MAKING HOME OWNERSHIP AFFORDABLE

Phil Moore

Neighbourhoods Regeneration Manager

WHY TENURE DIVERSIFICATION?

• Creating mixed, attractive sustainable areas

• Applies to existing as well as new neighbourhoods

• New neighbourhoods over 50% ownership

• Current estates typically 2% to 25%

• So a programme to sell existing customers their homes

DEVELOPING NEW APPROACHES:FIRSTLY, SOCIAL HOMEBUY

• Early pilot from 2006 • 4000 customers in 14

areas• Discount of £9k to £16k• 32 sales• Verdict – small scale, not

very affordable.• Niche product• Conclusion - new product

needed

RENTING TO OWNING

• PfP own product• Voluntary Sales scheme• Based on equity loan• For good/long standing

customers of 5 years plus• Buy at 60% or 70% market

value - £100k house for £60k mortgage

• No payment on the equity loan part

• Full ownership• Only condition – repay same %

on first sale.• BUT – market collapse !

KEY DRIVERS

• Primarily to fulfil home ownership and financial aspirations of customers – asset building

• More sustainable communities-keeping residents with jobs

• Financial model that is neutral between selling and renting, acceptable to RSL

RtO LAUNCH AND RESULTS SO FAR

• Phase 1 2009 launch to 25 areas, 8500 customers

• 9 sales so far• Phase 2 just

launched – 6800 customers including 3 large areas

WHAT DO WE THINK OF IT SO FAR?

• Slow burner – changing neighbourhoods is a long process

• Still market testing through variety in the pilots

• Current market is very low – preparing for the future

• Equity loan not easy to market• An attempt to cut through the

first time buyer barriers – high deposits

• Still a niche product

THE BENEFITS

To the residents• Making home ownership affordable on an income of

£20k+• Building a long term asset• Fulfilling aspirations• Financial inclusion

To the organisation• More balanced neighbourhoods • Keeping residents with jobs• Financial – capital receipt equals rental stream• Financial – recycled capital grant• Financial – equity as an asset

NEXT STEPS

• Evaluate• Widen the scope – all PfP

customers?• New products to achieve

higher ownership rates – eg sale of vacants pilot using the same equity loan model

• Keep going – meeting customers aspirations