Spotlight on Shared Ownership

Almost every planning agreement has an affordable housing provision. If developers don’t comply and provide affordable housing on one site, they will have to provide the equivalent elsewhere within the borough on another scheme they’re working on.

As recently published, District Housing Association took a number of shared ownership leases and tried to sell them to individuals on the basis they would buy a 50% share and staircase the remaining 50% immediately on the day of completion. This way they have sold the shared ownership leases (providing much needed affordable home ownership) to buyers who could easily afford them.

However, the local authority quickly found out and issued legal proceedings for two developments. In the first case, another housing association was awarded 17 out of 18 leases back and has since sold these on a true shared ownership basis. In the second matter, the judge granted injunctions requiring the flats to be used as affordable housing and the local authority was able to purchase these back for £200,000 per flat.

This clearly shows that if there is a reason to believe a housing association does not provide for homes that qualify as social homes, they may face de-registration and/or extensive litigation.

None of the flats referred to above qualified as social homes and the housing association further failed by improperly ‘staircasing out’ the affordable housing planning provisions. Such ‘staircasing out’ allowed for the flats to be passed into full ownership, on the open market, all within an unsatisfactorily short time span.

The transactions serve as a valuable reminder that all housing associations must continue to meet the registration criteria, in order to sustain their qualification as a social housing provider.

For further information or advice on planning agreements and affordable housing provision, please contact Alasdair Muir in our Real Estate and Projects team or Hetal Ruparelia in our Housing Management team.

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