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.
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 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 HOLD – Home 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.
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.
Golden Lane Housing
Working in partnership with Mencap to offer suitable housing options for people with a learning disability.
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.
Royal Mencap Society
Supporting people with a learning disability to live how and where they choose.
My Safe Home
Provider of help and support for people with a disability who want to buy their own home.