Source · Select Committees · Housing, Communities and Local Government Committee
Fifth Report - Shared Ownership
Housing, Communities and Local Government Committee
HC 61
Published 28 March 2024
Recommendations
5
Accepted in Part
Para 47
Improve Homes England's affordability calculator to model long-term costs and staircasing likelihood.
Recommendation
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 …
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Government Response 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.
Ministry of Housing, Communities and Local Government
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7
Accepted in Part
Para 58
Mandate OPSO providers highlight legacy service charge costs to prospective owners and families.
Recommendation
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 …
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Government Response 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 support.
Ministry of Housing, Communities and Local Government
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11
Accepted in Part
Review CORE data to assess shared ownership loss and publish replacement plan.
Recommendation
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 …
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Government Response 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.
Ministry of Housing, Communities and Local Government
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20
Accepted in Part
Encourage providers to update terms of old shared ownership leases with financial incentives.
Recommendation
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 …
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Government Response 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 disproportionate. Crucially, the Leasehold and Freehold Reform Bill will introduce a new statutory right for shared owners to extend leases to 990 years.
Ministry of Housing, Communities and Local Government
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Conclusions (2)
4
Conclusion
Accepted in Part
Para 46
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 …
Government Response 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 review.
10
Conclusion
Accepted in Part
Para 68
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 …
Government Response 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.