Looking at the Conservative’s latest proposal about shared ownership right to buy, where tenants have the right to purchase a 10% stake, concerns from associations about the impact that might have on their funding ability are well placed, given how funders currently treat shared ownership.
Housing associations are about housing those who are in the most housing need; if, given the stable home housing associations can provide, over time tenants have enough income to raise a mortgage, there are plenty of government initiatives to help them get on the housing ladder.
From my extensive experience of voluntary right to buy (VRTB), for many tenants raising a mortgage is going to be a struggle; so, in practice there are likely to be few takers. And for those who do take up the opportunity, they are likely to be “locked in” to their shared ownership lease, unable to increase their stake.
Given that locking in, assumptions lenders currently make about the numbers of shared owners who will staircase out would need to change, and I would hope with it would be their view on how much could be lent against the property. In a way, this is the creation of a new form of intermediate tenure.
For associations there will also be the challenge of improving the market for shared ownership resales (some might say though, that is long overdue). What would be disappointing is for these new shared owners to find they could only leave their homes by co-ordinating their sale with someone willing to purchase 100% of the property; resulting in a loss of much needed social housing.
If the aim of the policy is for tenants to have access to the wealth creation that traditionally has been home ownership, let’s blow the dust off equity stakes; remember the CIH’s “Homesave”? It isn’t about the mantra of homeownership; it is about sharing wealth creation opportunities with those who now have little chance of doing so.
Please contact Jonathan Cox.
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