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Housing figures have welcomed a major increase in grant levels in a new funding programme which ministers hope will take shared ownership “to the next level”.
The government’s £4.7bn 2016/21 Shared Ownership and Affordable Homes Programme includes £4.1bn to build 135,000 shared ownership homes in England.
Broken down, this means that bidders will receive an average grant rate per unit of £30,370 - nearly double the average of around £15,000 per unit in the 2011/15 Affordable Homes Programme.
In the foreword to the prospectus document published last week, Greg Clark, communities secretary, said he wanted to take shared ownership provision “to the next level”.
Mervyn Jones, head of housing at Savills, said: “That’s the highest amount of grant per unit we’ve seen in a number of years.”
He added that the increased grant rate would be “essential” for providers in more expensive areas because they would need higher grant rates to help their schemes stack up when selling smaller shares.
The prospectus says the government wants to encourage “greater involvement by the commercial housing sector” in the delivery of shared ownership. This is understood to include institutional investment and house builders.
The government is removing restrictions on the type of organisation that can hold an interest in shared ownership homes in the long-term and making it administratively easier to bid for grant for those that only want to hold the investment for a short time.
Stephen Teagle, managing director of affordable housing at house builder Galliford Try, said: “The grant rate should assist the investment proposition and encourage investors to participate through both registered providers and the private sector.”
Adam Morton, policy leader at the National Housing Federation, said: “There are likely to be a number of reasons why grant levels are higher, including the need to better reflect the cost of delivery and to encourage more providers to deliver shared ownership.”
However, Piers Williamson, chief executive of The Housing Finance Corporation, and Mr Jones said there was currently a lack of statistics available about shared ownership, such as the rate of defaults, which made it harder to encourage investors from new entrants such as pension funds.
“There is very little reliable long-term data on staircasing,” Mr Williamson said, adding that institutional investors were inherently more risk-averse about shared ownership than associations because they need to make a return on each investment.
£4.7bn
Total funding for programme in England (including London)
£4.1bn
Amount earmarked for shared ownership
135,000
Homes for shared ownership
10,000
Rent to Buy homes
8,000
Supported housing rental homes
Source: Homes and Communities Agency