Increasing Access to Home
Ownership in Barnet
Brian Reynolds
Deputy Chief Executive
London Borough of Barnet
Reviewing the Housing Strategy
• 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
Housing Needs
•
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
Ownership Options in Barnet
• Social Homebuy Scheme for Council Tenants
• Cash Incentive Scheme
• Shared Ownership
• Discounted Market Sale
• First Time Buyers initiative
• Housing Advice for potential owners
Social Homebuy Scheme
• 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
Cash Incentive Scheme
2-5 years tenancy
2+ bedrooms
5+ years tenancy
2 bedrooms
3+ bedrooms
£18,000
£26,000
£29,000
• Provides a cash grant to help tenants buy a property
on the open market
• 18 tenants moved under scheme in 2006/7
Shared Ownership
• 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 - Access
Total
Unable to Able to
% Unable
Tenure
Households afford
Afford
to afford
Affordability of shared ownership with 50% equity and tenure
Council
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 tenure
Council
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%
Source – Barnet Housing Needs Survey 2006
Shared Ownership - Money
New Build
Beds Full Price
50% Equity Share
1
£199,000
Annual
Mortgage
@ 5.89%*
£5,876
Annual
Rent
@3%
£2,985
Total
Annual
Cost
Income
Required
(3X Total
Cost)**
£8,861
£26,583
£3,690 £10,918
£32,754
2 £246,000
£7,228
3
£301,500
4
£415,500
25% Equity Share
1
£199,000
£8,892
£12,220
£4,523
£6,233
£13,415
£18,453
£40,244
£55,358
£2,912
£4,478
£7,390
£22,169
2 £246,000
£3,640
£5,535
£9,175
£27,525
3
4
£301,500
£4,420
£6,784
£11,204
£415,500
£6,136
£9,349
£15,485
* Interest only
** Method used by Metropolitan Home Ownership
£33,611
£46,454
Discounted Market Sale (DMS)
• 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
Tenure
Total
Households
Unable to afford
% Unable to
afford
Able to Afford
Affordability of low-cost market housing at no discount by Tenure Type
Council
11,008
10,972
36
99.7%
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%
RSL
Affordability of low-cost market housing at a 20% discount by Tenure Type
Council
11,008
10,972
36
99.7%
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%
RSL
Affordability of low-cost market housing at a 30% discount by Tenure Type
Council
11,008
10,921
87
99.2%
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%
RSL
Affordability –
Discounted Market Sale
New Build
Discounted @ Household Income Required
Full 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
£415,000
3
4
£68,914
£94,857
£83,172
£114,483
1
£241,200
£332,000
30%
£139,300
£39,800
£48,034
2
£172,200
£49,200
£59,379
3
4
£60,300
£83,000
£72,776
£100,172
1
£211,050
£290,500
40%
£119,400
£34,114
£41,172
2
£147,600
£42,171
£50,897
3
4
£180,900
£249,000
£51,686
£71,143
£62,379
£85,862
Mortgage Multipliers
1 Earner = 3.5
2 earners = 2.9
Barnet HNS 2006
First Time Buyers Initiative (FTBI)
• 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
Households
Housholds securing
securinglow
lowcost
costhome
home
ownership in 2006/7
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
Future Supply
• 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
Advice
• 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
Conclusions
• 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
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?