Sales push for shared ownership houses rented out during credit crunch
Landlords under pressure to sell ‘try before you buy’ homes
Housing associations are under pressure to sell the thousands of hard to shift shared ownership homes they converted to rental properties during the credit crunch.
An ‘unofficial’ survey by the Homes and Communities Agency has indicated that just 2 per cent of the 7,000 homes in the rent to homebuy programme have been sold.
Under the ‘try before you buy’ scheme, first announced in July 2008, associations allowed potential purchasers to move into difficult to sell homes for a subsided rent for up to five years. Almost £300 million of government funding is tied up in 6,960 homes in the RtH programme - although just 38 per cent of these have actually been built.
An informal study by the HCA of 70 per cent of the 47 RtH providers - seen by Inside Housing - revealed that just 36 of the 1,705 homes built and converted by respondants had been sold by March this year.
A spokesperson for the HCA said providers should encourage tenants to move into homeownership ‘as soon as is appropriate’. ‘If rent to homebuy is to be a success…reasonably significant numbers of purchases would be expected after the third anniversary of the tenancy,’ she added.
Alan Williams, group development director at One Housing Group, said it had started to ‘vigorously market’ its 250 rent to homebuy properties. It has sold around 12 so far. ‘As the market has improved, we have seen a notable recovery.’
Debbie Small, director of Inplace, the homeownership brand of Hyde Group, said it was looking at a ‘whole host of incentives’ to encourage RtH tenants to buy their homes. ‘We are looking at trying to convert 50 through targeted campaigns in areas where we think that demand is highest.’
She said it had sold three out of its 300 homes so far.
Wendy Hegarty, sales and property marketing manager at East Thames Group, said it had sold 4 per cent of its 363 RtH properties. ‘We are looking at a campaign to stimulate some activity by hosting evening seminars with independent financial advisors.’
All three associations said the mortgage market had shown signs of recovery with more lenders offering shared ownership products. Lenders were also now offering mortgages conditional on deposits of between 10 and 15 per cent.
Rent to homebuy fact file
6,960 homes allocated funding under RtH
2,642 RtH homes built so far.
1,884 RtH homes covered in HCA informal survey, of which
36 have been sold
Source: HCA
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Readers' comments (7)
Anonymous | 30/07/2010 5:35 am
Another day. Another fact about waste by the last government.
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| 30/07/2010 7:47 am
"An ‘unofficial’ survey by the Homes and Communities Agency has indicated that just 2 per cent of the 7,000 homes in the rent to homebuy programme have been sold"
Oooh. Never saw that coming. HA S/O unpopular? Could have knocked me over with a feather. As pointed out ad nauseam not one poster on this forum who have experience of S/O has said a good thing about it. Toxic leases, 100% liability for bloated annual and major works service charges irrespective of equity share, can't sublet, can't sell without permission and then face illiquidy with no secondary market, p**s poor management, costs exceed those of regular buying with mortgage when share of rent added on, where does it end?
Another completely predictable pope turns out to be catholic survey. S/O should simply be scrapped and not a penny of taxpayers money should go to the useless HAs who are running this life destroying scam.
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Anonymous | 30/07/2010 8:30 am
Even if the RtH miraculously turns in to the ‘must have‘, it will only suit the same sort of criteria as current S/O - 50k salaries, minimal equity, never going to fully own, RSL style block management. No impact for those at the very bottom of housing ladder - rental need with no foot on it. If it is the case that these homes are sitting empty and they have received public funding, can there not be Government intervention, contractual change insisting these home are made available for waiting housing rental applicants at fair rents.
Why would an organisation that has 'sold' 1% of their product, keep flogging away especially at a time when anticipated unemployment rise likely to cause less money about by way of mortgages.
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Anonymous | 30/07/2010 9:15 am
Im sorry but this is a rent to homebuy product where the applicant rents for three to five years, using the money they save on the discounted rent to save towards a deposit. The expectation is that they buy in 3 to 5 years. It has not been running for three years yet, so any purchases are surely positive. And as for the previous anonymous comment, you need to understand what it is you are commenting on. The properties are not 98% sitting empty, they are let.
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Harry Lime | 30/07/2010 9:35 am
9:15am comment ;
How dare you apply clear logic to this story!! Of course the properties are let, they will be extremely popular at the moment because they offer a subsidised rent, the real story will be whether there's a conversion from renting to buying. Personally I'd tick all the boxes, take the subsidised rent whilst saving the rest, and then when given the ultimatitum, clear off and use my savings for a deposit on a "normal" house!!
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Anonymous | 30/07/2010 9:48 am
exactly harry, surely the time to assess whether it has been a success is after 4 or 5 years, not 6 months before people were expected to buy!
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Anonymous | 30/07/2010 3:13 pm
Anonymous | 30/07/2010 9:15 am you need to understand what it is you are commenting on
You need to understand that the reason they are not sitting empty is because they have been re-branded from S/O and let to a certain criteria - paid employees, reduced rent and ‘expectation’ to buy - not the people whose feet every time they want to step on the rung of either social rental or purchase appear stuck in cement. Is their a contract that makes the rental saving element ring fenced to a dedicated purchase deposit account thus avoiding Harry’s scenario?
What is the minimum household income to secure purchase?
Blocks of empty homes (which they were hence re-branding) should at least be considered as housing delivery of a different type i.e. permanent rental property. A big rental building programme is needed but why not re-think current stock and different ways of trying to create some permanent rental stock even if small?
I don’t agree that 1% sales halfway through a project timeline is positive at a time of housing shortage and crisis.
This week, many older tenants have been ‘terrified’ re: enforced removal from their ‘too large home’, HB decrease (regardless of reality). If there are blocks of unsold modern flats with lifts, how about designating them as age 60+ only and offering to same as rental which may seem more appealing to current tenants when RSLs are endeavouring to re-coup larger properties back in to the system from them.
Creative thinking, not re-branding same old.
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