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Can homeownership be a realistic option for people with additional needs?

At 2016’s Transition Event, one of our speakers Mark McGoogan talked about the possible housing options for people with additional needs. This included homeownership. Many of the delegates expressed an interest in learning more about this, as a result we’ve brought Mark back to talk about how homeownership and specifically shared ownership can work for some people with an additional need and their families.

Shared ownership

As part of mainstream housing policy, all governments have supported affordable homeownership in one form or another. Shared ownership is one of those options. For more than 30 years, housing associations have received grants from Government to subsidise shared ownership homes for people who cannot afford to buy a house outright.

The idea of shared ownership is that the shared owner (the person wanting to buy the property) buys a proportion of the property, say 50% (it can be as little as 25%) and gets a mortgage to do so. The other 50% is owned by the housing association and the shared owner pays rent to the housing association for the part they don’t own.

Shared owners can buy more of the property if their income increases. They can get a bigger mortgage or use savings for this. Like people who own all of their homes, shared owners also have to ensure and maintain their own property.

Shared ownership for people with additional needs

Since the 1990’s a small number of housing associations have adapted the mainstream shared ownership model to enable people with additional needs to become shared owners. For instance, most of the housing associations offering this specialist type of shared ownership also provide additional services, such as repair, maintenance and help with getting the right support to make ownership a success. The additional cost of these services is added to the cost of the rent or service charge to be paid by the shared owner.

The HCA

The Homes and Communities Agency (HCA) is responsible for carrying out many of the Government’s housing policy aims. In response to these early innovations to deliver a shared ownership option for people with disabilities, the HCA developed a specialist homeownership product to sit alongside its other mainstream housing opportunities.

It’s called HOLDHome Ownership for People with Long-term Disabilities. This is quite a common way for people with additional needs to be able to take on shared ownership. Furthermore, the Government has very recently continued its commitment to HOLD, setting out plans to deliver 8,000 shared ownership homes for supported and older persons’ housing for 2016 to 2021.

Shared ownership financial responsibilities

When taking on shared ownership, people have three main financial responsibilities for their housing:

  • paying the mortgage on the part they own
  • paying the rent of the part they don’t own
  • meeting the costs of repairs, insurances and maintenance
Paying the mortgage

Most people with disabilities who become shared owners may not have full-time paid employment and are likely to rely on benefits to meet their accommodation costs. Like everyone else who has a mortgage, but does not have income or sufficient savings, a shared owner can apply for a benefit called Support for Mortgage Interest. This covers the interest payment on the original mortgage used to purchase the property, based on the average interest rate of mainstream mortgages. The Government pay this benefit directly to the bank or building society the mortgage is with.

From 2018, Support for Mortgage Interest will change from a benefit to a loan secured on the property. Current advice is that this will mean the loan will not be paid back unless the property is sold and there are sufficient funds from the sale to pay it back.

Paying the rent

Like everyone else who has to pay rent, but does not have income or sufficient savings, a shared owner can apply for a benefit called housing benefit.

Paying the cost of repairs, insurances and maintenance

These services are usually included in the housing association rental charge. Generally, this means that the level of housing benefit should cover these costs.

Issues with shared ownership

Getting the right quality and amount of support in your new home. Above all, this is the biggest issue faced by anyone looking to live more independently. It’s no different if you are buying, renting or moving into residential care. For housing associations specialising in this area, this is a critical issue.

Getting a mortgage. Before the financial crisis in 2007/8, there were national lenders who were prepared to offer mortgages of 95% of the shared owners ‘share’. Since the crisis, the Bank of England has also introduced tougher mortgage eligibility criteria, particularly around a mortgage applicant’s income. This has made shared ownership mortgages more difficult for lenders to provide, or limit the amount that they are able to provide. [See box]

Mental capacity. Mistakenly, a person’s mental capacity to purchase a property is often thought to be an issue, in particular for those with profound learning disabilities. In fact, this rarely presents a problem as there is a well-defined process to follow the best interest of the individual with formal decision-making and contracting under the Court of Protection rules.

Like any other house purchase money for a deposit, legal fees and any adaptations or works can be an obstacle. It requires careful budgeting and savings.

Shared ownership or outright ownership may not be the right choice for everyone with additional needs, however, it can be a realistic choice for many.

Finding the money to purchase

Bank of Mum and Dad (or Grandma and Grandad)

Where circumstances allow; some families are supporting their loved ones to achieve homeownership. In some cases, this means putting together enough money for a deposit to go into a housing association scheme; in others, it means putting up a substantial deposit of 30% or more and taking an equity share or doing their own version of ‘buy to let’. This may not be something all families are able to do, however, whatever route is taken, independent financial and legal advice is essential.

Current mortgage lending | Top tips for parents and buyers
Current mortgage lending

Currently several open-minded and incredibly supportive regional building societies are providing a set number of HOLD mortgages per year. These are being allocated on a first-come, first-served basis. Due to their proud community focus, some of these societies are restricting lending to their local area, so national coverage cannot always be guaranteed although people are working hard to address this whilst also increasing the total number of mortgages available.

Top tips for parents and buyers
  • Buying a home using HOLD can take a number of months, which is one of the reasons why it is such a safe, secure and sustainable solution. It is vital to begin considering this and all other housing options early. We recommend at the start of the last year at college.
  • If a buyer needs a court-appointed deputy to help make property and affairs decisions for someone who may lack capacity, this can take six months to secure. It will need to go via the Court of Protection so, again, start this process as soon as possible.
  • Check eligibility for the HOLD model right now. Buyers must be:
    • 18 to 60 years old with a clean credit history and no outstanding debts.
    • In receipt of Disability Living Allowance High or Middle Rate Care or the Personal Independence Payment equivalent, together with other qualifying benefits.
    • Unable to work in conventional employment.
    • Ideally looking to live on their own. They can share with others but this will require a lot of looking into.
    • In possession (or in the process) of arranging a suitable care and support package, either with their local authority, a private care provider or their family.
  • Able to put down a deposit and pay fees associated with buying their new home. This usually costs around £10,000, including a 5% deposit on their share of the property.
  • They must be preparing for homeownership and ensuring it’s sustainable.
  • They must be able to contribute to their housing costs of around £30 per week.

Dave Abbey, My Safe Home enquiries@mysafehome.info

Mark McGoogan MRICS is an independent consultant and chartered surveyor. He has over 20 years’ experience successfully navigating the housing systems in the public, private and independent sectors.

Where to start and useful contacts

The local authority housing department

Most local authority housing departments have a list of housing associations offering shared ownership in your area. Ask both the housing department and the associations about HOLD in your area. The best part of the housing department to ask is usually called ‘Strategic Housing.’

Advance Housing and Support

One of the first organisations in the UK to offer shared ownership. Their programme helps people with long-term disabilities and mental health concerns.
www.advanceuk.org

Golden Lane Housing

Working in partnership with Mencap to offer suitable housing options for people with a learning disability.
www.glh.org.uk

The Housing and Support Alliance

A national charity and membership organisation. They work with people with learning disabilities, families, advocacy organisations, housing and support providers and commissioners.
www.housingandsupport.org.uk/home

Royal Mencap Society

Supporting people with a learning disability to live how and where they choose.
www.mencap.org.uk

My Safe Home

Provider of help and support for people with a disability who want to buy their own home.
www.mysafehome.info

What’s your experience of shared ownership? We’d love to hear your thoughts, come and talk to us via email or our social media!