Low to middle income households are increasingly shut out of traditional home ownership, and more and more families with children are living in the private rental sector. We know, however, that home ownership overwhelmingly remains most people’s preferred tenure and the lack of asset accumulation amongst long term renters is a concern. In this presentation Vidhya Alakeson summaries the report 'A foot on the ladder', which argues that shared ownership needs to be understood as the fourth tenure in the UK housing market. For full report go to http://res-fdn.org/18IS4oP

1. ……………………………………………………………………………………………………..
A Foot on the Ladder: How shared
ownership can bring ownership into
reach
Vidhya Alakeson
Richard Donnell
Ben Marshall
Geeta Nanda
David Lammy MP
Patrick Butler
@resfoundation
#sharedownership

2. ……………………………………………………………………………………………………..
A Foot on the Ladder: How shared
ownership can bring ownership into
reach
Vidhya Alakeson
Resolution Foundation
www.resolutionfoundation.org
@resfoundation
#sharedownership

3. Home ownership is in decline
……………………………………………………………………………………………………..
Housing tenure, England
Housing tenure, London
Housing tenure, under 35, low to middle income
households
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#sharedownership

4. But good reasons to promote ownership
……………………………………………………………………………………………………..
• Aspiration to own remains strong – 92% of our
survey respondents would prefer to own
• Ownership currently offers greater security of tenure
• Satisfaction highest among home owners
• Asset building – large wealth gap between owners
(mortgaged and out right) and renters
– Median wealth including property among mortgagors £245,000
– Median wealth including property among private tenants £25,000 (social tenants - £15,000)
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#sharedownership

5. Help to Buy helps those whose principal barrier is a deposit
Peter and Sue
Cambridge:
Help to Buy: Monthly costs: £1557 (85% net
income)
Shared ownership: Monthly costs: £772 (42%
net income)
Exeter:
Help to Buy: Monthly costs: £970 (53% net
income)
Shared ownership: Monthly costs: £481 (26%
net income)
Net household income: £22,000
London Borough of Kingston:
Help to Buy: Monthly costs: £1724 (94% net
income)
Shared ownership: Monthly costs: 855 (46%)
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#hometruths

6. The case for shared ownership
……………………………………………………………………………………………………..
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Low and modest income
households
• More affordable – bridge
between renting and
owning
• Greater security than
today’s PRS
• Route to asset building
• Lower risk than
conventional mortgage –
(but smaller asset)
Housing market
• Source of new supply
• Improving liquidity in the
overall market
• Equity funded models
reduce market volatility
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#sharedownership

7. But the current product is not fit for a bigger purpose
……………………………………………………………………………………………………..
• Not consumer-focused and differentiated by
consumer group: staircasers and long term
part-owners
• Inflexible – too bound up in rules and
regulations set by government, local
authorities, lenders and providers
• Lack of scale – hard to get into and small
secondary market limits moving easily within
shared ownership
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#sharedownership

8. Lessons from innovations so far
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#sharedownership

9. Lessons from innovations so far
……………………………………………………………………………………………………..
• Innovations take time to be understood
• Innovations too often start with providers not
consumers
• Savings need to be built in to the product
• Flexibility is critical – for the product and for
providers
• Investment and lender buy-in require scale
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#sharedownership

10. Designing the product for the future
……………………………………………………………………………………………………..
• One product with multiple entry routes:
traditional shared ownership, home purchase
plan, rent to buy
• Two distinct customer segments – stronger
incentives to staircase for one and greater
mobility and asset protection for the other
• Greater choice over property types: the return
of DIYSO
• New set of standards focused on flexibility,
simplicity and transparency
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#sharedownership

11. Making shared ownership the fourth tenure
……………………………………………………………………………………………………..
• A new equity fund to support new shared ownership
homes
• A more proactive role from local authorities in
planning for and supporting shared ownership
• The development of larger portfolios of assets across
the sector to kick start the institutional market
• A new approach from Housing Associations – equity
to facilitate development and DIYSO, consolidation
and coordination across the sector, core product not
a cross subsidy
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#sharedownership

12. ……………………………………………………………………………………………………..
A Foot on the Ladder: How shared
ownership can bring ownership into
reach
Vidhya Alakeson
Resolution Foundation
www.resolutionfoundation.org
@resfoundation
…………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………
#sharedownership

13. “You can just about afford to rent
so what makes you think you can
afford to buy a house…”
“It’s like when it says on the news
the average person buying a
house in London is in his 40s, so
that don’t give no hope for young
people or anyone really.””
“I think there’s a lot of misinformation [about shared
ownership] because where do you
hear about details and stuff like that?
I just heard of it years ago, I just
thought it’s for nurses…”
@BenM_IM
#sharedownership

14. Why?
Q
14
And what, if anything, do you think are the main causes of the current
housing crisis in London? (spontaneous)
%
47
Affordability of housing/ house prices
39
Over-population/ immigration
37
Lack of building/ housing supply/ investment
14
Planning/ ability to build/ land availability
Government policy including Government policy
welfare reform and
legacy of Right to Buy
Economic backdrop/ lack of financing
5
Local government policy (e.g. housing allocation)
5
7
Renting - poor landlords
3
Poor housing choice
2
Poor housing quality
1
But to Let/ people buying properties and not living…
1
Base: Londoners who agree there is a housing crisis in London (829), 18 - 29 October 2013Source: Ipsos MORI/London Councils
© Ipsos MORI Version 1 | Public

15. Young/renters squeezed most by housing costs
Q
15
Approximately, what proportion of your total household income AFTER tax and
national insurance contributions, do you pay in mortgage payments or rent (excluding
utility bills and council tax). Would you say it is….?
More than a third
Age group
24%
18-24
25-34
35-54
55-64
49%
30%
HA rented
Private rented / other
54%
35%
47%
16%
Tenure
LA rented
30%
42%
65+
Owned with mortgage
A third or less (excluding nothing)
46%
31%
29%
31%
57%
38%
33%
36%
Owners
31%
Social rented (LA & HA)
30%
47%
57%
35%
Base: 697 GB adults excluding those who own outright, 25 October-27 October 2013 Source: Ipsos MORI/Panorama
© Ipsos MORI Version 1 | Public

16. ‘Debt peril’ – some low tipping points
16
Q. Thinking about the total amount of outgoings your household has – that is the
amount your household spends to cover living costs and bills – what is the
lowest this would have to increase for you for start to find it difficult to afford?
% By £25£49 per
month
% By £24 or less
per month
27
22
18
11
Social renters
14
11
Private renters
Base: 2,016 GB adults 16-75, March 2013 (313 social renters, 289 private renters
and 1,384 owner/occupiers)
© Ipsos MORI Version 1 | Public
% By £50-£74
per month
13
11
11
Owner
occupiers
Source: Ipsos MORI for Halifax

17. “Momentum behaviour”: house price/rent expectations
17
Q. Do you think the average property price in the UK will be higher or lower in
12 months time or will it be the same? [respondents given average UK
house price sourced from Halifax HPI]
80
Rent outlook – balance of % higher minus %
lower (+)
+64
60
+40
+56
+56
+33
40
+15
20
+20
+9
House Price Outlook
– balance of %
higher minus %
lower (+)
0
-20
Apr-11
Oct-11
Jan-12
Mar-12
Jun-12
Base: 1,000-2,000 British adults 16+ (c400 PRS)
© Ipsos MORI Version 1 | Public
Oct-12
Dec-12
Mar-13
Jun-13
Sep-13
Source: Halifax/Ipsos MORI
Housing Market Confidence Tracker

18. “The nearest the British have to a religion”?
18
Q. If you had a free choice, would you choose to rent accommodation, or would
you choose to buy? % Buy
95%
90%
85%
80%
75%
Pre war
Baby boomers
Gen X
Gen Y
Overall
70%
96
© Ipsos MORI Version 1 | Public
97
98
99
00
01
02
03
04
05
06
07
08
09
10

19. For most, renting isn’t a tenure of choice
19
Q. If you were told that you had to rent, rather than buy, a house or flat for the
rest of your life, how would this make you feel?
61%
Unhappy
57% of non-homeowners…A similar
proportion believe that people can
never feel fully settled in rented
property.
47% think it is important for parents to
bring up children in a home that they
own, not rent.
Neither
19%
13%
Over half (52%) predict that Britain will
become a nation of renters within
the next generation.
Happy
Source: ComRes for BBC (2,009 18-29s,19-20 June 2013)
Source: Halifax, Generation Rent: A Society Divided?
© Ipsos MORI Version 1 | Public

20. Responsibility: it’s the market, stupid?
20
Q. Who or what do you think is most responsible for young people finding it
difficult to get onto the property ladder?
Size of deposits required
35%
Property prices
33%
The Government
11%
The banks
11%
Older generations for pricing young
people out of the market
I do not hold anyone responsible for
the difficulty of getting on property…
Yound people themselves
3%
3%
3%
Base: All non-owning/mortgaged 18-29 year olds who think getting on the property ladder is
difficult (1,748), GB, 20-27 March 2013
© Ipsos MORI Version 1 | Public
Source: ComRes/BBC

21. ‘The fourth tenure’?
21
Q. Would you consider buying a part share in a home…?
% Don’t Know
% Yes
.,.whilst a governmentbacked scheme helped you
buy the remaining share
(shared ownership)?
% No
…with the assistance of
a government-backed
repayable low-interest or
no-interest loan (shared
equity)?
…with financial help
from a private developer
shared ownership or
shared equity product?
24%
27%
32%
36%
39%
46%
29%
27%
40%
Base: All potential consumers (3,365)
Source: HCA Consumer demand and attitudes in the intermediate market (Ipsos MORI 2010)
© Ipsos MORI Version 1 | Public

22. Scope to build awareness
22
Q. Which of the following, if any, best describes your attitude towards
intermediate market housing?
I am interested in buying or
renting an intermediate market
home and have already applied
1%
I don’t know enough
about intermediate
housing to know if I am
interested or not
21%
53%
24%
I am interested in
buying or renting an
intermediate market
home but have NOT
applied
I am NOT interested in
buying or renting an
intermediate market
home
Base: All potential consumers (3,365)
Source: HCA Consumer demand and attitudes in the intermediate market (Ipsos MORI 2010)
© Ipsos MORI Version 1 | Public

23. Multiple barriers but info & eligibility key
Q. Which, if any, of these do you think are barriers to buying a home through a
shared ownership scheme?
23%
Don't think I am eligible because of income
18%
16%
Want to buy without funding from anyone
Want more choice in type of property
14%
Too difficult to sell on
Too difficult to arrange mortgage for these schemes
12%
Couldn't buy in location I wanted to
12%
9%
Don't think I am eligible because of my job
Don't want to go through application process
Rules/conditions make it difficult to increase share/sublet
etc
6%
4%
24%
Don't have enough information to know
13%
None/there are no barriers
Other
Base: 591 private renters 16+, 11-24 November 2011
3%
Source: Ipsos MORI for Catalyst Housing

24. Thank you!
@BenM_IM
#sharedownership

25. ……………………………………………………………………………………………………..
A Foot on the Ladder: How shared
ownership can bring ownership into
reach
Vidhya Alakeson
Richard Donnell
Ben Marshall
Geeta Nanda
David Lammy MP
Patrick Butler
@resfoundation
#sharedownership