Social Housing Speed Read – shared ownership homes

What is a shared ownership home and what are the current plans?

In basic terms, a shared ownership home is a mixture of a person buying a proportion of their home and renting the remaining part, with the upper limit on ownership being capped at 75%. There is provision to “staircase” ownership to the full 100% in the future.

These homes are mainly aimed at first time buyers as a way of encouraging them to enter the property ladder, although their scope also extends to those who rent council or housing association properties and those people whose combined total annual household income is less than £80,000 (or less than £90,000 in London).

Whilst tackling the housing crisis remains at the very top of the Government’s agenda, to do this requires huge increases in the numbers of all types of tenure.

Shared ownership schemes have been promoted by the Government as one way in which it plans to grow the delivery of homes and so reduce the current housing crisis, following the Autumn Statement.

It seems the sector has responded to this endorsement, with an announcement last week confirming that several providers currently have at least 25,000 shared ownership properties under construction, with their release to market being scheduled within the next 12 to 18 months.

The locations of such developments are spread quite evenly across the country, with substantial schemes being situated in the North West, but there is inevitably more concentrated development in London and the South where demand is at its highest.

This latest development is a marked jump in delivery of such homes, with the sector having previously delivered an average of 6,000 shared ownership homes over the last 30 years.

Indeed some sector leaders have gone so far as to describe the sector as “standing on the precipice of an explosion in supply of shared ownership units…which could not come soon enough”.

The sector has also offered its support for further increased delivery of shared ownership homes proposing a potential target of delivering 39,000 homes per year; however some have commented that we are still some way off achieving this target.

Perhaps a word of warning

Clearly both the Government and the sector have accepted that a key weapon in their arsenal to tackle the housing shortage is to increase the output of new housing and to ensure this increase is both significant in number and delivered quickly.

The sector seems to be responding to the Government’s calls for greater delivery of new developments, which are importantly backed up with committed central funds; however we must not overlook the requirements that go with such developments such as location, the type of homes being built, and the infrastructure, services and amenities required to service such developments.

So too we must not become persuaded that this necessary avenue will provide a sufficient solution to the wider problem in isolation.

It has been suggested that devolution may be one way to enable the sector to meet the increasing demand which would increase both the flexibility and freedom within local areas – ultimately allowing local authorities to take charge of their own region and future. We must not forget that inevitably any solution offered must allow for us to provide “a housing system that works for everyone”.

Clearly, it is very encouraging that the sector has responded so robustly to the call for increased development and the provision of shared ownership homes, but we must ensure that the financial implications of such commitments are manageable on a long-term basis for providers, together with encouraging the provision of other forms of tenure to ensure we start off on the right footing to achieve the end goal, i.e. to create a sustainable housing solution which works for everyone.

We will keep you updated on any further developments and this looks to be a positive step in the right direction, but only if managed and implemented in the correct way.

If you have any questions on the above and how it may affect social housing providers, or any other questions as a social housing provider, please contact John Murray or a member of our expert Social Housing Team.