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Government to consider bids for higher grant rate to build new model shared ownership
The government will consider bids to its Affordable Housing Programme (AHP) tied to higher grant rates in recognition of the extra costs associated with the new model of shared ownership homes.
The £11.5bn 2021 to 2026 AHP is intended to deliver up to 180,000 new homes across England, with around half for shared ownership outside London.
Shared ownership homes funded through the new programme must follow a new model launched by ministers in spring.
Under the new model, buyers will be able to purchase a smaller initial stake and staircase more gradually, while landlords must handle repairs costs for the first 10 years.
New shared owners will be able to apply for £500 a year towards the cost of internal repairs during that period.
Some housing associations have expressed concerns about the changes, including about whether they will affect the financial viability of building homes for shared ownership.
Government housing agency Homes England and the GLA, which administers the AHP in London, have not set fixed grant rates for the 2021 to 2026 programme.
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It is understood that bids for funding to build shared ownership homes at higher rates of grant than in previous programmes are being considered in light of the new model, especially the 10-year repair period.
The Ministry of Housing, Communities and Local Government (MHCLG) confirmed to Inside Housing that it had considered the “limited” additional costs of delivering the new shared ownership model when designing the 2021 to 2026 AHP and expects those to be reflected in bids.
But it also warned against providers making “overestimated assumptions”.
The first round of bids are currently being considered by Homes England and the GLA.
A spokesperson for MHCLG added: “We do not set grant rates for the Affordable Homes Programme – funding levels are assessed on a bid-by-bid basis, ensuring they are both viable and providing the best possible value for money.
“We’re investing more than £12bn over the next five years to increase the supply of affordable housing – the largest investment in a decade, which will unlock a further £38bn in public and private investment in affordable housing.”
A spokesperson for the GLA said: “The 2021–26 Affordable Homes Programme moves away from fixed tariffs and has introduced flexible grant rates.
“Partners have now modelled the final version of the new lease and have taken this into account in their bids to us for 2021–26.”
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