Social Housing Speed Read – shared ownership tenure
3rd July, 2017
Savills' new publication "The housing sector is changing: are you?" reports that shared ownership development is gaining popularity within the sector.
We take a look at shared ownership and what can be expected going forward with this tenure.
“The housing sector is changing: are you?”
The report reveals that 85% of housing associations plan to build shared ownership properties over the course of the next five years. This is in comparison to 83% who responded stating they were delivering homes for affordable rent.
These findings are based on a survey conducted by Savills which 104 chief executives and senior board members of associations completed.
Shared Ownership Schemes
The scheme allows buyers to acquire anywhere between 25% and 75% of the property, and pay rent on the remainder.
As of April 2016, there were approximately 175,000 households under the shared ownership tenure in England, representing 0.8% of all housing.
The schemes provide that the buyer can sell their property at any time; however, before the property is put on open market the association has the right to try and find a buyer.
The report from Savills also highlighted concerns around funding for social rent with 88% of survey respondents placing the Government guaranteeing rent certainty in their top three priorities.
Head of UK residential research at Savills, Lucian Cook concludes that “some degree of cross subsidy is needed”.
Shared ownership schemes have received the backing of the Conservatives. In 2015 they declared that they aimed to deliver around 35,000 additional shared ownership units per year from 2016 until 2020.
While the current political climate has perhaps since pushed these pledges onto the back burner, there is potential for their comeback following Theresa May’s newly formed government with the Democratic Unionist Party (DUP).
The DUP’s housing policies provide a focus on delivering co-ownership housing, the equivalent of shared ownership in Northern Ireland – although it is worth noting that housing policy is devolved in Northern Ireland and so any impact on the Government’s policy will be somewhat limited.
On the basis of Savills’ report, it looks like we will be seeing more Shared Ownership Tenure, with potential backing from the Government and hopefully a guarantee on rent certainty which is being hinted at in certain quarters.
Shared ownership would assist individuals getting on the property ladder where they can afford to move to full ownership. What remains crucial is that any shared ownership scheme is also affordable if it is going to be utilised by those who need it most.
While the DUP could aid in the revival of shared ownership, it has been pointed out by Shelter that for the £1 billion sum that the party secured from Theresa May for their support, 50,000 homes of this type could have been built which would have been a step in the right direction in addressing the current housing crisis.
Shared ownership is not without its critics; from the consumer’s point of view, “owners” investing a premium to buy a share in a property often do not appreciate that they have no more security than an assured tenant, whilst having all the repairs and maintenance obligations of a “full” owner occupier.
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.
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