The use of large up-front fees and disproportionate deposits has already resulted in significant cost consequences for one care provider.
The report sets out the findings of the detailed research undertaken to better assess key aspects of the VRTB, such as profiling of tenants and stock, and the level of demand. The report underlines our experiences in working with the five associations, NHF and Department for Communities and Local Government to bring the VRTB Pilot to life. The findings of the report and lessons learnt from the Pilot will be invaluable to those considering taking part in the second VRTB Pilot, due to start this year.
Some of the key research findings identified were:
1) There was a fairly strong level of interest in VRTB as a proportion of those tenants who were living in eligible properties to apply.
The Report sets out that 27% of tenants in eligible properties expressed an interest with 6% going on to make an application. These figures would likely be higher in a national VRTB roll out which would be likely to include portability and wider property exemptions.
2) The average valuations of VRTB properties varied widely, reflecting marked local housing market differentials between the pilot areas.
We expect this to be a key factor in the implementation of the VRTB nationwide affecting the number of overall sales: we anticipate a real north/side divide as has been demonstrated by the figures in the Pilot.
3) By treating the discount as a deposit lenders were prepared to offer mortgages at relatively high multiples of household income, raising concerns about future financial risk for some applicants.
Many commentators have expressed doubt that eligible tenants will be able to obtain mortgages to purchase their homes. Our experience on the statutory RTB schemes is that mortgages are readily often available to purchasing tenants and the research shows that this trend has continued with the VRTB Pilot.
Our work on the scheme design, implementation and sales process for the VRTB Pilot means that we are uniquely placed to assist organisations who are considering taking part in the second VRTB pilot due to start this year (for more details click here).
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