The government has announced a new phase of improvements to the shared ownership model, including raising household income eligibility caps.
The caps, which have been frozen since 2016, will raise from £80,000 to £90,000 outside London and from £90,000 to £110,000 in the capital. The new caps will take effect in the new year.
In addition, the government will consider measures to reduce existing barriers to staircasing such as upfront and ongoing transaction costs, explore options to support resales including an assessment of the efficacy and reasonableness of nomination periods and the fees charged by providers, and develop better guidance to help existing shared owners understand and navigate the options available to them.
The government will also undertake a review of the functioning of buybacks (or leasehold repurchases) as an exit route for shared owners who, through no fault of their own, find themselves unable either to afford to remain in their home or to sell it.
In a speech, Matthew Pennycook, Minister of State for Housing and Planning, said: "Despite improvements made to the model over recent years, the government is fully aware that shared owners continue to struggle with a range of serious affordability, transparency, management, staircasing and resale challenges.
"In addition to progressing an ambitious leasehold reform agenda and accelerating the remediation of unsafe buildings to the benefit of shared owners and other long leaseholders, we are taking forward a phased programme of targeted improvements to the shared ownership model to ensure it provides an effective and sustainable route into home ownership."
Rob Barnard, intermediary relationship director at Pepper Money, commented: "This is a welcome and sensible decision. The shared ownership income caps had been frozen since 2016, while house prices rose by 37% and earnings by 42%. That left a growing number of working households earning too much to qualify, yet still unable to buy a suitable home on the open market.
“Earlier this month we returned to Downing Street with our white paper, Sustaining the Development of Shared Ownership, which called for the caps to be reviewed. Our research found that one in ten non-homeowners earning above the caps had already tried to use shared ownership and been told they were ineligible. Two thirds said they would consider it if the caps were raised to include them. Raising the caps opens the door to many of those households, but it needs to be reviewed regularly. This is an important step, but there is more to do. We’ll continue to engage with Government and policymakers, using the evidence and experiences of customers and brokers to raise the issues that can help make shared ownership work better.
“With more detail on Your First Home expected in tomorrow’s Budget, the same principle applies. Eligibility rules need to reflect what people actually earn and what homes actually cost today.”
