Shared Home Ownership

Shared Home

Ownership

with the benefit of a safety net
Consultation Paper

Share Your Views

We want your opinion on our shared home ownership idea

Would you like to own a share of your home? This could be possible
with our proposed scheme...

Our proposal

Our proposal is to give tenants the ability to own/part own the home they
are renting but with
the security of a safety net.

Meeting Our Tenants’ Aspirations

In 2012, 43% of our tenants said they would like to buy a proportion of their home, and of these, 17% felt they had the ability to do so. The Association therefore has been looking at how it can fulfil the aspirations of those tenants, and at the same time continue to “make quality homes more affordable to more people”.

How Much Will It Cost?

The following illustrations highlight the weekly costs of the proposal in comparison to the existing rental
of the property.

The illustrations are based on a 2- and 3-bed house but all property types will be considered.

Property Type 2 Bedroom House (Value £134,000*) 3 Bedroom House (Value £159,000*)
Description Current weekly charge £ Weekly Charge after buying 20% share £ Current weekly charge £ Weekly Charge after buying 20% share £
Rent** 80.50 38.00 95.75 50.00
Maintenance charge*** 0.00 30.00 0.00 35.00
Service charge**** 5.00 5.00 5.00 5.00
Total Payment to the
Association
85.50 73.00 100.75 90.00
If you need to take out a loan for the 20% share then this is an approximate illustration of costs:
Mortgage payments
(based on 5% interest rate over 25 years)
N/A 33.00 N/A 37.00
Total Outgoings 85.50 106.00 100.75 127.00


Notes:

*Property values may decrease as well as increase. The property price would be based on an independent valuation.
**Rent - the proposal is that the rental payment will reduce significantly when a tenant buys a share of their home.
***Maintenance Charge - to ensure the property is properly maintained to Welsh Government Regulations, the shared owner will make weekly maintenance payments to the Association.
****Service charge figure is the typical weekly payment by a tenant in a house towards the maintenance of communal areas.

Shared Ownership with a Safety Net Explained

The “Buy Back” Safety Net

People’s circumstances can change quite quickly, and we feel it is important that in times of crises those who have bought a share of their home don’t risk losing it through defaulting on their mortgage.

Our proposal is that the buyer can request, at any time, subject to terms and conditions, that the Association repurchases part of, or the entire share bought, through the “buy back safety net”. The purchase price of the share would be based on the market value for the property at the time of “buy back”. However, it should be noted that property values may decrease as well as increase. The likely criteria for “buy back” would include a deterioration in the buyer’s finances or if the buyer needs to move for some reason.

To protect both the buyer and the Association, the property must have been well maintained. Therefore, the proposed scheme includes an agreement that the Association will maintain the property referred to the illustration as the “maintenance charge”.

When the buyer has purchased 100% of the property, they can still take advantage of the “buy back” safety net, as long as they have continued to maintain the property through the Association.

We would like to thank Altair for its help in developing this scheme.

Money received from sales can be invested in providing more homes for local people.

If 15% of our tenants bought just a 10% share of their home we could build at least 25 further homes.

If, on average a 25% share was purchased, this would mean more than 60 new homes, and if the capital was matched by Welsh Government grant, then over 120 new homes could be provided.

If the scheme is adopted across Wales it could see an increase of between 1,000 and 4,000 new homes built.


Next Steps

The Association is consulting widely on this proposal with tenants and Association partners like the Council, and importantly, mortgage providers, to see whether or not there is an appetite across Wales to develop the proposal into a real offer to its tenants.


Closing date: 30th June 2015 (Now Closed)