Increasing Access to Home Ownership in Barnet Brian Reynolds Deputy Chief Executive London Borough of Barnet.

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?