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Suzanne BensonSuzanne is the firm's national Head of Real Estate, working on major projects (including strategic land, joint ventures and regeneration) ...more
The green paper – an opportunity for more innovation in homeownership products?
The government’s consultation is an ideal opportunity to look at new models, argues Suzanne Benson
The Social Housing Green Paper provides an opportunity to look at innovative home ownership models, writes @SuzBenson2309 of @Trowers #ukhousingCommonhold? Shared ownership trust models? @SuzBenson2309 of @Trowers looks at the opportunity for new homeownership models presented by the green paper consultation #ukhousingWhile the Social Housing Green Paper does not provide the further funding commitment that some hoped for, it does nonetheless consider supply from a number of angles.
One notable aspect is the interest in widening the scope of shared ownership, with the government posing the question: “How can we best support providers to develop new shared ownership products that enable people to build up more equity in their homes?”
Increased access to both partial and full ownership has the potential to generate income and increase mobility, both factors can increase the available supply of social rented housing.
The green paper focuses on the example of allowing incremental staircasing in 1% tranches to make staircasing more accessible and cites the Thames Valley Housing’s So ReSI model as one successful example.
“We have seen a continued conversation about the drawbacks and pitfalls of utilising a leasehold structure.”
The surrounding policy context is however prompting a wider conversation. Last summer the government undertook a consultation exercise entitled Tackling Unfair Practices in the Leasehold Market.
Since then, we have seen some initial commentary emerge from the government on their proposed approach to rectifying some of the more aggressive leasehold practices.
We have also seen a continued conversation about the drawbacks and pitfalls of utilising a leasehold structure – particularly for house sales.
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Shared ownership leases have so far been specifically excluded from the proposals. At the same time they do continue to attract a degree of negative commentary and scepticism from parts of the market.
While the shared ownership lease model does continue to present the most effective and flexible mainstream model for assisting the intermediate market, the green paper does create an opportunity to consider developing other models.
One obvious area for discussion in the current climate is commonhold, as introduced by the Commonhold and Leasehold Reform Act 2002. Commonhold is an alternative to long-leasehold ownership which allows owners in a multi-unit building (apartment owners) to hold the freehold to their unit and share the cost of communal facilities and services.
This form of ownership already operates around the world, for example the condominium system in America.
One of the key aims of the act was to overcome the disadvantages of leasehold ownership. In practice, it has failed to take off, and there are very few blocks currently in commonhold ownership. Given ongoing issues associated with leasehold tenure, there have been many calls to review the legislation and implement changes in order to make commonhold both a practical and fundable option.
A public consultation exercise is expected to be launched in October to test this. In a market which is increasingly focused on high-rise and communal living, commonhold could certainly provide an alternative tenure for developing new models.
A further area for consideration is the shared ownership trust model.
This trust-based product creates a legal ownership structure which will be familiar to anyone who jointly owns a property.
“A shared ownership trust neatly avoids the complexities of the landlord and tenant relationship.”
A relatively simple contractual document would set out the terms of the shared ownership arrangements, enable the parties to agree a mechanism for the homeowner paying to occupy the property and also deal with increases in equity ownership and upkeep of the property.
A shared ownership trust neatly avoids the complexities of the landlord and tenant relationship while providing a more secure basis for products with very low initial tranche sales.
Finally, shared equity mortgage models have a proven track record and have potential, beyond the Help to Buy model, for use with affordable homeownership. Some of the regulatory challenges introduced with the Mortgage Credit Directive in 2016 would however need to be addressed to enable wider use in the sector.
The challenge with any non-standard market product is to engage the mainstream lenders in the conversation – this requires scale and stakeholder engagement. A national discussion at policy level – as prompted by the green paper – should provide an ideal starting point.
Suzanne Benson, partner, Trowers & Hamlins
Social Housing Green Paper: full coverage
All our Social Housing Green Paper coverage in one place:
Green paper measures are not enough to create May’s ‘new generation’ of council homes Green paper proposals are welcome but much more is needed to support councils to build, writes John Bibby
Green paper shows ministers now see associations as trusted partners Focusing on the failure of the green paper to address supply misses the point, writes Boris Worrall
Government should focus on building on what is already strong Philippa Jones considers the Social Housing Green Paper through a slightly different lens
We need more than a week of delayed announcements bundled together Jules Birch reflects on the government’s ‘Housing Week’ announcements
The regulator should monitor how associations assist homeless people Government announcements this week are positive, but any enhanced role for the English regulator should include looking at homelessness prevention work, argues David Bogle
The regulator’s role should be limited to dealing with systemic failures Julian Ashby suggests the Housing Ombudsman Service should deal with all complaints
The green paper shows ministers are in listening mode Despite some glaring omissions, the government appears to be in listening mode and it is important the sector takes advantage, argues Emma Maier
A short history of social housing league tables Attempts to create league tables for housing associations are nothing new. Mervyn Jones looks at how they have worked in the past
League tables could prove blunt and counter-productive, sector warns Housing figures criticise government proposals to measure social landlords against performance indicators
Government ‘must decide how proactive regulator should be’ on consumer standards Ministers now face a dilemma over the regulator’s focus, sector figures say
The Green Paper: a golden opportunity missed? Melanie Rees assesses the Social Housing Green Paper against recommendations drawn up by the Chartered Institute of Housing and finds the government comes up short
Longer strategic partnerships and guranteed debt to boost social housebuilding The Social Housing Green Paper outlines key ways of boosting supply
The green paper is remarkable progress but it is still not enough The green paper suggests the government appears to be re-writing much of its policy since 2010, but more needs to be done, writes Jules Birch
Green paper marks a ‘milestone’ on resident involvement The government’s recognition residents need clear information is to be welcomed, now it up to the sector to embrace tenant involvement, writes Paul Hackett
Ministers consider stock transfer programme to community-led associations The stock transfer programme could be revived under proposals in the housing green paper
Access to housing grant could be tied to new league tables Grant could be awarded according to how well landlords meet performance indicators, the paper suggests
Ofsted-style regulation of tenant services proposed The government is considering expanding the Regulator for Social Housing’s remit to intervene over tenant services and give it a more “proactive approach to enforcement”
Government proposes dropping one-for-one Right to Buy replacement commitment A consultation paper published alongside the green paper proposes a broader measurement to replace the one-for-one pledge
A list of recent housing policy U-turns The green paper confirms yet more housing policy U-turns from the government, which has spent the past two years dropping policy ideas developed under the David Cameron government. Here is a rundown of the major changes in policy direction
Sector welcomes green paper but calls for more ‘ambitious investment’ Reaction to the proposals, from the National Housing Federation, Chartered Institute of Housing and more
Morning Briefing: reaction to green paper announcements how the media reported the proposals trailed by the government overnight
Government drops plans to force councils to sell higher-value stock The government drops plans to force councils to sell higher value homes
League tables and ‘sharper teeth’ for regulator in social housing green paper Ministers reveal some of the things in the paper ahead of its publication
Grenfell survivors: green paper does not go far enough survivors of the Grenfell Tower fire have said the measures published in the Social Housing Green Paper do not do enough to rectify issues in the social housing sector
KEY PROPOSALS IN THE SOCIAL HOUSING GREEN PAPER
- New 'league tables' of housing providers based on key performance indicators, surrounding services such as repairs and neighbourhood management. This could be linked to housing grant.
- Consideration to scrapping of the current 'serious detriment' test, to allow 'Ofsted-style' tougher consumer regulation
- New home ownership options such as allowing tenants to buy as little as 1% of their property each year through shared ownership. This would only apply to new shared ownership purchases.
- Ditching of plans to force social landlords to offer fixed term tenancies rather than lifetime tenancies in social housing
- Ditching of plans to force councils to sell off their most valuable social housing when it becomes vacant
- The potential introduction a new stock transfer programme from councils to 'community-led' housing associations
- The return of guaranteed debt funding to help the development of affordable homes, and longer term 'strategic partnerships' for developing housing associations
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