Shared equity scheme offers attractive solution for councils

Shared equity scheme offers attractive solution for councils

Chris Williams, Director at Merlion Homes, discusses the launch of a new shared equity scheme that has the potential to transform the provision of affordable housing.

Having spent the last 20 years working within the local authority arena, I am only too aware of the many challenges and frustrations being faced across the sector. One area that receives much attention is the urgent need for more affordable, more accessible and sustainable housing solutions.

The Government’s Housing White Paper called on local authorities to be ‘as ambitious and innovative as possible to get homes built’, yet what is the Government actually doing on a practical level to help and support local authorities to deliver?

With the demands for home ownership products outstripping the initiatives from government, we felt at Merlion that there was an urgent need to do things differently — it is from this starting point that we developed our own Local Authority Enhanced Shared Equity Partnership scheme (LAESEP). We believe that the scheme provides a feasible and attractive solution for local authorities and developers, but most importantly the homebuyer.

The scheme — which can be accessed by any local authority and can arguably be made available across any new development (of any size) — offers homebuyers the opportunity to purchase their new home, for between 65% and 75% of market value. However, unlike many other schemes on the market, the homebuyer will own 100% of their home with no rent to pay on the outstanding stake. Instead, this is only repaid, when the property is sold (or the buyer can opt to staircase out early should they wish).

So where does the Local Authority fit in?
Our Enhanced Shared Equity Partnership invites local authorities to invest rather than provide a grant into the homes, which Merlion are offering with this new scheme — presenting councils with the opportunity to realise a potentially strong return on their investment.

Merlion Homes essentially purchases an agreed number of plots from the developer or council, which are then offered to the market for between 65% and 75% of market value. We handle the entire sales process alleviating both the housebuilder and the local authority (should it be investing) of any admin or associated workload.

A win-win
We believe the scheme offers an attractive solution for all. We can assist local authorities in meeting the housing demand within their area, while offering a sound investment opportunity. We can also help developers meet their affordable housing obligations, while removing any associated admin on their part. Most importantly we can provide homebuyers with an attractive, affordable and sustainable route into home ownership that not only enables them to purchase a new home, but also enables them to access competitive mortgage rates — further enhancing the affordability of their purchase.

What’s more, the solution is highly flexible and adaptable to meet the specific requirements within a locality or of a given site. We have concluded a pilot of our scheme with a specific local authority, which has now been adopted formally at cabinet level and we are already in discussions with a number of others, who we hope will be rolling the scheme out shortly. This is an exciting time for us and over the coming months I hope to reach out to more local authorities interested in hearing more about the scheme and how it could work for them.

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