“From growth in values up around 5% to 7%, we’re seeing that is being sustained roughly about level, if not with a 1% or 2% increase. So, it’s beginning to flatten a bit.
“Demand is still really strong. January through March saw the highest level of demand for shared ownership we’ve ever had.”
In the past year, it made 142 private sales, 161 shared ownership resales, and 469 shared ownership new build sales.
“The market remains strong, but we’re cautious going forward,” he says, adding that build costs are increasing at circa 15%.
The 33,000-home landlord is not alone – Accent, Karbon Homes, Sovereign and Places for People all reported strong shared ownership sales.
Paul Fiddaman, chief executive at Karbon Homes, says: “We’ve had a really good year – shared ownership and direct sale.”
The 28,000-home landlord recently had 600 bids for 30 Rent to Buy homes.
The demand for shared ownership is likely down to people who would have once bought outright no longer being able to afford to, he suggests.
Last year, Karbon had no market sales in its own name, although it delivered 36 through a joint venture. In the previous year, it sold 91 homes, of which five were market sale in its own name, 82 were shared ownership and four were Rent to Buy conversions.
“Housing affordability also remains stretched, where mortgage rates remain well above the lows prevailing at this point last year”
Matthew Bailes, chief executive of Paradigm, which owns and manages 16,000 homes across London and the South East, says: “What’s happening now is the market is slowing down, things are moving a bit more slowly, prices have levelled off, people are feeling the squeeze, but there’s still demand for shared ownership, in part because Help to Buy is no longer available.”
Charlotte Carpenter, executive director of growth and business development at Karbon Homes, suggests other factors are helping to bolster demand for products like shared ownership.
Anecdotally, she says that landlords leaving the private rented sector because of costs and beefed-up regulation is having an impact.
“Where will people go? If they’re able to qualify, social housing, but a lot wouldn’t.
“We will see a lot of them come into Rent to Buy theoretically, and you might see some move into shared ownership from there.”
While any shift away from the market might drive some demand for shared ownership, the landlords Inside Housing spoke to were more concerned about the potential impact on homelessness.
“There is a bit of a perfect storm [for] people that can’t get into social housing because there are people with greater needs ahead of them in the queue,” Mr Bailes adds.
“They can’t get into shared ownership because they haven’t got a deposit or quite enough income to service the debt. They certainly can’t get into full ownership.”
With slowing or falling prices, some social landlords are currently picking up new opportunities for development – and others are keeping a watchful eye.
‘Worries about cash flow’
Sarah Ireland, executive director of sales and homeownership at Accent, says it has had “a couple of bulk sales from house builders put on the table. They’re worried about cash flow.”
Accent itself is not as exposed to the market – last year it completed 15 homes for outright sale and started none. It is not currently marketing any private sale developments.
“We will see a lot of them come into Rent to Buy theoretically, and you might see some move into shared ownership from there”
Mr Bailes says he has not seen similar behaviour from developers, and if it is happening, it is “quite marginal and scheme specific”.
“That said, I think we will see more of it if the market gets more difficult over the next few months,” he says. “We’ve seen some house builders offering £12,000 to subsidise a mortgage for two years.”
Karbon Homes is also receiving increased offers from developers “who have stock they’re finding a bit more challenging to shift themselves”. “That means they are keen to do deals with us so there are opportunities in there for us around the affordable housing world,” Mr Fiddaman says.
Scott Black, chief operating officer at Places for People, says if house builders reduce their production, and more land becomes available, “further opportunities to deliver additional affordable homes could arise”.
Of course, there are issues other than prices that are currently affecting social landlords’ development activity. Landlords that Inside Housing spoke to say they are more concerned with other issues: construction costs, contractors going under, planning delays, labour and skills shortages, and lack of government funding for regeneration.
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