The findings of the report, by Dr Gemma Burgess, Acting Director of the Cambridge Centre for Housing & Planning Research and a professor at the university, were released at an industry roundtable on Wednesday 3rd February. The event, chaired by property writer and editor Stacey Meadwell, brought together a panel of experts from the property world - Kush Rawal, Director of Residential Investment at MTVH; Jon Lord, Managing Director at Metro Finance; and Ben Fry, Head of Housing Investment at Gresham House - to discuss the findings with Dr Burgess.
The panel heard from Dr Burgess’ report: “Shared ownership providers, lenders and wider industry stakeholders interviewed for this research were all very positive about what shared ownership offers to customers. In many parts of the country, interviewees felt that shared ownership is the only realistic route into homeownership for households with relatively low deposits. The product offers flexibility as it opens homeownership at a range of possible price points to households with modest deposits.”
The research, which surveyed 24 housing providers and interviewed industry and user groups, revealed important details about the average shared ownership transaction:
· Most shared ownership purchasers are aged between 20 and 40 (72%), with the late 20s being the most common time to purchase. Only 5% are over 65.
· The largest group of shared ownership purchasers are single adults without children (50%) followed by childless couples (35%)
· 94% are in employment
· The average value of shared ownership properties purchased in 2018/19 was £265,000, with the average initial share being 42% and a deposit of £24,600
Interest in shared ownership is booming. According to the report: “All interviewees were asked about the impact of the pandemic on the shared ownership sector. The most immediate impact had been an increase in demand for shared ownership lending and in enquiries about buying a shared ownership home. Since 2015/16, the number of shared ownership completions per year has increased from 4,084 to 17,021.”
In fact, demand for shared ownership properties is now considerably greater than supply – with up to 10 people enquiring about every home in some areas. The report found that nearly half of the shared ownership homes completed in the last five years were built in London (27%) and the South East (22%), with two-bedroom homes being the most popular size of home sold (58%).
The report did voice some concerns, mainly around the Government’s plans to amend the standard shared ownership scheme. At present, the minimum share that can be purchased is 25%, and shared ownership purchasers are responsible for repairs and maintenance. Under the new scheme, the minimum share will be 10%, and housing providers will be responsible for repairs for 10 years, which could affect viability.
“Most survey respondents thought that the option of purchasing a 10% share and lack of responsibility for repairs and maintenance for the first ten years, in particular, will make the new model more attractive to buyers and will increase demand. However, most survey respondents believed that the proposed changes will reduce the supply of shared ownership properties that they are able to build.”
With the difficulties around maintenance meaning that providers might be able to provide fewer homes as a result, the report urges the Government: “The unintended consequences of these changes to the product should be carefully considered before changes are implemented.”
Another area of concern was public lack of understanding of the scheme, which has existed for more than 50 years, especially with regards to leasehold.
Submissions from The Law Commission noted: “Members of the public do not always understand exactly how shared ownership schemes operate, or the precise nature of the legal arrangement which the purchaser of a shared ownership property is entering into.”
Kush Rawal (pictured), Director of Residential Investment at Metropolitan Thames Valley Housing, comments: “We are pleased that this report – the first of many that we plan to commission – proves the valuable role that shared ownership has in helping people take their first steps on the property ladder. It’s also confirmed what we at SO Resi already knew; that people are often confused and uncertain about what it all involves. For this reason, we are determined to guide people every step of the way, with simple, clear and transparent language that ensures that there are no surprises down the line.”
Dr Gemma Burgess, Acting Director Cambridge Centre for Housing and Planning Research at Cambridge University, concludes: “There is consensus that the UK has a housing crisis and that greater effort needs to be made to increase housing supply.
"Shared ownership has an important role to play in delivering new build housing supply and in meeting the need for affordable homes. The Government should do all it can to make it as easy and simple for providers to increase their pipeline of shared ownership homes, to reduce cost and complexity from the system, and to ensure that grant levels are sufficient to ensure a strong supply of shared ownership going forward.”