How to boost delivery of low-cost homeownership

Mr Hilditch highlights a “mixed economy” of affordable housing providers, including the “growing band of for-profits”, and new partnership arrangements, such as those between Homes England and house builders Barratt Redrow and Vistry Group. “How will they meet that vision that the government has set out? What kind of homeownership products are needed? And who will fund and develop them?” he asks the panel.

Steve Partridge, head of the affordable housing consultancy at Savills, shares figures from the firm’s statistical model that links affordability and demand. In the current market, this predicts that 150,000 affordable homes of all tenures are needed each year, around a third of which should be for low-cost homeownership.

“This shows that the underlying demand is already there,” he adds. “But affordability is also predicted to worsen… over the next few years, so that need is likely to go [up] to 55,000 to 57,000 [homes] a year.”

Samuel Stafford, managing director of the Land, Planning and Development Federation, points out the multiple challenges to getting plans for new affordable housing approved – a task he describes as “plaiting fog”.

“There are lots of spinning plates at the moment,” he says. “There is the devolution agenda at the same time as local government reorganisation. There are issues with the electricity network capacity, waste water capacity and nutrient neutrality, and there is nothing in the Planning and Infrastructure Bill that is going to make a material difference.”

While much of the discussion focuses on refining existing homeownership products, there are calls from the panel to “think bigger”.

“It’s fair to say that the traditional binary of renting and buying is no longer serving modern-day housing needs,” says Joanna Lee-Mills, a partner at Ward Hadaway. “We really need to be looking at that spectrum of products that can bridge that gap and accommodate different financial circumstances for people, and reflect how people are living and working nowadays as well.”

“But could we even think bigger?” Ms Lee-Mills asks. “We could go from a build-to-rent-to-buy model to a community build-to-rent-to-buy model which involves whole blocks or streets where residents can journey together from renting to owning.”

Under this institutional investor-backed innovation, groups of residents would transition from renting to owning over a seven to 10-year period. “That would create placemaking, not just owning,” Ms Lee-Mills adds.

Georgia Kirby-Watt, operations director for affordable housing at Octopus Capital, says there is a “massive opportunity for innovation” in the homeownership market. “We need partnerships to deliver innovation because we’re not going to be doing this by ourselves.”

She suggests a homeownership model that initially requires no deposit or mortgage. “You could start by transferring 10% of ownership from day one with an interest-free loan that was paid back over five years, then go and get a mortgage and staircase the rest.”

Gary Newlyn, head of social housing and public sector at Miller, says insurance could help “smooth” the kind of risk inherent in new ideas. “There is much insurance can do to de-risk innovation and your aspirations in this market, but that might involve stepping back to see if there are different ways it might help you.”

Steven Rance, head of strategy and innovation at Miller, adds that insurance could also be used to ease investors’ fears about the homeownership market. “How do we create a commercial solution, using house builders who have got some capacity [to provide funding] and use insurance to then defray the risk that an investor might perceive in the sector as well?”

Several of the panellists point to the huge demand for their mainstay shared ownership products, the potential for it to be “mainstreamed” and for more investors to be attracted to the market.

“We can’t build shared ownership fast enough,” states Sarah Robson, executive director of development and asset management at Karbon Homes, which owns or manages more than 35,000 homes. “There is huge demand and we want to continue to meet it.”

Aileen Payne, finance director at 46,000-home Orbit Homes, says it had seen “a real demand” for shared ownership since the last Conservative government ended the Help to Buy scheme for new applicants in 2022. “We want to explore what other opportunities there are for shared ownership and market sale options now that we don’t have the Help to Buy.”

Stuart Hensby, director of sales and marketing at 55,000-home Abri, points out that people are “turning to shared ownership” as the private market “struggles to deliver” homes for first-time buyers. “The type of buyer for shared ownership is very different from five years ago,” he adds. “The expectations are much higher, and we need to drive and create a more mainstream feel for it.”