Deposit-free scheme will unlock new funds for the social sector
£3.5bn shared owner plan
A property investment company plans to unlock up to £3.5 billion of capital per year from the social rented sector by converting 40,000 social homes into shared ownership.
Assettrust has been working with regulators and government agencies to develop a deposit-free shared ownership model in a bid to kick-start the ailing shared ownership market. It also aims to realise the gap between the existing use value and market value of homes in the social housing sector and pull in new sources of funding.
The launch of the own your home scheme, devised after consulting the Communities and Local Government department, the Tenant Services Authority and the Homes and Communities Agency, comes after several bodies, including the Chartered Institute of Housing, called for the introduction of new mortgage products.
Assettrust will buy existing social rented homes for shared ownership from partner associations, which would continue to manage the homes in the long term. The company intends to offer the product for up to 500,000 social rent properties, and hopes for a take-up rate of 8 per cent.
Halifax has agreed to provide mortgages for the new product, with deposits being provided by landlords, offering buyers a 25 per cent discount on the market value of the share of the property bought. Assettrust will then purchase the residual share, also at market value, allowing an association to cash in on the difference between open market and existing use value.
Assettrust has targeted major institutional investors for funds and aims to deliver up to 40,000 tenure conversions per year, releasing £3.5 billion.
‘The concept is about trying to get working households to realise their homeownership aspirations and to redistribute grant back into the sector,’ said Nicholas McAlpine-Lee, deputy chief executive of Assettrust.
Liverpool-based landlord Cosmopolitan Housing Association, which owns and manages 2,000-homes will take part the scheme’s pilot, while Assettrust is in negotiation with nine further providers.
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Readers' comments (2)
Alpha One | 18/11/2011 9:42 am
Wait a minute, wasn't this what the caused the current economic crisis? Unscrupulous lenders encouraging people who couldn't afford to pay for a mortgage to buy their home with sky high finance, now CLG are BACKING the scheme.
Can someone remind about the definition of stupidity again, some about making the same mistake again and again and expecting a different result...
Sure for the minority of people stuck in social rent that genuinely can't get a mortgage this will be great, but I imagine the majority of people stuck in social rent are stuck there because they have neither the income or the assets to purchase.
Then again, we might get lucky and Bob Crow might take them up on the offer and finally buy his home, but I wouldn't hold my breath.
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F451 | 18/11/2011 10:37 am
Is this the long awaited fulfilment of Shapps's promise to extend the Right to Buy to RSL tenants?
If so then why does it need the insertion of another middle man to make it work - RSLs mainly operate in Group structures, within which they have a shared-ownership arm that could easily run this scheme. Inserting a parasite into the equation does not deliver anything that could be delivered without it.
If these people have the means to buy their home then let them go and by a home within the private market. If they have the means to buy a home through shared ownership then let them go to that market using a DIYSO style package. The last thing we need is to loose even more social housing units with no guarentee of replacement. The last thing the nation needs is more people borrowing that which they can not afford.
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