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Government seeks private investors for grant-free shared ownership
The government has called on private firms to come forward with proposals for building new shared ownership schemes without government grant.
Following yesterday’s Budget, the Ministry of Housing, Communities and Local Government (MHCLG) has now launched a consultation inviting private investors and ‘delivery organisations’ to put forward ideas that will create new routes into affordable homeownership.
In consultation papers published following the Budget yesterday, the ministry said it was “particularly interested” in ideas for shared ownership products which would be funded by the private sector.
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Last week the publicly listed real estate investment trust (REIT) ReSI acquired a portfolio of 34 new build homes in Barnet to convert into shared ownership homes, and has a stated intention to invest further in the tenure.
Meanwhile, Heylo Housing – a for-profit registered provider – has built up a portfolio of 1,650 shared ownership homes, following its launch in March 2017.
Shared ownership properties, which are typically offered by housing associations, allow buyers to purchase a percentage of the equity in a property while paying rent on the share they don’t own. This reduces the monthly mortgage costs and is attractive to buyers with smaller initial deposits.
Currently, shared ownership homes have typically been developed using government grant, cross-subsidy provided by housing associations from their market sale profits or via planning obligations imposed on private developers – known as Section 106 contributions.
The government is now seeking proposals which would see private sector investors develop shared ownership homes without public money.
Under the criteria for proposals released today by MHCLG, the government said successful proposals must target households earning under £90,000 in London and £80,000 per year in the rest of England.
The new products must also allow households the right to staircase on demand, meaning owners would be able to buy greater stakes in the property at any point.
Rent levels must come in no higher than 3% of the value of the owners stake in the property per year and mortgage protection clauses must be maintained.
Organisations will be expected to submit proposal templates before the deadline on 1 February 2019, with the government then assessing the viability of the schemes.
The MHCLG has also called for other privately funded affordable homeownership schemes and innovative routes into homeownership which would be primarily privately funded.
All proposals should not rely on government grant funding, government guarantees or developer Section 106 contributions.
Autumn Budget 2018 - full coverage
All our Autumn Budget 2018 coverage in one place:
The Autumn Budget lacked the ambition we need Philip Hammond’s Budget fell short for housing, writes Melanie Rees
There were no big fireworks but the Budget offers an opportunity to deliver The Budget leaves associations facing a choice and we must now deliver, argues David Montague
Names of new housing association strategic partnerships revealed Homes England has released the names of the eight housing associations that have just signed strategic partnerships with the government.
Budget a missed opportunity on housing, says NHF Reaction to the Autumn Budget from several organisations, including the National Housing Federation
Budget small print reveals significant announcements for housing Housing policies contained in the Autumn Budget and background documents published yesterday will have a large impact, if they actually go ahead, writes Jules Birch
Hammond’s extra Universal Credit cash is welcome – but we need homelessness specialists in Job Centres too The Autumn Budget must not become a missed opportunity to put in place measures to prevent homelessness, argues Ruth Jacob of Crisis
Hammond announces extra funding for Universal Credit: Philip Hammond has announced plans to pump more money into Universal Credit in the Autumn Budget today.
Help to Buy equity loan scheme extended to 2023 for first time buyers:The Help to Buy equity loan scheme will be extended two years to 2023 for first time buyers only, with new price caps set for each English region.
Housing Live - the Autumn Budget 2018 as it happened: Live-blogging from Jules Birch reveals how the Autumn Budget unfolded and what it means for housing
OBR: scrapping council borrowing cap will deliver only 9,000 new homes: Scrapping the borrowing cap will deliver only 9,000 new homes over the next five years, the Office for Budget Responsibility (OBR) has said.
Letwin: builders of large sites must accept more ’diversity’ of tenure: Builders should be required to accept suggested levels of affordable housing for large sites in order to receive government support, including Help to Buy, a major review of housebuilding has concluded.
Chancellor announces strategic partnerships with nine housing associations: Nine housing associations have signed new strategic partnerships with the government to deliver over 13,000 homes, Philip Hammond has announced.
Stamp duty scrapped for buyers of shared ownership homes worth up to £500,000: Stamp duty will be scrapped for first-time buyers of homes for shared ownership, the chancellor has announced.
Autumn Budget 2018 - the key housing policies at-a-glance
- £1bn to help fund the implementation of Universal Credit over the next five years
- £500m in Housing Infrastructure Fund to unlock a further 650,000 homes
- The next wave of strategic partnerships with nine housing associations, which will deliver 13,000 homes
- British business bank guarantees for SME house builders
- ‘Simplification’ of process to convert commercial properties to new homes
- Providing funding to empower 500 neighbourhoods to allocate homes to local people in perpetuity
- Help to Buy equity loan scheme extended by two years to 2023 and limited to first-time buyers
- Retrospective inclusion of first-time buyers of shared ownership in stamp duty relief