I was pleased to see housing minister Robert Jenrick’s recent announcement of a review of shared ownership with a view to widening home ownership, particularly for younger people.
As a millennial – and the first cabinet minister to be born in the 1980s – Jenrick appreciates that the challenge of buying a home is especially acute among his generation, for whom ownership has halved compared with the early 1990s.
Metropolitan Thames Valley is a housing association that has always been committed to helping young people get on the property ladder and we’re bucking the trend in that respect: the average age of our shared owner is now 35, down from 41 over 10 years ago. This has brought Jenrick, who is 37, into our average age bracket.
We have been providing homes for shared ownership since the 1980s and over that time we’ve refined our approach as we have learned along the way. Overall, we have learned three main things that we think would be particularly useful for the government to consider in ensuring the successful implementation of its proposals.
The first is the need to innovate to make the product affordable. The minister is right to question whether it can be made easier for shared owners to buy more shares in their home. Instead of buying more equity in 10% chunks, as most housing associations require, he wants to cut this to 1% across the board.
Our own research has shown that people find the minimum 10% stake unaffordable and are deterred by the cost of legal and valuation fees.
So our Shared Ownership PLUS scheme enables homeowners to buy an additional 1% share of their home every year for 15 years. Unaffected by fluctuations in the property market, the fixed cost of each share is based on the home’s original purchase price and rises by 3% a year, ensuring full transparency from day one.
This makes budgeting simpler, removes the need for any admin charge associated with ‘staircasing’ (the conventional process of increasing your share in a property) - such as solicitors, valuations, stamp duty fees - and brings down rental charges. Participation in the scheme is optional and those taking part can also purchase more equity via traditional staircasing.
To date, Shared Ownership PLUS has provided the opportunity for more than 500 of our customers to buy further equity in their homes. It is currently the only scheme of its kind in the UK, but there is great potential for this successful approach to be rolled out nationally by other housing associations to make increasing equity quicker, cheaper and more hassle-free for shared owners.
The second thing we have learned is the importance of making shared ownership accessible. Our aim is to demystify the model by avoiding jargon at all costs and being really clear and straightforward in our explanations.
Leveraging technology has been critical. We have developed a clean, user-friendly website for SO Resi, our shared ownership brand, and optimised it for mobiles, because over 70% of our 40,000 visits every month are from smartphones. We have built a strong social media following by creating clear and accessible video content to explain shared ownership. And we are experimenting with services such as Live Chat. We appreciate the magnitude of the decision to buy a home, so clarity of communication is paramount.
The final lesson for us has been the importance of continuing to listen to customers. Over the past 40 years, the ownership market has changed beyond recognition, as have people’s expectations. Over that time we think we have developed a good product that is leading the way, but at the same time we need to continue to learn and evolve and know there is more we need to do.
As early pioneers and innovators of shared ownership, we stand ready to work with the government and share our experience. We are also interested in hearing what others have to say of their experiences. It is a collective endeavour to make home ownership a possibility for even more of Jenrick’s generation.
Kush Rawal is a director of residential investment at Metropolitan Thames Valley