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Major housing association to make raft of shared ownership changes ahead of government reforms
A major London-based housing association will make several shared ownership policy changes this summer in advance of reforms to the tenure promised by ministers, Inside Housing can reveal.
Metropolitan Thames Valley Housing (MTVH), which owns and manages around 57,000 homes, has committed to offering all new shared owners 990-year leases following a policy review.
Existing shared owners, of which MTVH has around 8,700 through its SO Resi brand, will be offered the chance to extend their lease to 990 years from June 2021 for a cost based on the size of their equity share.
The changes will only apply to schemes where MTVH is the freeholder.
It will also scrap ground rents for all new sales on schemes where MTVH is the freeholder, effective immediately.
Marriage value – the property value increase following the lease extension – will no longer be considered when calculating extension costs.
From April 2022, all 6,500 MTVH leaseholders will see ground rents phased out on properties where the association is the freeholder, as well as being given the option to buy a 990-year lease extension without marriage value costs.
MTVH said the changes are intended to improve security and cut costs for its shared owners.
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It comes after the government confirmed plans earlier this month to give all shared owners the right to a 990-year lease term on schemes where the shared ownership landlord is the freeholder.
Under the current model, shared owners can be issued with a minimum lease of 99 years.
This means they often have to pay thousands for a lease extension within the first 20 years of living in the property as it is extremely difficult to sell a home with a lease that is shorter than 80 years.
Kush Rawal, director of residential investment at MTVH, said: “We welcome the government’s wider proposals to implement 990-year leases across the shared ownership sector, but have taken the decision to act now to ensure our customers benefit from an extended lease length as quickly as possible.”
He added: “Throughout our policy review, we have been particularly mindful that upcoming changes to shared ownership policy do little to enhance the experience of existing shared ownership customers and we were keen to explore what could be possible and within our means.
“Given that new customers will be guaranteed the security of a longer lease term, it is only right that this is offered to our existing customers too.”
The government has planned further changes to the shared ownership model, including lowering the minimum equity stake from 25% to 10% and enabling 1% staircasing.
It will also require landlords to cover repairs costs up to a maximum of £500 a year for the first 10 years of the lease.
Some social housing sector figures have warned that these changes could make the product “financially unviable”.
The new model will be a requirement of all shared ownership homes built with funding from the 2021 to 2026 Affordable Homes Programme.
