At the Conservative Party conference on 30 September 2019 the Secretary of State for Housing, Communities and Local Government Robert Jenrick announced new proposals for Registered Providers (RPs) - shared ownership offers for tenants.
The proposals aim to provide RP tenants in new stock with an automatic right to buy a share of their home starting at 10% with ability to increase to full ownership over time (including the ability to purchase at 1% increments). This offer would apply to new builds but a voluntary arrangement for existing tenants is being considered.
What this would mean for the social housing sector is yet to be seen and we will wait to see how this proposal develops in practice. However, in the interim we have set out some initial food for thought for our RPs clients below:
1. There is a potential for this to impact on an RP’s ability to raise finance – having reached an understanding with funders on shared ownership properties, these changes could destabilise the cashflow and make them a less attractive proposition for funders.
2. A larger number of purchases of smaller ownership percentages means additional fees and administration work and costs. A streamlined, efficient process would be essential and would need to be considered in terms of administration and governance for RP. Affordability criteria would need to be included to ensure that tenants aren’t taking on debt and liabilities that they can’t afford, both in terms of the acquisition costs and the cost of service charges for repairs and maintenance.
3. As usual, the devil will be in the detail, but we have previously worked with RPs to establish similar schemes, on a voluntary basis. This has been in areas where house prices mean that even RtB discounts aren’t enough to enable tenants to buy their own homes.
If you have any questions or would like to discuss the proposal please do not hesitate to contact Susie Rogers or Rachel Collins