Changes in the Shared Ownership Scheme Unveiled
The government unveiled plans on Tuesday, revealing a shakeup on the Shared Ownership scheme. This move is in the hopes that more first-time buyers and social housing tenants will be able to buy homes in part. Desirably, it should also usher in a wave of new homes, with more properties available for the shared ownership scheme.
The changes cover shared ownership in England. Housing policies have different rules in Scotland, Wales, and Northern Ireland.
Earlier this year, research conducted by the House of Commons staff noted that the scheme was a bit complicated for buyers, lenders, and providers to understand.
Essentially, the shared ownership schemes involve the buying of a property share with a lump sum or mortgage. The buyer must then pay rent for the rest of the amount due to the owner of the remaining share.
Shared ownership homes are mostly part-owned by housing associations. In England, less than 1% of the households or around 157,000 live in shared ownership homes.
The original scheme rules that buyers can only be eligible if they can afford 25% of a home in England. Criticisms have been made at the original scheme, citing that even part-ownership of a household is unaffordable for many people.
In response, the government is introducing changes that will reduce the stake to a minimum of 10% only. Other changes such as "staircasing," should make it more accessible for current part-owners to buy in more of their houses.
The instalments scheme allow them to buy additional shares in 1% instalments, instead of the original 10%. Fees will also be cut. Landlords must also cover the cost of repairs and maintenance for the first 10 years.
Editor of the First Time Buyer Magazine, Lynda Clark, shares her joy of the news: "Today's Affordable Homes Programme announcement is a significant step in supporting first time buyers across the country, with at least 50% of funding set to go towards affordable homeownership – in particular shared ownership."
Kush Rawal, director of residential investment at Metropolitan Thames Valley, said:
"Historically, restricting staircasing to larger shares has been a barrier for customers, so we welcome this move and further steps to reduce the costs of staircasing transactions.
"We passionately believe in the power of shared ownership as a key part of the affordable housing mix and want to see the number of shared ownership homes massively increased.
"Understanding and discussing with the government the details of how the Right to Shared Ownership and the new 10-year leases covering repairs will operate will be crucial, as we must ensure that these measures support our shared aspiration to build more affordable shared ownership and affordable rented homes."
