector and the Government are likely to promote this route to ownership as the costs of living and traditional home ownership continue to rise.
Registered providers are, of course, committed to sustainable housing solutions and might be expected to work with the Government to develop these shared ownership as part of that.
The central funds committed by ministers will boost house-building, and registered providers are well-placed to help provide these new homes. The Government’s long-awaited housing white paper will hopefully shed more light on the momentum behind this tenure, and the scale upon which it will be rolled out nationwide as a part of the solution to the country’s housing problem.
If you have any questions on the above and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact John Murray or a member of our expert Social Housing Team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
This page may contain links that direct you to third party websites. We have no control over and are not responsible for the content, use by you or availability of those third party websites, for any products or services you buy through those sites or for the treatment of any personal information you provide to the third party.