Riverside Home Ownership - Risk of shared ownership repossessions no worse than for housing market as a whole

1 March 2010

The idea that shared owners are ‘marginal’ buyers or represent high risk lending for banks and building societies is a myth.

Figures released by the National Housing Federation’s Home Ownership Advisory Panel show that shared owners are no more likely to be repossessed than those who own 100% of their property with a mortgage. The figures suggest buy-to-let ownership is more likely to lead to repossession than shared ownership.

In 2008/09, just 0.38% of shared owners (432 households) had their homes repossessed compared to 0.42% of mortgaged owners (46,000 households) and 0.46% of buy-to-let owners (5,700 landlords).

Carol Lavender, Director of Riverside Home Ownership, said: “The fact is that housing associations apply strict affordability tests to ensure applicants can afford to buy and sustain shared ownership. These tests were often stricter than the measures applied by lenders to other first time buyers and buy-to-let when the housing market was booming and lending competition was fierce.

“Shared ownership is sometimes painted as ‘risky’ lending. These figures show that to be a myth. Shared ownership is a great market for lenders with real potential for growth.
“Housing associations are interested in sustainable communities. Marginal, high turnover ownership is not good for communities and not good for housing associations as social businesses with a long term stake in communities. We’re very careful about who buys shared ownership homes.

“Housing association shared ownership providers also consider options such as reducing the equity owned and offering access to specialist financial advice if shared owners find themselves in financial difficulty, options frequently not available to owners in the general market. Repossession for housing associations is always a last resort.”