Why shared ownership remains a vital tenure
Can more be done to promote shared ownership as a real option for homebuyers? And how can it be set up for future success? Inside Housing hears from Rob Barnard of specialist lender Pepper Money
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At the time of writing, the government’s Social and Affordable Homes Programme prospectus is yet to be published. The prospectus has been eagerly awaited by many stakeholders in the shared ownership world, who hope that it will give this tenure the support and backing afforded to other tenures.
Rob Barnard, intermediary relationship director at specialist lender Pepper Money, is one of them. He believes the time is right to bang the drum for shared ownership, and says it is an important way for some buyers to get a foothold on a housing ladder that would otherwise be out of reach to them.
It can, however, be an overlooked tenure. Inside Housing speaks to Mr Barnard to find out whether more can be done to promote shared ownership as a real option for potential home-buyers, why it is a perfect fit for specialist lenders and how it can be set up for future success.
Rob Barnard is intermediary relationship director at Pepper Money, leading on shared ownership.
Why is it important to champion shared ownership as a tenure?
Research from our white paper, Shared Ownership: a Vital Bridge to the Housing Market, estimates that since the financial crisis, more than three million prospective homeowners have missed out on the opportunity to own their own properties. That’s an alarming statistic and why, in our view, shared ownership remains a vital tenure option. It’s especially important for would-be buyers in areas where demand is high and full ownership is out of reach due to deposit size or property affordability.
Is enough being done by policymakers and housing associations to promote shared ownership?
In the past 12 months alone, we’ve seen more than 20,000 shared ownership completions, so it’s clear that it has a valued place in the affordable housing mix. But it’s also had a lack of positive attention in recent years. Without more awareness of it and its benefits, its viability as a tenure could be challenged in the coming years. It’s one of the reasons we published our white paper. We wanted it to shine a light on shared ownership and demonstrate why it has real value within the affordable housing strategy.
Does shared ownership have an image problem?
There have been some image challenges. For example, one issue some shared ownership flatowners have raised is the payment of service charges. Yet service charges for flats aren’t exclusive to shared ownership – they’re a feature of flatownership generally. Traditionally, shared ownership properties have tended to be flats. However, our white paper shows that houses are a growing part of the shared ownership mix. In 2023-24, 65% of all shared ownership completions were houses, according to government data.
Does the government lack understanding of the role shared ownership plays in the wider housing market?
I think shared ownership can be misunderstood. We do know that housing as a whole is a key political priority for the government, so I was pleased to walk up Downing Street and deliver the white paper to Number 10 earlier in the autumn. It was a way for us to ensure that our rigorous, pragmatic but cost-effective recommendations about shared ownership are heard at the highest levels of government.
There is a lack of data around shared ownership. What kinds of issues does this create?
There’s a lack of data in the sector generally. If we are to effectively integrate shared ownership into the housing market, data about the tenure should be regularly published and readily available. For one thing, it would help policymakers and potential buyers make better, more informed decisions. Also, a lack of data doesn’t just limit understanding of shared ownership’s impact – it can feed misconceptions about it. It’s why our white paper calls for data to be centrally collated, managed and published, ideally by an independent body. Policymakers would then have a clearer, evidence-based picture about the tenure.
Currently, you can buy a property through shared ownership if your household income is £80,000 a year or less – or £90,000 a year or less in London. Your white paper recommends an increase to these income thresholds. Why?
Those £80,000/£90,000 thresholds were set in October 2016 and have remained static ever since. That’s an issue because someone earning £60,000 today only has the same purchasing power as someone earning £44,000 almost 10 years ago. Not adjusting for inflation is gradually making shared ownership less accessible to those who really need it. That’s why we think the threshold needs to increase.
To be clear, we’re not looking to make shared ownership available to higher earners. We want to ensure that people earning average wages today have the same access to property ownership as people earning average wages back in 2016. If we don’t do that, we’re in danger of creating a situation where people who have no other way onto the housing ladder are locked out of the market.
Why are specialist lenders passionate about supporting shared ownership?
Because it opens doors for greater numbers of creditworthy people to own their own home. I can only speak for Pepper Money, but the type of lending we do fits beautifully with the typical profile of a shared ownership customer. We take a more compassionate, responsive and realistic view of people’s circumstances – but we don’t take shortcuts. We take time to find out about an applicant’s back story and base our lending on responsible and financially sustainable decision-making. Many of our applicants are those with self-employed status, complex incomes or second jobs, so they don’t fit the rigid scoring approach set by traditional lenders.
What role can specialist lenders play in promoting shared ownership?
There are several things we can do. First, let’s challenge perceptions. Specialist lenders should work with the industry to change the image of shared ownership and challenge myths and misconceptions about it. Second, we need more thought leadership. It’s why we commissioned Rob Thomas, a former Bank of England economist, to work on the white paper with us. Third, let’s educate people about the benefits of the tenure through the media, providing data that demonstrates its true value.
How optimistic are you that shared ownership will grow in importance as a tenure in the years ahead?
I’m cautiously optimistic that with the right policy updates, data infrastructure and lender support, shared ownership can grow significantly. But specialist lending needs to be part of that growth. We remain absolutely committed to shared ownership and will continue using our platform to promote it, and the increasing role that specialist lenders play in it.
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