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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
• 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