Agenda item

(Housing Portfolio Holder) To consider the attached report (C-022-2010/11).

(1)        That the previously agreed Open Market Shared Ownership (OMSO) Scheme be piloted in 2010/11 but with Broxbourne Housing Association (BHA) instead of Moat, and operated in the manner previously agreed by the Cabinet subject to the following changes:

            (a)        applicants of the Scheme also be allowed to purchase two- bedroomed houses;

            (b)        the maximum property purchase price be increased to £210,000;

            (c)        the purchased property to be of modern construction, either            brick/block or brick/timber cavity construction;

            (d)        applicants also be allowed to purchase a property in Hertfordshire, or         a London Borough immediately neighbouring the Epping Forest District;

            (e)        if the Scheme is subsequently extended to a Phase 2 then BHA’s   marketing, legal and administration costs be reduced from £2,500 to        £2,000 for phase 2; and

            (f)         if the scheme is over-prescribed then priority be given to those        applicants seeking to purchase the cheapest properties;

(2)        That the Director of Housing and the Director of Corporate Support Services be authorised to agree the detail of the scheme and the necessary legal agreements;

(3)        That the Pilot Scheme be funded from the £435,000 payment received by the Council from McCarthy & Stone to fund affordable housing within the District (in accordance with the Section 106 Agreement for its recently completed development in Epping) in order to fund 8 shared ownership properties, and budget provision be made accordingly within the Housing Capital Programme for 2010/11;

(4)        That the existing budget of £350,000 for the OMSO Scheme within the Housing Capital Programme for 2010/11 be carried forward to 2011/12;

(5)        That the success of the Pilot Scheme be reviewed by the Housing Portfolio Holder upon completion; and

(6)        That the Housing Portfolio Holder be authorised to extend the OMSO Scheme into a Phase 2 in 2011/12, if considered appropriate, to provide a further 6 shared ownership properties, utilising the £350,000 budget provision.

The Housing Portfolio Holder presented a report about the Open Market Shared Ownership Scheme.

The Portfolio Holder reminded the Cabinet that it had previously agreed to pilot an innovative Open Market Shared Ownership (OMSO) Scheme to enable housing applicants on the Council’s Housing Register to get on the home ownership ladder, and select a property on the open market that they would like to purchase on a shared ownership basis. The Housing Association that the Council had previously agreed to operate the Scheme with was no longer interested.  However, following discussions with a number of other housing associations, Broxbourne Housing Association had expressed an interest to work in partnership with the Council to introduce the Scheme.  A small number of changes to the previously-agreed Scheme had been proposed, to enlarge the scope of the scheme and make it more attractive to applicants.

The Portfolio Holder added that, following a capital receipt from a developer under a Section 106 Agreement, it was proposed to fund the pilot scheme this year from this capital receipt to assist eight applicants. It was further proposed that, on completion of the Pilot Scheme, consideration should be given to extending the scheme next year, funded from the existing budget for the scheme. It was confirmed that , where successful applicants for the scheme were existing Council tenants, they would vacate Council properties, which would then be available for subsequent release to other applicants on the Council’s housing waiting list, in accordance with the terms of the Housing Allocations Scheme.

Decision:

(1)        That the previously agreed Open Market Shared Ownership (OMSO) Scheme be piloted in 2010/11 but with Broxbourne Housing Association (BHA) instead of Moat, and operated in the manner previously agreed by the Cabinet subject to the following changes:

            (a)        applicants of the Scheme also be allowed to purchase two- bedroomed houses;

            (b)        the maximum property purchase price be increased to £210,000;

            (c)        the purchased property to be of modern construction, either            brick/block or brick/timber cavity construction;

            (d)        applicants also be allowed to purchase a property in Hertfordshire, or         a London Borough immediately neighbouring the Epping Forest District;

            (e)        if the Scheme is subsequently extended to a Phase 2 then BHA’s   marketing, legal and administration costs be reduced from £2,500 to        £2,000 for phase 2; and

            (f)         if the scheme is over-prescribed then priority be given to those        applicants seeking to purchase the cheapest properties;

(2)        That the Director of Housing and the Director of Corporate Support Services be authorised to agree the detail of the scheme and the necessary legal agreements;

(3)        That the Pilot Scheme be funded from the £435,000 payment received by the Council from McCarthy & Stone to fund affordable housing within the District (in accordance with the Section 106 Agreement for its recently completed development in Epping) in order to fund 8 shared ownership properties, and budget provision be made accordingly within the Housing Capital Programme for 2010/11;

(4)        That the existing budget of £350,000 for the OMSO Scheme within the Housing Capital Programme for 2010/11 be carried forward to 2011/12;

(5)        That the success of the Pilot Scheme be reviewed by the Housing Portfolio Holder upon completion; and

(6)        That the Housing Portfolio Holder be authorised to extend the OMSO Scheme into a Phase 2 in 2011/12, if considered appropriate, to provide a further 6 shared ownership properties, utilising the £350,000 budget provision.

Reasons for Decision:

House prices within the District continued to remain very high, resulting in many local people being unable to purchase their own home.  The operation of the previously-agreed OMSO Scheme, but with BHA, would assist 8 applicants on the Council’s Housing Register to enter home ownership this year, whilst the extension of the Scheme would assist a further 6 applicants.

If house prices increased then the Council’s investment in the Open Market Shared Ownership Scheme would increase proportionately and would be recouped when shared-owners purchased additional equity shares up to 100% (staircasing). The receipts would then be re-invested in further equity purchases to assist other applicants. The previously-agreed Risk Sharing Agreement would minimise and mitigate the Council’s risk, especially if property prices decreased.

Other Options Considered and Rejected:

To not operate the Pilot Scheme.

To operate the Pilot Scheme with another housing association, but no others had expressed an interest.

To not authorise the Housing Portfolio Holder to extend the Scheme to assist a further 8 applicants.

To not plan for the possible extension of the Scheme, and to not utilise the capital receipt from the developer to provide affordable housing on this Scheme.