Alternative Housing Provision

Housing Directors' Meeting21 October 2015

Richard McQuillan

Head of Housing Services

Hafod Housing Association

Background Hafod Housing Association provides

& manages a range of housing models outside the standard SHG model: Low Cost Home Ownership Shared Ownership Flexi Tenure (for the elderly) Rent First – Buy Later Intermediate Rent Homeless leasing (Not covering) Social lettings (Not covering)

Low Cost Home Ownership (LCHO)

• Traditional approach 70/30 ownership• Sell property for 70% of the market

value• Association retain 30% equity in the

property• No charges related to 30% equity• No time limit on redeeming 30%

equity

LCHO Challenges

• Local Authority Partnerships– Identifying potential buyers– Local connection criteria– Affordability

• Market Vs Sector Approach– Marketing via a waiting list

• Securing a Mortgage– Savings– Other costs

• Market Prices in some areas pushing up LCHO prices

LCHO Challenges Cont.

• Developers attitudes towards Section 106:– Not sure of standard of property handed over– Advance marketing can be difficult– Additional costs for turf, carpeting, white

goods, door numbers!

• Managing Service Expectations:– Out of hours viewings– Weekend open days– Quick response to defects etc.

Shared Ownership

• Part Owned / Part Rented• Percentage of ownership can vary• Owner can staircase up to full

ownership• Not seen as a great deal for buyers• Full repairs responsibilities with the

owner• No longer pursuing this model

Shared Ownership Challenges

• Some tenants struggling to pay rents & mortgages

• Historic issues of tenants not understanding financial implications investing in a property

• Monitoring condition of the property– Some tenants not investing in their home

• Increased house prices & economic climate– Lower rate of tenants staircasing to 100%

ownership

Flexi-Tenure• One scheme in a Cardiff (Sheltered

Scheme for the Elderly)• Part Owned / Part Rented• Owners can reduce equity in the

property as well as increase their equity stake.

• Owners can purchase up to 95% of the property.

Flexi-Tenure Observations• Combined Rents & Service Charges

can by high even at 95% ownership:– Low rental element– Service charges for Sheltered Scheme not

cheap

• Popular scheme:– Desirable location - Near Roath Park Lake

Cardiff – No difficulties for tenants to sell

Rent First – Buy Later• Only managing two schemes• Intermediate (LHA) rents set to allow for

the saving towards a mortgage• Valuation taken at the start of the tenancy• Valuation taken when tenant choose to

buy• The difference in valuation is shared

between the Association and the tenant• Can’t sell below purchase & works /

acquisition costs

Rent First – Buy Later Challenges

• Confusing for tenants - No guarantees of ‘discount’ offered

• Purchase & works costs can exceed local house prices (low value areas)

• Difficulty saving for mortgages:– Other financial priorities– Tenants often ‘dip’ into savings– Change of economic / personal

circumstances

Intermediate Rent• Welsh Housing Partnership (WHP)• Funded through Association Reserves, Loans &

Grant• Increase supply of affordable homes• Rent level set at Local Housing Allowance

(LHA) rate• Help those:

– Unable to buy– Struggling to pay market rents in the private sector– Not able to access social housing

• Over 260 units

WHP Challenges

• Increasing house prices create challenges to procuring properties at the right price

• Keeping improvement costs to budget – unexpected works

• Ensuring the model financially stacks up – easier in higher LHA level areas

• Trying to please all our local authority partners

• Local authority partners having own agendas

Welsh Housing Partnership

• Scattered units or new development• Popular with tenants:

– Cheaper than market rents in PRS– Good quality accommodation– No stigma of ‘social rented’ housing

• Association benefits– Low turnover– Low rent arrears– Low repair costs

Any Questions?