New Prime Minister Boris Johnson is looking at investing public funds in a new part-buy, part-rent scheme.
Leading estate agents, the Romans Leaders Group, have been quick to reveal details of their new shared ownership division. Staff on the social housing magazine, Inside Housing, have said they were told of the Prime Minister’s interest in shared ownership by two sources who know of Johnson’s plans.
How the scheme would work
The staff believe that the new scheme could be designed to reduce demand for rented social housing, and would be part of a concerted effort to concentrate on home ownership. It is unclear currently whether the scheme will replace Help to Buy once it is scrapped in March 2023.
Shared ownership is restricted to people earning less than £80,000 per annum (£90,000 in London) and is usually operated by a social housing provider.
It is not without its critics, however – some part-owners find it impossible to ‘staircase’ or buy progressively more of a property, while others are deterred by additional costs such as monthly service charges or the legal and administrative expense involved in increasing ownership.
There can also be complications when it comes to resale. Nonetheless, the new PM’s interest in shared ownership is well-known. In 2011, Johnson, then mayor of London, promised Sunderland-based housing association Gentoo £40 million to expand their scheme, Genie Home Purchase, into the capital.
The plan would have involved Genie buying properties and offering them mortgage-free to aspiring would-be owners with a 30-year payment plan resulting in full ownership.
But the scheme failed to attract investment in the north-east and was scrapped in 2016. Some landlords in the private sector have even experimented with variations of shared ownership with varying degrees of success.
The Unmortgage scheme
A new scheme, Unmortgage, involves forming partnerships with institutional investors instead of social housing landlords. It’s business model provides a means whereby people can access home ownership through a part-own, part-rent process that pairs buyers with investors.
Under the scheme, renters can purchase as little as 5% of a property without a mortgage, renting the remaining 95% and ‘staircasing’ their way to owning more of the property as and when funds allow. Properties can be either new-build or second-hand.
Unmortgage, which last year raised the largest seed capital in Europe for a fintech, announced a new partnership earlier this month with Allianz Global Investors.
Estate agents Savills has stated it expects demand for shared ownership to increase in excess of 15,000 per annum once Help to Buy is scrapped.
The Leaders Romans Group
Over the weekend, the Leaders Romans Group, with 130 branches, publicised its new shared ownership division. CEO Peter Kavanagh said that it had become increasingly apparent that the company should be investing time and resources precisely in this aspect of home ownership.
Kavanagh went on to say that shared ownership is not something estate agents normally become involved in, and he didn’t think it could be operated and managed through a standard office.
The Romans’ shared ownership team will focus on new-build properties and the company has appointed Adrian Plant as director of shared ownership.