As I predicted in my previous blog Johnson on Housing, this government’s primary housing focus will be on home ownership, making life easier for first time buyers in particular.
The government recently issued a discussion paper titled Making home ownership affordable, and one of its primary aims to is to revamp shared ownership.
It proposes a “national model for shared ownership” that will make it easier for shared owners to buy and sell their homes, and to boost “staircasing” – the process by which you buy additional chunks of your property – by allowing owners to buy 1% of the unsold value at a time, instead of the present 10%.
Five years ago I wrote a report for Gateway Housing Association on staircasing. At the launch, then National Housing Federation CEO David Orr described shared ownership as “the tenure that refuses to die”. It’s always been a kind of twilight tenure, attractive to some, understood by few (some people still think it means sharing your home with others!), andthere are still lenders who can’t quite grasp how it works.
The principle of shared ownership is sound – a transitional tenure between renting and buying– but it is beset by complicated rules and has been hit by some bad press in recent years: poor construction, steep service charges, a lack of interest by landlords, and a lack of clarity about who it is for.
The concept of staircasing implies that shared owners can fairly swiftly move up and out of the tenure. In fact, a Cambridge University study in 2012 found that shared owners were less mobile than other owners and the costs and complexity of staircasing were major barriers to mobility. If you can’t buy bigger portions of your home, then it becomes hard to move on to outright ownership.
My report for Gateway found that those who staircased had an average income of £10,000 more than those who had not, and they also had greater access to savings and inheritances. Obviously, income is a key barrier, but the fees involved in buying extra shares were also identified as a significant obstacle.