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In an attempt to ease access to affordable housing in Northern Ireland, Clanmil Housing Association, South Ulster Housing Association and Barclays, in conjunction with Turkington Holdings have formed a unique partnership to pilot the ‘Own a Home’ shared equity scheme.
The ‘Own a Home’ equity share scheme is a first for the UK offering a 100% mortgage with no deposit required and is currently exclusive to Turkington Holding’s, Clendinning development in Portadown.
The need for affordable housing has never been so critical and as mortgage lenders apply tighter financial criteria to loans, the opportunities for buyers to pay for conventional mortgages has become more limited, making shared equity schemes more attractive.
Turkington Holdings originally met with the Department for Social Development to obtain advice on ways to develop the scheme, in order to create cash flow for the company and offer affordable mortgages to people on moderate incomes.
Clanmil were approached by the DSD because of their track record of creating innovative partnerships to provide tailored solutions for the social housing need in Northern Ireland.
Through their association with Clanmil, Barclays has agreed a special dispensation for the ‘Own a Home’ pilot scheme, which offers a 100% mortgage to potential purchasers without them having to fund an initial deposit.
Clare McCarty, Chief Executive of Clanmil explained, “The ‘Own a Home’ shared equity scheme fits perfectly with our commitment to seek out innovative solutions to help people access affordable housing.
‘The unprecedented inflation of property prices in Northern Ireland tipped the balance of affordability, making it extremely difficult for local people to buy their own homes, even as house prices fall. Because Barclays can offer a 100% mortgage on this pilot scheme, people on moderate wages can now access the benefits of home ownership.
‘Equity sharing enables people to take advantage of a life-changing opportunity and will enable those who aspire to home ownership to realise their dream.”
The ‘Own a Home’ shared equity scheme works in the following way;
The purchaser buys a 50% stake in the property with the benefit of a mortgage charged on it, provided by a commercial lender, in this case Barclays.
The developer, Turkington Holdings retains 25% for a period of up to ten years subject to it being the first party to be “staircased out” (when /if the purchaser buys further shares in the property).
Clanmil Housing Association buys the balancing 25% stake and rents it out to the purchaser (subject again to the purchaser’s right to staircase out).
If “staircasing” is not effected within that period, Clanmil Housing Association buys Turkington Holdings out at the then market value. Where values have declined below historic cost, Turkington Holdings may elect to retain the property, but subject to creating an additional “rent” as its return for the continued occupation of its share by the purchaser.
The purchaser can, at a future date buy a further share in the property from Turkingtons / Clanmil and become owners outright. Alternatively if they wish to move, they are able to sell their share on the open market.
Clare McCarty added, “We have been concerned for some time about the affordability of homes for people on moderate wages and the scheme that we are offering is an important tool in developing a low cost solution.
Clanmil is interested in developing this model elsewhere and is currently discussing these options with key market players.” |
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Posted by for Clanmil Housing Association |
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