Mark Henderson is the Chief Executive of the Home Group, one of the UK’s largest providers of homes for sale and affordable rent, and a leader in long-term integrated health and housing.
In the UK it’s a plain fact that many more people want to own their home, rather than rent.
Ownership can be a very positive thing: it gives people ‘skin in the game’ with their community and a real chance to hand on a legacy to their families.
The instinct to own a home is no different if you are a young professional or someone living in social housing. 87% of Home Group customers want to get on to the housing ladder. Every poll I’ve seen shows the general population are within a few basic percentage points of that.
That shouldn’t be a surprise, but it is all too often overlooked. Ownership seems to be an all or nothing proposition, but need not be.
If, at Home Group, as a housing provider, we are genuinely listening to our customer base, then like many others in the sector we will be actively promoting home ownership. This isn’t an either or. We still have a huge program to build more affordable homes and we are actively investing £1.7bn in our current business plan doing just that.
The announcement this week of a new Government backed model for Shared Ownership is something we know our 120,000 Home Group customers will welcome. By reducing the minimum from a 25 per cent stake to ten per cent, more of our customers will be able to benefit. This is a great step forward and lessens the most significant barrier to ownership.
When buying a Shared Ownership home, you will still need to put down a deposit, but in showing flexibility and reducing the stake required, the Government are making that barrier so much easier to overcome.
At Home Group we’ve tried to bring fresh thinking to this area in the last three years with our own product to support our customers onto the housing ladder. The product, namely ‘Deposit Builder’, supports customers who might struggle to raise a deposit. The product allows customers to save up to £7,000 in just five years through a combination of rent reduction, access to the Government’s ISA scheme, and match funding from Home Group.
Virtually every housing association and local authority has their own shared ownership scheme, with a myriad of rules, and each branded under a slightly different name or logo. Hopefully the Government can now work with us and create the right conditions so that it is simpler and easier to understand for those looking at the product. We would all benefit from a Government backed advertising blitz to promote the new model.
Shared Ownership isn’t perfect, and we’ve still got questions about what next. But with a constructive spirit, we can work together with the Government to iron out many of the issues which can cause confusion or leave customers disappointed.
As a large national provider of social and affordable homes, let’s just look at what this all means in practical terms in two different parts of the country in which we have homes.
According to Zoopla, the average house price in leafy Wandsworth is a staggering £770,060. Up in Whitehaven, Cumbria, the average house price is a much more modest £144,877. At a stroke, anyone wanting to get on the property ladder has gone from needing to borrow £36,000 to a more manageable £14,500. It may not seem like a huge amount but the average Whitehaven employee according to PayScale earns £19,000 per year. That is well below the national average, so context is vital. Incidentally, the median annual earnings for full-time employees in the United Kingdom was approximately £30,350 last year. The comparison in Wandsworth is £39,600.
I’d like to see the Government go further. As the Government outlines, you can now move in as little as one per cent increments (up to outright ownership). Surely if you can find a mortgage then why not? Ten per cent should be the guide and not a hard stop. What is crucial here is having a process in place which means fees, valuations, and all the other vital technical aspects are dealt with.
Even at ten per cent, the cash equivalent in Wandsworth is still high at over £77,000. That would mean the customer could own half the property up in Whitehaven. £14,500 would get you a two per cent share in Wandsworth. It might be all that some can afford it and we should encourage that.
Given the way in which rising house prices have outstripped wages, many people, especially those on low incomes, may never get the chance to own outright. So we have to help them own as much as they can. For some people having a stake in the property is simply about choice. In a YouGov poll, 29 per cent of social tenants’ surveyed wanted more choice over issues like fitting a new kitchen or bathroom. For others, it was about how they want to leave something behind or build up a sum they could call upon in hard times. 15 per cent wanted to provide a legacy for their family.
Some of this is about basic fairness and people on lower incomes deserving the same chance to get on the housing ladder, regardless of whether they live inside the M25 or anywhere else.
At Home Group, aspiration is important to us, as is listening to our customers. We know that for many, that might mean getting into work or it might mean owning. We want people to have the opportunity to get on the housing ladder – and we are going to continue to play our part in delivering that.