People seeking to get on the housing ladder through shared ownership may be allowed to increase the proportion of the home they own in smaller steps than currently allowed, the housing secretary, Robert Jenrick, has announced.
Instead of increasing equity in 10% chunks, people who share the ownership of their home with a housing association could buy as little as 1% a time, in what the government described as an effort to make home ownership more accessible to low-income groups and to “level up” the country.
Labour criticised it as “tinkering” and said it did not tackle the lack of new affordable housing.
Housing experts said the idea, which is to go out to consultation would only work if transaction costs were reduced. There are high costs to buying additional chunks of equity that act as a disincentive to “staircasing” ownership, industry sources said.
The Home Owners Alliance estimates it costs about £2,000 to buy an additional tranche of equity on top of the cost of the share itself because of the costs of valuing the property, conveyancing, stamp duty and rearranging mortgages.
The Ministry of Housing, Communities and Local Government has yet to offer any indication about how these costs may be reduced.
“My mission is to increase the number of homes that are being delivered and to get more young people and families on to the housing ladder, particularly those on lower incomes,” said Jenrick. “That’s why I am announcing radical changes to shared ownership so we can make it simpler and easier for tens of thousands trying to buy their own home.”
The ministry gave the example of a family in a £450,000 shared ownership property who could buy an initial 25% stake with a mortgage for £112,500, while paying subsidised rent on the remainder. Currently they would then have to pay £45,000 to “staircase”, meaning to increase their stake and decrease their rent. If the new plans are introduced they would pay as little as £4,500 a time.
Polly Neate, the chief executive of Shelter, said: “Pinning his hopes on yet another complicated housing scheme is a worrying start for the new housing secretary. The government must realise that unworkable schemes, laden down with admin costs, are the wrong priority at any time - and are woefully inadequate when this country is facing the current housing emergency.”
The shadow housing minister, Sarah Jones, said: “Tinkering with the details of shared ownership is meaningless when lack of investment from government means low-cost homes for ownership simply aren’t getting built. The Tories have failed to deliver the low-cost homes we need to get people on the housing ladder.
“Just 1% of all homeowners have accessed shared ownership, and the number of these and other low-cost homes being built each year has almost halved since its peak under Labour.”
However, Catherine Ryder, the director of policy and research at the National Housing Federation, which represents housing associations, said: “We very much welcome the news that the government is looking at ways to make staircasing in shared ownership easier. Shared ownership is the best route into home ownership for people who can’t afford to buy outright and housing associations, who built 14,000 shared ownership homes last year, are committed to working with the government to continue improving it.”
