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All Section 106 homes to be subject to new shared ownership model, government reveals
All shared ownership homes delivered through Section 106 will be subject to the government’s new model of shared ownership, it revealed today.
The government has said that it expects from April that all homes delivered with funding from Section 106 developer contributions will need to follow its new shared ownership model, which allows buyers to purchase smaller initial stakes in properties and staircase in 1% chunks.
The new details came as part of a consultation opened by the government today calling for responses to its new shared ownership plan. This includes previously unseen details about how the plan will work, such as how shared owners can buy 1% stakes in their purchased homes, as well as protect new shared owners from hefty repairs bills for the first 10 years.
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The consultation also said the housing secretary would lay a written statement before parliament that set the expectation that all new shared ownership homes funded by developer contributions that receive planning permission will follow the new model from April.
Section 106 planning agreements see developers deliver affordable homes in exchange for permission to build and are the biggest contribution to affordable housing supply – in 2018/19, they were responsible for 49% of all affordable homes completed in England.
The consultation goes on to say that a transitional arrangement will be put in place for those developers and housing associations that have already prepared planning applications, assuming that shared ownership would follow the existing model, so that pipelines are not adversely affected by the change.
This arrangement would follow similar principles to those set out for first homes in the government’s Planning White Paper, which says that where significant work has already been done during planning with the local authority on tenure mix, the authority should have the flexibility to accept alternative tenure mixes and consider whether first homes could be easily substituted for another tenure.
The government has also said that it will expect any homes funded through its new infrastructure levy to also be subject to the model. It put forward the proposed levy in its Planning White Paper, with the intention of replacing the current Section 106 and Community Infrastructure Levy with a nationally set, value-based charge for developers.
Among the other details put forward in the consultation document is confirmation that shared owners will not have to get a valuation when increasing their stake by 1% and the price will be based on local House Price Index information.
The government has also clarified the details concerning its proposal that landlords pay for repairs for the first 10 years of a shared owner’s ownership of a property. This will last only for the first 10 years of a building’s existence and no longer, so if a shared owner sells their stake four years after buying a new build home, the new owner will only have six years left of protection from repairs costs.
