A national report exploring how an overhaul of shared ownership could double supply to 30,000 homes and help address the UK’s growing affordability crisis is published today.
Initial findings show that current demand for shared ownership homes outstrips supply by as much as 10:1.
Orbit Group and the Chartered Institute of Housing (CIH) have released an interim report exploring the potential to expand shared ownership so it becomes a fourth mainstream tenure alongside home ownership and social and private renting
The report sets out the key issues that government and the housing sector will need to address to increase shared ownership from its current 15,000 homes per year to at least 30,000 within the next Parliament – around 13% of the 240,000 new homes England needs each year. The full report will be published in February.
Orbit, CIH and other organisations have been making the case for shared ownership. Last week the Chief Secretary to the Treasury Danny Alexander MP, announced a Government consultation on shared ownership, and it also featured in the Autumn Statement.
Evidence shows that people increasingly want to own their own home, yet less than one-fifth of families on lower quartile incomes could afford a two-bedroom home with a 90 per cent mortgage. Whereas, shared ownership is more affordable than buying outright and renting privately in all regions, except the North East.
Simon Sanderson from Ipswich was in the army for 13 years as a mechanic in the Royal Electrical Mechanical Engineers, and now lives in a shared ownership home with his wife and four children.
He said: “Without shared ownership I don’t think I would have been able to purchase a house suitable for my family due to my household income not allowing for a large mortgage and no savings. If shared ownership did not exist I would have been forced into private rent and don’t know if I would ever get out of expensive rentals.”
The report sets out challenges for Government to make a commitment to long-term consistency in the name, product, target market and investment into shared ownership. It has involved discussions with leading housing, financial and investment organisations (see acknowledgements in Shared Ownership 2.0 report), as well as focus groups with around 40 customers.
Paul Tennant, chief executive of Orbit Group, said: “We and others have been championing shared ownership and we were delighted to see the government responding with a commitment to shared ownership in the Autumn Statement. This recognition that the product needs to be attractive to households, developers and investors is critical and, as our report demonstrates, is key to shared ownership becoming the fourth mainstream tenure. There’s lot of work to do, but our initial findings set out clearly the areas a range of experts feel need properly addressing.
“Shared ownership has huge strengths as a product. But the housing market has changed a lot since it was launched and we need to refresh the product, remove some complexities, commit to long-term investment and ensure its fit for purpose in the world of 2015. This will help it reach scale and maximise its potential at a time when it’s needed more than ever.”
Gavin Smart, deputy chief executive of CIH, said: “One of the many symptoms of the housing crisis is a growing group of people who we might call the squeezed middle. For them, home ownership is increasingly out of reach – because of stagnant wages combined with rising prices, the scale of the deposit required, and stricter lending criteria – but they don’t have the level of need and vulnerability to qualify for social housing. For the vast majority of these people, the private rented sector is going to be the only option –and for some it might be the right option, but what if it isn’t?
“This is where an expanded programme of shared ownership could come in. Our new report explores how to achieve an increase in numbers but also how we can make it simpler and more flexible, so it works better for consumers, housing associations and mortgage lenders. We need new and radical solutions if we are going to solve our national housing crisis within a generation and we are really pleased to be working with Orbit Group on this report, which has the potential to transform the housing options available for many people who have previously had little choice.”
A full report will be published in early February, which will look at solutions to deliver shared ownership at scale.