A North London council is looking to sell off 23 new shared ownership homes it bought for an estimated £6m in October of last year because it doesn’t have the expertise to market them to the right people or manage its share of the properties when sold. Brent Council has blamed rising inflation, the cost-of-living-crisis and Liz Truss for the “appetite and demand” in them falling.
The council originally approved the purchase of 115 affordable homes in 2020 as part of the Grand Union development in Alperton – 92 of which were for affordable rent and 23 for shared ownership. The leases were completed for 22 of them in October 2022 and the final one last month (June), meaning the council owned the leasehold but not the freehold which remained with the developer.
Purchasing the 115 homes cost the council a total of £30.27m, including all fees, which meant an average of around £263,000 per property. It is estimated that the shared ownership homes cost around £6m.
Rather than having ambitions to move into the shared ownership market, as the council would part-own the leasehold on the properties, the council claims the purchase was to “unlock the [remaining] 92 homes [in the same block] for affordable rent”. However, it has described the market as “turbulent”, with too many of these types of homes available and their demand reducing.
A report from the corporate director of residential services states: “The impact of the mini-budget back in September 2022, rising inflation and growing cost of living crisis has led to uncertainty in the market. The affordability of shared ownership has however also come into question within the housing sector.”
It added: “Research into the ongoing cost of living crisis and housing shows shared owners are more likely to be vulnerable to financial hardship than other homeowners. This is a result of both mortgage offers and the rent payments on properties being linked to inflation.”
The report says that the council doesn’t currently have the required experience in selling, marketing, or managing shared ownership properties and the number of homes wouldn’t warrant the level of resource needed to upskill and recruit. It adds that there are “no current plans” to move into this market.
It is understood that the shared ownership homes were originally acquired to go towards meeting the borough’s housing needs. Questions were raised at the time of the purchase about whether the scheme would actually help with this.
Alperton’s councillor, Anton Georgiou, asked the cabinet member for housing, homelessness and renters security, Cllr Promise Knight, at a recent Full Council meeting on July 10 why the properties are now being sold rather than transferred to the council’s housing stock.
Cllr Knight replied: “They are being re-purposed because we know that the political appetite for shared ownership is waning. You brought this up six months ago and this is a demonstration of us listening.” The proposal to release the 23 homes into the open market will be determined by the Cabinet at an upcoming meeting (July 17).