Right to Shared Ownership – an update

On 17 October 2019 the Government announced a new Right to Shared Ownership (RtSO). Eligible tenants in eligible social or affordable rented homes delivered by the Affordable Homes Programme (AHP) 2021-26 have the right to buy a minimum 10% share of their home, with the ability to buy further shares over time.  In December 2022 guidance on the RtSO was issued at which point the scheme was “re-announced” entitling eligible residents to utilise the new form of shared ownership lease alongside the pre-existing right.

At the time there was considerable concern from both lenders and Registered Providers as to how this would be managed by them administratively.  This is because:

• Lenders tend to want general needs properties as security, often with caps on the amount of shared ownership which can be used for this purpose.
• The lender valuation methodology for shared ownership (EUV-SH) is generally different to that for General Needs (MV-ST, unless restrictions on use apply).  The two methods deliver significantly different results because their basis of valuation is so different.
• The projected demand for the programme was unclear, and so there was uncertainty as to the level of resources required.
• The accounting treatment of the homes may need to be adjusted.
• There would be a significant difference in relation to repairing responsibility, which would fall onto the landlord for the ‘initial period’.

There was also very little evidence of take up – as a right to shared ownership (albeit on different terms) had existed previously under the Right to Acquire programme which, after much lender machinations on funding implications, had been almost unused.

So, we were interested to see the level of take up of the new RtSO.  We submitted a FOIA request to the Department for Levelling Up, Housing & Communities (DLUHC) in January this year.  We asked DLUHC for statistical information regarding the exercise of the RtSO since the launch of the AHP 2021-26 and over the last 3 years.

In their response, DLUHC noted that they do not hold complete data sets but that, after allowing for the eligibility period (which covers the financial year 2021-2022), only three instances of the use of the RtSO have been reported to them during the financial year 2022-23.

The conclusion here, albeit at an early stage in the AHP delivery window, is that the uptake has been statistically (at least) insignificant to date.  Nonetheless it should be noted that there is a requirement under the programme for RPs to notify residents about the scheme on a proactive basis where it applies to their home.

For more information, please contact Andrew Cowan.