We talk lower deposits, security of tenure and staircasing with the man overseeing Metropolitan Thames Valley housing association’s operation
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“It’s about educating people on what the product is and what process they will go through when buying something with us,” said Kevin Sims, director of affordable homes provider SO Resi, part of Metropolitan Thames Valley (MTV) housing association.
As we’re running a special feature on shared ownership in Wharf Life, we thought we’d turn to an expert in the field to offer readers some clarity on the scheme and whether it might work for them.
First, a few facts.
The way shared ownership works is relatively simple.
Buyers essentially enter into a partnership with an affordable housing supplier such as a housing association.
They purchase typically between 25% and 75% of a property, paying rent at a capped level on the rest as well as any service charges due.
To be eligible, buyers in London must have a combined household income of less than £90,000 a year and not own another property.
But why go down this route at all?
“A lot of people aspire to home ownership – we’d all like to live in a five-bedroom house in Kensington, but most of us can’t do that,” said Kevin who joined MTV six years ago and now looks after the organisation’s shared ownership buyers throughout their journey with SO Resi.
“While 100% ownership might be the goal, some people will only be able to achieve 50% or 75% but owning a share in a property is still better than renting.
“One of the most important things you get as a shared ownership buyer is what I call: ‘Security of tenure’.
“If you’re renting, you don’t own anything.
“Your landlord might wake up on any given morning and decide they want to sell up – you’re constantly at the mercy of a notice period and all the stress and worry that comes with an unexpected move.
“That’s not going to happen to a shared owner.
“There might be a situation where someone defaults very badly on their rent and mortgage, but as a housing association we’ll be there to step in and help so, unless someone’s got themselves into a real pickle, there will never be anybody saying they have to move out in a month’s time.
“That security is a really valuable part of the product.
“There’s also freedom of expression of course.
“Shared owners can decorate the property however they want – they’re more or less free to live in it like they own it outright.”
more affordable
It’s not just peace of mind, however.
Not only is the monthly cost of a shared ownership property in east London typically cheaper than monthly rent on a comparable home, the bar to getting on the ladder is significantly lower too.
“Saving a 10% deposit for a £400,000 one-bed apartment would mean putting aside £40,000 before you consider the other conveyancing and moving costs and that’s unmanageable for a lot of people,” said Kevin.
“The only way many can manage to raise a 10% deposit would be to move out of London and that just isn’t possible for some.
“But if you bought a 25% share in that property with a 10% deposit, you’d only need to save £10,000. That’s still a lot, but it’s considerably easier than buying outright.
“There’s also recently been an increase in the number of 95% mortgages available and having to only find £5,000 makes a very, very big difference.
“That allows a whole load of people who can’t buy into the housing market any other way to do so.
“That means they have an asset and, while people would aspire to own 100% of a property, I’d certainly rather have 25% than nothing at all.
“In long term, the value of that asset will grow – nobody’s going to lose out on buying at any one of our London developments whether that’s at Canning Town, Nine Elms or Wembley.
“Of course there are places on the outskirts of the capital but they’re no substitute for London life, which is why people find it so attractive.
“Consequently shared ownership is a big draw for lots of people, especially those who are renting at high rates in the city.”
staircasing with SO Resi
The journey doesn’t end with the purchase of the first share, however, with buyers able to increase their stake in a property, paying less rent as their level of ownership increases.
“The process is called ‘staircasing’ and there are lots of ways that shared owners can do that,” said Kevin.
“For many years, for example, we’ve offered shared owners the option to increase their stake in a property by 1% every 12 months.
“Unlike some other housing associations, MTV under that SO Resi umbrella actively encourages staircasing and we have a big team to facilitate it.
“At present, about 8% of our shared ownership buyers own all of their home so for some it’s an aim rather than a destination.
“If somebody then wants to move out, that’s not a problem either.
“We are very proactive if someone wants to sell their share and it’s now a straightforward process to either market it through us or via an estate agency.”
key details: SO Resi Canning Town
There are still some shared ownership properties left to purchase at SO Resi Canning Town in east London.
Prices start at £98,750 for a 25% share in a one-bed with estimated monthly outgoings of £1,371.
The apartments are located within easy walking distance of Canning Town station for access to the DLR and Jubilee line, offering direct connections to Canary Wharf, the City, London City Airport, Excel and Stratford.
Kevin said: “There’s a whole raft of reasons why your London professionals will see Canning Town as a very attractive proposition – it’s got lots of appeal to lots of different kinds of people.
“It’s been really successful as a scheme for us and you can see why buyers want to live there.”
Find out more about the development here
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