23/02/2010: Risk of shared ownership repossessions no worse than for housing market as a whole

The idea that shared owners are ‘marginal’ buyers or represent high risk lending for banks and building societies is a myth.

Figures released by the National Housing Federation’s Home Ownership Advisory Panel today show that shared owners are no more likely to be repossessed than those who own 100 percent of their property with a mortgage. The figures suggest Buy-to-Let ownership is more likely to lead to repossession than shared ownership. 

In 2008/09, just 0.38 percent of shared owners (432 households) had their homes repossessed. In 2009, 0.42 percent of mortgaged owners in the main housing market (46,000 households) and 0.46 percent of Buy-to-Let owners (5,700 landlords) were repossessed. 

Helen Muir, Operations Director at Orbit Groupt, speaking on behalf of 20 major Low Cost Home Ownership providers, said "The fact is that housing associations apply strict affordability tests to ensure applicants can afford to buy and sustain shared ownership. These tests were often stricter than the measures applied by lenders to other first time buyers and Buy-to-Let when the housing market was booming and lending competition was fierce. 

"Shared ownership is sometimes painted as ‘risky’ lending. These figures show that to be a myth. Shared ownership is a great market for lenders with real potential for growth. 

"Housing associations are interested in sustainable communities. Marginal, high turnover ownership is not good for communities and not good for housing associations as social businesses with a long term stake in communities. We’re very careful about who buys shared ownership homes. 

"Housing association shared ownership providers also consider options such as reducing the equity owned and offering access to specialist financial advice if shared owners find themselves in financial difficulty, options frequently not available to owners in the general market. Repossession for housing associations is always a last resort."