Recommendations & Conclusions
6 items
4
Conclusion
Fifth Report - Shared Ownership
Accepted in Part
Shared ownership as an ‘affordable homeownership’ scheme is predicated on shared owners being able to save enough money to staircase (eventually to 100%). However, its affordability appears to be so marginal for many shared owners that there is no guarantee that staircasing will be possible for them, and the guidance …
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Shared ownership as an ‘affordable homeownership’ scheme is predicated on shared owners being able to save enough money to staircase (eventually to 100%). However, its affordability appears to be so marginal for many shared owners that there is no guarantee that staircasing will be possible for them, and the guidance for Homes England’s Affordability Calculator does not explicitly recommend providers assess the likely affordability of future staircasing for prospective shared owners before the purchase is made. This puts into question the effectiveness of the product as a homeownership scheme.
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Government response AI summary
The government acknowledges the importance of affordability and states that Homes England has been working with stakeholders to proactively update its affordability guidance, due to be published in Quarter 1 of 2024, while deciding against stress testing for service charges, but will keep this under …
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Ministry of Housing, Communities and Local Government
5
Recommendation
Fifth Report - Shared Ownership
Accepted in Part
Homes England should assess how fit for purpose their initial eligibility and affordability calculator is. As part of this, it should evaluate whether to include a ‘long-term’ function within the calculator to model affordability over 5-, 10- and 15- year periods which take into account the assumption that costs will …
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Homes England should assess how fit for purpose their initial eligibility and affordability calculator is. As part of this, it should evaluate whether to include a ‘long-term’ function within the calculator to model affordability over 5-, 10- and 15- year periods which take into account the assumption that costs will rise over time for shared owners, through various scenarios. Homes England should also add a means Shared Ownership 39 of calculating how likely it is that shared owners will be able to afford to staircase, given projected costs, and not just assess affordability on the assumption that the shared owner remains on the initial share purchased.
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Government response AI summary
The government states Homes England is improving its affordability guidance, with new guidance due in Q1 2024. However, it rejects including long-term stress testing for service charges or incorporating staircasing assumptions into the calculator due to potential inaccuracy and unreliability.
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Ministry of Housing, Communities and Local Government
7
Recommendation
Fifth Report - Shared Ownership
Accepted in Part
The Government must make it mandatory for providers of OPSO to highlight the potential legacy costs of service charges being passed on to family members to prospective shared owners and family members in line to inherit the property upon the shared owner’s death, prior to initial purchase. Homes England could …
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The Government must make it mandatory for providers of OPSO to highlight the potential legacy costs of service charges being passed on to family members to prospective shared owners and family members in line to inherit the property upon the shared owner’s death, prior to initial purchase. Homes England could ensure this by specifying the need to include this information in the Key Information Documents. The Government should also give consideration to how it can encourage providers to better support those inheriting OPSO properties to sell the property upon the death of their relative.
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Government response AI summary
The government commits to amending OPSO key information documents to highlight potential legacy costs to beneficiaries and will consider mandating providers to include this information. For supporting heirs with sales, it outlines existing options available to providers but states providers must decide how best to …
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Ministry of Housing, Communities and Local Government
10
Conclusion
Fifth Report - Shared Ownership
Accepted in Part
It is currently unclear what proportion of shared ownership housing stock is being lost to the open market. This makes it impossible to judge what impact sales of shared ownership homes to the open market are having on the overall supply of affordable housing in the UK. We welcome the …
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It is currently unclear what proportion of shared ownership housing stock is being lost to the open market. This makes it impossible to judge what impact sales of shared ownership homes to the open market are having on the overall supply of affordable housing in the UK. We welcome the data provided to us by Baroness Penn which shows the number of 100% staircasing sales for the previous three years, as well as the introduction of a question to the CORE platform on whether a staircasing transaction is part of a ‘back-to-back’ sale. This should help improve our understanding of the implications of shared ownership on affordable housing stock, although there is still no specific plan for how the Government will replace those homes which are sold on to the open market.
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Government response AI summary
The government commits to reviewing all data on staircasing transactions, including back-to-back sales, and exploring further data improvement. However, it explicitly states it does not believe a plan to replace shared ownership homes lost to the open market is necessary, citing existing grant recycling requirements.
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Ministry of Housing, Communities and Local Government
11
Recommendation
Fifth Report - Shared Ownership
Accepted in Part
The Government must urgently review data it has from the CORE platform regarding the new question on whether staircasing transactions are part of a ‘back-to-back’ sale for 2023–2024, from which it must make an assessment of the extent to which shared ownership properties are being lost to the open market. …
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The Government must urgently review data it has from the CORE platform regarding the new question on whether staircasing transactions are part of a ‘back-to-back’ sale for 2023–2024, from which it must make an assessment of the extent to which shared ownership properties are being lost to the open market. The Government must then design and publish a plan on how it intends to replace all properties transferred to the open market from sales in the current and future iterations of the Affordable Homes Programme. (Paragraph 69) 40 Shared Ownership
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Government response AI summary
The government commits to reviewing all relevant data on staircasing transactions once the 2023-24 reporting year concludes, but rejects the need to design and publish a plan for replacing homes lost to the open market, citing existing recycling provisions for grant funding.
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Ministry of Housing, Communities and Local Government
20
Recommendation
Fifth Report - Shared Ownership
Accepted in Part
The Government should encourage providers to voluntarily update the terms of their ‘old’ shared ownership leases (for properties delivered under the 2016–2023 programme), particularly the minimum 990-year lease length and the 10-years repair period, and consider offering financial incentives for providers to do so. (Paragraph 101) Repairs, maintenance and fees
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The Government should encourage providers to voluntarily update the terms of their ‘old’ shared ownership leases (for properties delivered under the 2016–2023 programme), particularly the minimum 990-year lease length and the 10-years repair period, and consider offering financial incentives for providers to do so. (Paragraph 101) Repairs, maintenance and fees
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Government response AI summary
The government states it has encouraged providers to offer new model terms voluntarily and will continue to do so for upcoming homes. While happy to encourage updates for old leases, it notes significant practical barriers and argues financial incentives for the 10-year repair period are …
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Ministry of Housing, Communities and Local Government