Ministers should use Wednesday’s Budget to elevate shared ownership to a core part of the government’s housing strategy according to one of the UK’s leading affordable home providers, which warns that the tenure is now the only viable route onto the ladder for many first-time buyers.
Peter Hawley (main picture, inset), director of SOWN, part of LRG, says shared ownership had become increasingly important as affordability pressures intensified. “For many of the first time buyers, Shared Ownership is the only route onto the ladder,” he says.
Hawley says today’s first-time buyers were facing a sharply more challenging environment than just five years ago.
“Today’s first time buyers are paying almost a third more to get on the property ladder than they were five years ago, while the number of private renters moving into home ownership has fallen by nearly a quarter,” he says.
AFFORDABILITY CONCERNS
Although 83% of renters say rising rents make them more motivated to buy, “three quarters do not believe they can afford a home on the open market without help from a scheme”.
Yet despite its role in bridging the gap between renting and full ownership, Hawley says shared ownership “barely features in current policy documents and is all but invisible in the National Planning Policy Framework”.
He describes it as an option that “helps people build equity, supports mixed communities and does so at a fraction of the cost of traditional subsidy”.
SHARE OWNERSHIP PRIORITIES
Hawley sets out three priorities he said the Chancellor should adopt to allow shared ownership to play its full part in the housebuilding programme.
First, he called for greater visibility. “Help to Buy showed how a clear, well promoted scheme can support both demand and supply. Shared Ownership deserves the same treatment,” he says.
A national communications and guidance campaign would ensure buyers, lenders, developers and councils “have a better grasp of how the product works, who it is for and how it can support delivery”.
Second, Hawley urges action to unlock stalled developments. Many affordable homes, he says, are tied up in Section 106 agreements that were becoming difficult to deliver, with some units “even standing empty because registered providers are unable to take them on”.
He says targeted grant flexibility, clearer guidance on tenure cascades and allowing Homes England funding to be used on Section 106 shared ownership units would “help schemes proceed, protect affordable output and support SME builders as well as larger housebuilders”.
UPDATE INCOME THRESHOLDS
Finally, he says income thresholds need updating to reflect real market conditions.
“The current income limits of £90,000 in London and £80,000 elsewhere have been frozen while prices have continued to rise,” he says.
“In many higher value areas, including much of the south east, even buying a 25% share of a modest home is now out of reach, yet some households earning just above the cap still cannot buy on the open market.”
FLEXIBLE AND RESPONSIVE
A more flexible, regionally responsive system would keep the product focused on those who need help most “without shutting out the ‘missing middle’ of would-be buyers”.
“Shared Ownership is not a substitute for social housing, nor is it a silver bullet for the housing crisis,” Hawley says.
“But for thousands of households it is the only practical step onto the ladder. My ask of the Chancellor is simple: recognise Shared Ownership as a central plank of the housing programme, give it the policy profile it deserves and make sure the rules allow it to work in the markets where it is needed most.”
