Calls for shared ownership revolution to help ‘forgotten families’
Published by Max Salsbury for 24dash.com in Housing and also in Communities, Development
Changes to shared ownership lease to be discussed at National Housing Federation’s Shared Ownership Mortgages Conference
A massive expansion of shared ownership homes is needed for a generation of ‘forgotten families’ priced out of home ownership and with no hope of social housing, a new report has claimed.
The study, from housing charity Shelter, highlights the 'squeezed middle' families in England, typically earning between £20,000 and £40,000 a year, that are facing the prospect of years of private renting or being trapped on the first rung of the property ladder.
Shelter estimates that as many as 1.8 million families in England could fall into this group, yet its analysis of incomes and house prices shows that rapidly rising property prices mean the traditional market leaves almost three-quarters of these families (73%) priced out of a family-sized home.
The charity’s figures show that the mortgage guarantees of the government’s help to buy, due to be rolled out in January, will still leave the majority priced out, with more than 78% of families on low or average incomes still unable to afford the monthly mortgage repayments on a family-sized home using the scheme, even if they had a deposit.
Shelter says that this means the only option for many will be years spent bringing up children in private lets, paying out dead money in rent and facing the insecurity of short-term tenancy contracts of just six or 12 months.
In contrast, the report finds that mortgage repayments on a shared ownership home would be affordable for 95% of families on low or middle incomes.
The charity is now calling for a major new housebuilding programme of shared ownership homes to revolutionise home ownership. The report shows that a new generation of shared ownership would allow families to find an affordable home of their own with an estate agent or mortgage lender on their high street.
Shelter’s research found that, if current trends continue, 25% of families on low or middle incomes will be privately renting by 2020, with many more likely to be trapped on the first rung of the ladder in homes too small for their families.
This month, the Royal Institute of Chartered Surveyors reported that house prices were rising at the fastest rate in seven years, pushing home ownership further out of reach for many.
Meanwhile, the short supply of social housing makes it an unrealistic prospect for many, with fewer than 50,000 family-sized social homes becoming available in the last year compared to 1.8 million households on the waiting list.
Lucy Musk, a retail merchandiser from Hitchin, Hertfordshire, lives with her husband in his parents’ home. She said: “It feels like every door is being slammed in our face. We can’t afford to get onto the housing ladder – even with help to buy – and private rents are extortionate. We work hard and we’re trying our best, but there’s just nothing out there for people like us.”
The charity has calculated that investing £12 billion could build 600,000 new shared ownership homes - enough to give almost half of England’s private renting families the chance to own their own home.
Speaking earlier this year, business secretary Vince Cable called investment in housebuilding on this scale – less than 1% of GDP - a “no-brainer”.
Kay Boycott, director of campaigns and policy at Shelter, said: “Building the new shared ownership homes we desperately need is the only way to give thousands of families a stake in the stable home they want at a price they can afford.
“So far, years of piecemeal policies and an alphabet soup of confusing schemes have meant that shared ownership has failed to reach its potential, leaving it nowhere close to meeting the needs of England’s forgotten families. But for the many young people desperate to do what generations have before them and find a stable home of their own, a national shared ownership programme is the bold and radical solution we need.”
"Every day, Shelter’s housing advisers see the consequences of our growing housing shortage, from those not knowing where they'll sleep that night to families struggling to pay their rent or mortgage. However, shared ownership won’t work for everyone, and we need a mix of new homes, including desperately-needed new social housing.”
Stephen Smith, director of housing and external affairs at Legal & General, said: “This report demonstrates the need for much more intermediate tenure provision across the UK, but also that the plethora of schemes we have had to date have served to confuse rather than give confidence to lenders and buyers.
“A single scheme, which is clearly described and clearly understood by buyers and lenders alike would be a great step forward. But fundamentally, for low and middle income earners, shared ownership has a big role to play in getting families into decent homes.”
National Housing Federation chief executive David Orr said: “We welcome Shelter’s recognition that shared ownership is the most effective way of helping low to middle income families meet their aspirations and get on the housing ladder.
“With house prices and private rents expected to rocket over the next five to ten years, the need for homes that people can afford is greater than ever. Shared ownership has already proved to be a tried and tested way of offering the most affordable and flexible route into home ownership.
“Housing associations are well-placed to deliver the full range of affordable homes, including shared ownership, this country needs. The best way this can be achieved is for Government to provide a comprehensive national housing strategy, with a long term commitment to house building, that truly aims to create a sustainable housing market in England.”