Midland Heart cautiously welcomes new shared ownership model

Shared ownership plays an important role in helping lower income households access homeownership however, we propose a number of changes to the new model to make sure it remains viable.

21st Dec 2020 - Developments
By  Rob Hunter

Shared ownership is critical for helping low to middle income households, including key workers, access home ownership for the first time. Those who would otherwise be locked out of the housing market, can buy a partial stake in a new home. They then pay a discounted rent on the remaining share, allowing them to save and gradually staircase up to full ownership. In the last two years alone, Midland Heart has helped 149 households realise their dream of full homeownership in this way.

We are a committed delivery partner of Government, increasing our supply of much needed new shared ownership homes across the Midlands. We currently have 400 under construction, to add to the 700 we have built over the last ten years. However, we recognise that for some people, the current model is still out of reach. Whilst shared ownership will never be the right option for everyone, we believe more people could benefit if the scheme became more flexible.

The Government’s publication of a new more flexible model in November is therefore welcome news. We support the principle that shared owners should be able to buy smaller initial stakes and staircase is smaller chunks. This would surely make the scheme more accessible.

However, we can only build homes that investors are willing to lend against and at the moment there is insufficient clarity on how the new model will impact on the security applied to shared ownership homes by lenders. We have urged Government to clarify this with the financial sector before pressing ahead. We have also made a number of technical recommendations to ensure the new model works in the best interests of both shared owners and housing associations.

You can read our full analysis and recommendations here.