10 March 2006
Social Homebuy was launched a year ago with the promise of giving social tenants the chance to buy a part share in their homes. Neil Merrick visits an estate that is piloting the scheme
Home ownership has always been popular among the residents of St George's Avenue, part of a 1920s estate that is less than a five-minute walk from the centre of Newbury.
Since 1989, when Newbury became one of the first local authorities to transfer its entire stock to a housing association, ex-council tenants have continued exercising their right to buy. Today, fewer than half the homes in St George's Avenue are owned by Sovereign Housing Group, the registered social landlord that took over the properties 17 years ago. And if the RSL has its way, that number will continue to fall.
But right to buy sales have almost dried up in Newbury and other parts of Berkshire. Families that moved into their homes after 1989 are ineligible for RTB, and a £16,000 discount ceiling imposed by the government two years ago is dissuading those who still qualify.
Since last April, there has been just one sale across the group, which owns nearly 13,000 homes in southern England. For tenants in St George's Avenue, which circles a small football pitch, the prospects of home ownership were looking as grim as the rusty goalposts they look out on each day.
That was until the Office of the Deputy Prime Minister came up with Social Homebuy. Unlike most councils and some registered social landlords that are anxious not to lose their precious homes, Sovereign is keen to see tenants buy at least a share in them and create a better mix of residents on its housing estates.
It was already talking to the Housing Corporation about offering some form of home ownership scheme when Social Homebuy emerged just over a year ago. Within the next few weeks, Sovereign and three other RSLs will pilot the scheme before more get the chance to come on board during the next two years.
Ian Barber and Julie Foster, who have lived in St George's Avenue for 13 years, are among 15 households poised to join the pilot, which requires them to buy at least half their home. They will continue paying rent on the remainder until they can afford it all.
Barber says that the couple, who are ineligible for RTB, wants to buy as much of the house as they can afford. But they are waiting to study final details of the scheme before taking any firm decisions. 'We like the house and don't particularly want to move,' he says. 'This way we will get a foot on the property ladder and stay where we are.'
Martin Huckerby, Sovereign's director of finance, says the opportunity to become homeowners without moving house is the main attraction of Social Homebuy. Earlier shared ownership schemes were based on people moving into new properties. 'People prefer to stay where they'd had their kids,' he says.
From the landlord's point of view, Social Homebuy makes more business sense than right to buy because it chooses whether it wants to sell a particular property and, crucially, it can use all the receipts to build new homes or refurbish existing ones.
Denise Reeves, its head of home ownership, says: 'We're not selling stock off but releasing the capital tied up in a home so that it can be used in another way.'
Last July, Sovereign wrote to 770 households in the Newbury area and received 90 responses. This was reduced to 15 for the pilot but, with other families apparently keen, it expects as many as 65 tenants to buy shares in their home in the next two years.
While the government is willing for tenants to buy as little as 25% of their home, Sovereign is, for now, insisting on a minimum purchase of 50%. To encourage take-up, Sovereign initially offered tenants a £2,000 discount. This has been increased to £8,000, with the ODPM picking up the bill.
Although it took longer than expected for the Housing Corporation to finalise a common lease, Reeves expects the first sales to go through fairly quickly once valuations are agreed. 'There are no chains and nobody has to move,' she says. 'The discounts are bigger than expected and everyone has been to a mortgage company and had their loans provisionally approved.'
Along with other RSLs in the pilot, Sovereign has strict rules to ensure people do not run up bills they cannot afford. Tenants must be in work, have lived in the same home for at least five years and cannot owe rent or be subject to an antisocial behaviour order.
Social Homebuy was originally seen as an alternative to extending right to buy to all housing association tenants. After initially opposing the scheme, the National Housing Federation gave its support when the government agreed that, if not in the pilots, tenants will eventually be able to buy as little as 25% of their property. RSLs also praised the ODPM for reversing an early decision to prevent them charging rent on the remaining share of the home.
But Olivia Powis, policy officer at the NHF, insists the scheme must remain voluntary. 'Some RSLs have much more stock than others and it makes sense for them to sell off some of their properties,' she says. 'We want it to be a scheme that they can use to meet the government's objective of mixed communities and as an extension of their disposal programmes.'
Local authorities, including those with arm's-length management organisations, will also be encouraged to offer Social Homebuy. Birmingham council and Derby Homes, an Almo, are among those known to be interested in the scheme.
But it is in the housing association sector that the first sales will take place. The other piloting RSLs are Guinness Trust, Notting Hill Housing and Places for People. In total, up to 400 tenants should join the scheme before it is rolled out nationally, although it is impossible to predict how popular it will be.
Kate Needham, sales and marketing manager at Guinness, says its target is to sign up 100 tenants. At present it has 43 applications pending on seven estates. 'We can start selling as soon as somebody accepts the valuation,' she says.
While three of the piloting RSLs expect tenants to get mortgages from high-street banks and building societies, Places for People plans to team up with a lender and offer a customised mortgage for Social Homebuy.
Steve Binks, group director of finance at PfP, says it is concerned about tenants who have had problems with lenders. 'The idea is to make home ownership accessible to people who don't feel comfortable dealing with financial institutions,' he says.
Tenants who have second thoughts after joining Social Homebuy will have one year in which they can drop out and go back to renting the whole property.
To reflect the fact that tenants will take responsibility for all repairs to their home even though they only own a portion of it, their rent will be reduced by more than the fraction of the house they purchased. Thus, a family that was paying £85 a week in rent on a £150,000 house and buys half will see its weekly rent fall to £36. 'Their relationship to us changes subtly,' adds Reeves. 'We won't be responsible for neighbourhood issues in the same way.'
To avoid problems over the upkeep of communal areas, flats are presently excluded. Sovereign also will not sell housing designed for elderly people, or large family-sized homes that may be difficult to replace.
When Social Homebuy was launched, ministers indicated that only about half of the properties sold by RSLs would be replaced.
However, Sovereign says there is no reason why it should not build as many homes as it sells. 'The government is keen that the receipts are put into tackling homelessness and overcrowding,' says Huckerby. 'We are a major developer and build hundreds of houses every year in our own right. We'd hope to top it up with this extra money.'
PFmar2006
