Is it Right to Shared Ownership or Wrong to Shared Ownership?

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11 December, 2019

Scarlett Ash

Recently the Housing Secretary Robert Jenrick has revealed the shared ownership Right to Buy plan. Mr Jenrick's plan is to allow tenants on new housing association stock to buy shares in their home allowing them to buy in 1% increments with the ability to increase the share over time up to full ownership of the property. The government has stated that they will work with Registered Providers on a voluntary basis to decide what offer can be made to tenants living in existing property stock and if they can benefit from the 'Right to Shared Ownership' without the need to move.

The Government website explains below:

'Under Right To Shared Ownership, the tenant could buy an initial 10% stake worth £20,000, while paying subsidised rent on the remaining 90% of the property.'

For example:-

The tenant could make up this 10% stake through a £2,000 deposit and a £18,000 mortgage.'

The Government also plans to work with Registered Providers to enable tenants living in existing stock to benefit from the shared ownership scheme.

Robert Jenrick has commented:

"Many people want to own their home, but can't see a route towards achieving that goal. This government is determined to help people realise that ambition and boost ownership for thousands of hard-working people up and down the country."

"Owning a home is not just about the four walls around you, it's about investing in your family, saving for the future and putting down roots in a community."

Potential problems?

There has been some discussion within the housing press in terms of problems with the proposed 'Right to Shared Ownership'. Some of the issues highlighted are personal to the tenant looking to purchase such as affordability, will tenants living in affordable housing be able to purchase a share of their home and pay the remaining percentage of rent? Does there need to be further facilities for financial education around budgeting and debt avoidance?

Another potential problem is whether lenders are willing to lend? Will they take the risk where tenants have a mortgage and rent to pay?

The National Housing Federation (NHF) have also advised that they are concerned that the 'Right to Shared Ownership' could affect Registered Providers' ability to build new homes and invest in existing homes and communities. The National Housing Federation Board have agreed three key questions -

  • What impact will it have on the supply of new social rent homes?
  • What impact will it have on levels of existing social rent homes?
  • What impact will it have on other critical areas of work such as building safety?

The NHF have asked that if you have any questions or views - to contribute to the ongoing debate and share your thoughts on the link below.

Overall, the idea for tenants to be able to purchase a property and get themselves on the property ladder can be seen as a positive but there is the argument that potential problems may just outweigh the positives of this scheme, we will have to wait and see…

For more information contact Scarlett Ash in our Housing & Regeneration department via email or phone on 0333 207 1130. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

Learn more about our Housing & Regeneration department here

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