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Boris mulling over new form of part-buy, part-rent plan to ramp up focus on home ownership

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Sat 27 Jul 2019

Boris mulling over new form of part-buy, part-rent plan to ramp up focus on home ownership

New Prime Minister Boris Johnson is considering putting public funds into a new part-buy, part-rent plan.

Leading estate agents Romans and Leaders proved quick off the mark, revealing details of its new shared ownership division.

The social housing magazine, Inside Housing, said it has been told of the Prime Minister’s interest in shared ownership by two sources who know of Johnson’s plans.

They believe that the new product would be part of a greater focus on home ownership, and could be designed to take pressure off demand for rented social housing.

Whether it would take the place of Help to Buy when it is scrapped in March 2023 is not clear.

Shared ownership usually relies on a social housing provider, and is restricted to people with an income of under £80,000 a year (£90,000 in London).

It does come in for extensive criticism – some part-owners find it impossible to ‘staircase’ to incrementally own greater parts of the property; others are put off by other costs such as monthly service charges, and the expense involved every time a share of the property is increased.

There can also be complications when it comes to resale.

However, the new Prime Minister’s interest in shared ownership is known.

In 2011, a Sunderland-based housing association Gentoo set up a scheme called Genie Home Purchase, with then London mayor Johnson promising it £40m to expand into the capital.

The idea was for Genie to buy a property and offer it mortgage-free to a hopeful owner with a 30-year payment plan ending in full ownership.

However, the scheme failed to attract investment to gain traction in the north-east and was scrapped in 2016.

Variations of shared ownership are not unknown in the private sector, where some landlords have tried it.

There is also a new scheme called Unmortgage, which partners with institutional investors rather than social housing landlords.

It sets out its stall as providing a way for people to access home ownership through a part-own, part-rent model that pairs buyers with investors.

Under the scheme, renters can purchase as little as 5% in a property without a mortgage, renting the remaining 95%, and ‘staircasing’ their way to owning more of the property when they are able. Properties can be new or secondhand.

Unmortgage – which recently parted company with co-founder Rayhan Rafiq Omar – announced a new partnership earlier this month with Allianz Global Investors.

Last year, Unmortgage raised the largest seed round in Europe for a fintech.

Savills has said it expects demand to rise for shared ownership by more than 15,000 a year once Help to Buy is scrapped.

Yesterday evening, the Leaders Romans Group, with 130 branches, unveiled its shared ownership division.

CEO Peter Kavanagh said it had become clear that this is exactly “where we should be investing our time and resource”.

Kavanagh said: “[Shared ownership] is not something many agents get involved with – I don’t think it’s something that could be run through a standard office.”

The Romans shared ownership team concentrate on new build. The company has appointed Adrian Plant as its shared ownership director.