Comment from Maggie McCann, Orbit Homes Director of Regeneration and Partnerships
With only 1% of the UK housing stock being of a shared ownership tenure, this is still a relatively small market, but one which is growing, and which has the potential to help more people realise their dream of owning their own home.
As an organisation dedicated to making homes more affordable for all, we absolutely support the principle of shared ownership and welcome the government’s ambition to make it easier and more affordable for people to use.
But the ambitions outlined in the new model do present some challenges and, unless worked through in partnership with government, lenders, homeowners and landlords, we believe they have the potential to impact the viability of the scheme and challenge the sustainability of the tenure for our customers.
Take, for example, the proposed 10-year essential repair and maintenance obligation. How do landlords determine what is a fair and reasonable repair, that is of suitable quality and which is priced correctly, if we have little or no involvement in the repair process until cost claims come in?
It also raises a key issue around appropriate property maintenance and servicing guarantees; for example, will shared owners be required to provide proof of appropriate maintenance and servicing compliance? And what are the ramifications for both parties if this isn’t done? We need robust and fair processes surrounding repairs to prevent substandard repairs compromising component and collateral warrantees and to protect the rights of both shared owners and landlords.
Ensuring the long-term sustainability of homeownership must also be addressed. The lower entry threshold of a 10% share risks encouraging some low-income buyers to take on shared ownership when they might not be able to afford it in the longer-term. The 10% share also risks reducing lender choice as minimum loan amounts come into effect, and there is an increased likelihood of purchasers borrowing money from less conventional lenders, who may not require the traditional levels of financial scrutiny.
But it’s not just at entry level where there are long-term sustainability concerns. The proposed valuation model for 1% staircasing could mean we are selling shares of properties at below true market value, reducing the number of new affordable homes that we’re able to build.
Overall, we welcome changes to the shared ownership model and are encouraged by government’s ambition to make it easier and more accessible. But we believe the sector must work collaboratively with government, homeowners and lenders, so that together we can make the scheme easier and more affordable, whilst ensuring the sustainable supply of new shared ownership homes and the long-term attractiveness of the scheme