Increasing Access to Home Ownership in Barnet

Brian ReynoldsDeputy Chief Executive

London Borough of Barnet

• Providing greater choice and increased access to low-cost home ownership

• Meeting the needs and aspirations of older people

• Continue to tackle homelessness and reduce the use of temporary accommodation

Reviewing the Housing Strategy

• Housing Needs Survey - shortfall of 5,148 affordable housing units per annum

• Research shows that most people aspire to own their own home

• 40% of first time buyers buy with help from family/friends

Housing Needs

• Social Homebuy Scheme for Council Tenants

• Cash Incentive Scheme

• Shared Ownership

• Discounted Market Sale

• First Time Buyers initiative

• Housing Advice for potential owners

Ownership Options in Barnet

• Allows existing tenants to acquire an equity share in their own home

• Minimum share 25%

• Landlord can charge up to 3% on retained equity

• Barnet Scheme:

– Keeps rent low at 2.5% of equity

– Major repairs charges pro-rata for first 5 years

Social Homebuy Scheme

Social Homebuy Scheme

• Provides a cash grant to help tenants buy a property on the open market

• 18 tenants moved under scheme in 2006/7

2-5 years tenancy

2+ bedrooms £18,000

5+ years tenancy

2 bedrooms £26,000

3+ bedrooms £29,000

Cash Incentive Scheme

• Government funded part-buy/part-rent scheme, operated by Housing Associations

• Allows people to buy a minimum 25% share in a home and pay a subsidised rent on the remainder

• 33 shared ownership sales, including both new build and existing properties, were completed in 2006/’07

• The properties included 3 x 3 bed, 21 x 2 bed, 7 x 1 bed and 1 studio

Shared Ownership

Source – Barnet Housing Needs Survey 2006

TenureTotal Households

Unable to afford

Able to Afford

% Unable to afford

Affordability of shared ownership with 50% equity and tenureCouncil 11,008 10,842 166 98.50%RSL 6,034 5,977 57 99.10%Private rented 20,370 17,614 2,756 86.50%TOTAL 37,412 34,433 2,979 92.04%Affordability of shared ownership with 25% equity and tenureCouncil 11,008 10,471 537 95.10%RSL 6,034 5,977 57 99.10%Private rented 20,370 16,536 3,834 81.20%TOTAL 37,412 32,984 4,428 88.16%

Shared Ownership - Access

BedsNew Build Full Price

Annual Mortgage @ 5.89%*

Annual Rent @3%

Total Annual Cost

Income Required (3X Total Cost)**

50% Equity Share1 £199,000 £5,876 £2,985 £8,861 £26,583

2 £246,000 £7,228 £3,690 £10,918 £32,7543 £301,500 £8,892 £4,523 £13,415 £40,2444 £415,500 £12,220 £6,233 £18,453 £55,358

25% Equity Share1 £199,000 £2,912 £4,478 £7,390 £22,169

2 £246,000 £3,640 £5,535 £9,175 £27,5253 £301,500 £4,420 £6,784 £11,204 £33,6114 £415,500 £6,136 £9,349 £15,485 £46,454

* Interest only** Method used by Metropolitan Home Ownership

Shared Ownership - Money

• Available via St George only

• The purchaser pays 80%; the discount is protected by a covenant on the property, held by the Council

• Thirteen applicants are so far purchasing under this scheme

• The planned provision is for 240 homes

Discounted Market Sale (DMS)

TenureTotalHouseholds Unable to afford Able to Afford

% Unable to afford

Affordability of low-cost market housing at no discount by Tenure Type

Council 11,008 10,972 36 99.7%

RSL 6,034 6,034 0 100.0%

Private rented 20,370 19,327 1,043 94.9%

TOTAL 37,412 36,333 1,079 97.1%

Affordability of low-cost market housing at a 20% discount by Tenure Type 

Council 11,008 10,972 36 99.7%

RSL 6,034 6,034 0 100.0%

Private rented 20,370 19,327 1,043 94.9%

TOTAL 37,412 36,333 1,079 97.1%

Affordability of low-cost market housing at a 30% discount by Tenure Type

Council 11,008 10,921 87 99.2%

RSL 6,034 5,977 57 99.1%

Private rented 20,370 18,491 1,879 90.8%

TOTAL 37,412 35,389 2,023 94.6%

Discounted Market Sale

New Build Discounted @ Household Income RequiredFull Price Beds 20% 1 Earner 2 Earners

£199,000 1 £159,200 £45,486 £54,897

£246,000 2 £196,800 £56,229 £67,862£301,500 3 £241,200 £68,914 £83,172£415,000 4 £332,000 £94,857 £114,483

30%1 £139,300 £39,800 £48,034

2 £172,200 £49,200 £59,3793 £211,050 £60,300 £72,7764 £290,500 £83,000 £100,172

40%1 £119,400 £34,114 £41,172

2 £147,600 £42,171 £50,8973 £180,900 £51,686 £62,3794 £249,000 £71,143 £85,862

Mortgage Multipliers

1 Earner = 3.5

2 earners = 2.9

Barnet HNS 2006

Affordability – Discounted Market Sale

• Launched on Beaufort Park for 50 new build apartments

• 5% cash deposit + mortgage to at least 45% of value, with nothing to pay on balance for first three years

• Currently 31 buyers purchasing under this scheme

First Time Buyers Initiative (FTBI)

Scheme H/Holds Helped

Shared Ownership 33

Open Market Homebuy 11

Discounted Market Sale 13

First Time Buyers Initiative 31

Right to Buy 22

Right to Acquire 6

Cash Incentive 18

Total 134

Target by 2010 1000

Housholds securing low cost home ownership in 2006/7

Households securing low cost home ownership in 2006/7

• There are currently 324 shared ownership properties with planning permission

• It is anticipated that 510 low cost home ownership properties will be built on the regeneration estates

• 227 Discounted Market Sales properties will become available and a further 19 FTBI properties

• Cash incentive is programmed at 20 per year, while other schemes are subject to demand

• This results in a future supply of at least 1080 new build low cost home ownership properties

Future Supply

• Booklet developed for those wanting information about home ownership

• Reaching out: community events; Sharia Mortgages

• Working with Barnet Homes to provide more advice for council tenants

Advice

• Discounted Market Sale provides a simpler product and an opportunity for some people at the higher end of the intermediate market to purchase

• Shared ownership provides an opportunity for more people to access homeownership, but rents need to be kept as low as possible as property values increase

• Need new, simple products• Need to tackle higher interest rates for low

cost home purchasers

Conclusions

Your response

• How much do you know about your tenants’ aspirations (and capacity) for home ownership?• What range of low cost home ownership products are available to tenants in your local area?