David King looks at the state of shared ownership in the sector and asks whether we know enough about its impact.
Shared ownership is a tenure that can work well for housing association business models. By allowing tenants to buy an equity stake before they start renting, income can be quickly recycled into more development.
However, most outside of the sector will have likely encountered a different perspective; one where the buyer becomes both a tenant of a housing association and a debtor of a bank with tight lending controls and looming interest rate rises. Shared ownership is still cheaper than owning a home outright in many places, but the complexity of entering into a relationship with these two parties is clearly causing some frustration. As a Guardian article last year set out:
“On paper, shared ownership is the best answer we have for a generation locked out of traditional ownership and paying exorbitant private rents. But if it continues to place all the responsibility, and few of the benefits, on the shoulders of one party its reputation for being a frustrating and disappointing arrangement will grow.”
The research behind that article comes from the University of York, which based its findings on research conducted on the tenants of two housing providers. While in many ways the paper is full of insight, it’s difficult to see just how representative this is of the rest of the sector.
Surprisingly, the ONS has indirectly addressed this research gap in a write up of the Annual Population Survey. Looking at wellbeing data between 2011 and 2015, it found that all but one tenure had experienced an improvement in wellbeing: part-rent, part-mortgage. The ONS is the first to admit this is basic analysis, and to note that due to the relatively low proportion of shared owners the findings for this group are statistically shakier. But combined with research from York, it is clearly enough to raise concerns and focus attention: although there is not yet conclusive proof, there is at least a case to be investigated that this tenure – as currently structured – may be associated with negative outcomes for some shared owners.
If this indeed proves to be the case for the current cohort of shared owners, what problems might emerge if shared ownership were massively expanded? We may be able to find out, as the government has just allocated almost all future capital grant to shared ownership.
One option for a housing association would be to take this grant and continue to build shared ownership without engaging with these difficulties. Many may even say an increase in the total housing stock outweighs the short-term pain of those in shared ownership. This would be to miss an opportunity.
Nothing is more attractive in the world of marketing at the moment then values. Whether it’s Virgin Trains with BITC stickers plastered on the sides of its locomotives or Marks and Spencer Plan A, the private sector is responding to customer preferences for something more than price. We might expect to see this preference to play out favourably for the social housing sector, a large and expert socially-focused sector dedicated to providing homes and build communities. And yet this sector is actively looked down on by the public, assuming they even know what a housing association is.
Shared ownership could be a chance to let consumers feel they are buying into something bigger, instead they seem to be left confused and frustrated. Each of those consumers could become an important voice in the community, or even sway politicians to take greater care when managing funding for social housing. That positive image may even help attract more customers (when our housing ‘market’ begins to actually resemble a competitive market with a choice of desirable neighbourhoods.)
Getting to a better form of shared ownership – one that works for tenants and social landlords alike – will require a commitment to critical research on how it works and how it doesn’t. And once we have that evidence, it will need careful design work to build better approaches. Without this, shared ownership will forever be an opportunity that fails to translate into sustainable business.
By David King – on 16/03/2016 HACTWe at
We at tsop agree.
What are the next steps?
If you have an interest in the new era of Shared Ownership, as an existing or potential provider, funder, mortgage provider, sale agent or manager drop us a line.