03 October, 2018
A survey carried by YouGov (survey conducted with 2,111 adults between 3 and 4 May) on behalf of home landlord Aster, revealed that only 60% of people are familiar with the homeownership product. This is despite the fact that 95% of the people who took part in the survey would qualify for the product.
The survey revealed that more than half (51%) of the people were unaware that building societies and banks offer mortgages for this tenure type. 81% of the people who took part in the survey also thought Britain's housing market is unaffordable for first-time buyers.
It should also be noted that a significant proportion of Shared Ownership is dictated by Section 106 (S106) agreements. For many existing shared ownership houses, restrictive conditions on re-sale (often imposed by 106) can also make shared ownership homes less mortgageable.
Mainstream mortgage lenders seem to be accepting the position that there will be properties that need to retain their 'affordability' in the future through these shared ownership schemes. The most common position that appears to be accepted is for a leasehold shared ownership new build property to have an upper limit on the percentage that can be owned, normally a maximum of 80%.
This is a positive for RP's in relation to shared ownership sales of new build properties, but the landscape of affordable rent and Right to Buy properties is changing.
In 2016-2017 Aster built more than 300 low cost homeownership units and they have called for the government to raise awareness to boost the homeownership profile. The idea stems from the publicity from the government to raise further awareness about the Help to Buy Scheme. It would appear the rise of Help to Buy has seen a decline in popularity of Shared Ownership.
In September 2017 the government backed 'Shared Ownership Week' took place in a bid to rejuvenate interest and to try and urge first time buyers to sign up for the scheme. The Department for Communities and Local Government, which oversees the programme said the following:
"This Government is determined to make housing more affordable, increase supply and help more people get onto the housing ladder. Shared ownership plays a key part in this, helping young aspiring homebuyers to achieve their dream of home ownership".
To try and combat the decline, Aster also put forward recommendations to simplify the application process, so it is easier for buyers to staircase and also transfer their current mortgage to an open market.
Bjorn Howard, the chief executive of Aster said: "Shared ownership blends ownership and renting and can be a great option for many locked out of the renting and ownership markets. It provides lifelong security without the huge upfront costs for a deposit that homebuyers face when they use traditional ownership routes".
Despite the apparent decline in newly-built shared ownership properties, it would appear the scheme has still been a success for many individuals as figures show more than 50,000 people have bought a share of a home using the scheme since 2010.
In August 2018 a second pilot of the Voluntary Right to Buy scheme was rolled out in several areas of the country hoping to change the way RP's can manage the funding received through the Right to Buy scheme to provide one for one replacement housing. The government hopes that the new Voluntary Right to Buy scheme will redress the balance of allowing tenants to purchase their properties while maintaining the required level of properties for affordable rent. As the scheme is still being tested (we are currently working on this with one of our clients who has taken up the pilot) it is a case of wait and see if the government have found a scheme that works and will enable the Right to Buy scheme to continue in the future.
If you are looking for any more information with regards to our services view our Housing & Regeneration section. You can also contact Rob Parkinson in our Housing & Regeneration department via email or phone on 01772 220199. Alternatively send any question through to Forbes Solicitors via our online Contact Form.