Next steps on 2021-26 Affordable Homes Programme

07 October 2020

We’re raising your concerns about the impact of the new shared ownership model with the government.

The government announced the details of the 2021-26 Affordable Homes Programme (AHP) on 8 September, setting out how the committed £12.2bn funding for new affordable homes would be spent.

While we welcomed the fact that the programme will fund homes for social rent, supported housing and shared ownership, we’re concerned that elements of the programme could seriously affect housing associations’ ability to build these homes. This is particularly concerning when we are faced with significant economic and market uncertainty, and housing associations want to be doing all they can to build homes to help strengthen the recovery from coronavirus. 

New shared ownership model

There are two key proposals related to shared ownership that could impact housing associations’ ability to build much-needed affordable homes. These are:

  • A proposed new model of shared ownership that would reduce the initial minimum share to 10%, allow shared owners to buy additional shares in installments of 1%, and make landlords responsible for repairs and maintenance costs for 10 years.
  • Plans to create a Right to Shared Ownership on most new homes for discounted rent, where the tenant would have a right to buy shares of their home under the new shared ownership model proposed.

Housing associations fully support the government’s drive to open up new routes into home ownership and are the main provider of shared ownership in the country. 

However, our members have told us that the new model could mean that it is no longer financially viable to build new shared ownership homes without significant extra grant from the government. It could also reduce demand for existing shared ownership homes. 

Finally, lenders have said that the reduced initial share could present a real risk to new shared owners on lower incomes, who may struggle to meet payments on their home in the long-term.

Sharing these concerns with the government

We’ve been engaging with MHCLG and Homes England to seek clarification on the new programme and raise members’ concerns about the impact of the new shared ownership model on their appetite and ability to build new homes. 

The government has said they will run a technical consultation on the implementation of the new model, but we are concerned the focus of this consultation may be quite narrow. 

The new policy proposals represent a significant change to the existing shared ownership model, and a significant challenge to the sector. While we’ve already shared some actions with officials that could help mitigate the risks, without significant additional grant or fundamental changes, we are worried the new model will not be viable for housing associations to build. 

We understand the government is committed to the new model, but we will be writing to the Secretary of State, Robert Jenrick, to share our concerns. We will highlight that housing associations were planning to invest £16.9bn in developing more than 50,000 new homes to rent and buy in 2020, and more in 2021. We will be clear that the sector wants shared ownership to work, which is why we want to see a full and genuine consultation on the new proposals, engaging housing associations, developers, lenders and investors.

We’re calling for the government to:

  • Consult fully on the new model with housing associations, lenders and investors to allow us to consult properly with members and understand the detailed implications.
  • Carry out an impact assessment on the effect the new model would have on the market and on key market players such as housing associations.
  • Allow time for the new model to be assessed and agreed before bids have to be made into the new AHP.
  • Recognise that the new shared ownership model would require higher grant rates to make it financially viable for housing associations to build.

Share your views

We’re continuing to seek members’ views on the new AHP and on the proposed new model of shared ownership. These views will shape our conversations with the government and our response to the current technical and any future consultations.

If you’d like to share thoughts, concerns or questions, please get in touch.

Who to speak to

Rob Wall, Head of Policy