presentation link

Aspects of shared homeownership
Presentation for the Shared Equity Homeownership Working Group’s
‘Benefits of shared homeownership’ seminar, Parramatta, 18 July 2016
Craig Johnston
Shared-equity approaches
(Pinnegar and others 2009)
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Definitions
• Shared equity – the 2 parties own a share
of the property’s value
 Shared-equity loan – Party 1 takes out a
mortgage on a proportion of the dwelling,
Party 2 on the balance
 Shared homeownership – ‘tenants in
common’ – Party 1 might pay rent on
proportion they don’t own – Party 2 has a
stronger interest in property partic. at sale
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Examples in Australia
• Equity loans targeted to public-housing tenants
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SA: EquityStart loan
QLD: Pathways Shared Equity loan, State housing loan
TAS: HomeShare
WA: GoodStart Home Loan scheme
ACT: Shared Equity scheme
• Equity loans targeted to lower-moderate
income
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SA, WA, NT
• Shared homeownership
 WA: Shared Home Ownership scheme
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Shared Equity scheme ACT
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Homebuyer partners with Housing ACT
PH tenants – existing dwelling
70% minimum loan from IMB
Housing ACT max 30% share; to be
bought out within 15 years
• Homeowner pays for outgoings; does
not pay rent on Housing ACT’s share
• 77 since May 2010 (10 paid out)
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Shared Home Ownership WA
• Homebuyer partners with Housing Authority
• HA properties (does not equate to ‘public housing’) – procurement of
properties at scale (1,005) and discount ; linked to a sales program
• SharedStart homeloan from KeyStart Home Loans
• The loan can be ‘fixed’ or ‘flexible’
• If ‘fixed’, homeowner buys 70% which they may sell back to HA; may
never own 100% (HA has max 30% share: retains permanently)
• If ‘flexible’, homeowner required to buy HA share and repay KeyStart
loan over 30 years
• ‘Fixed’ or ‘flexible’ refers to nature of HA’s equity share, not interest
rate
• Homeowner pays for outgoings (normal ‘dwelling costs’); does not pay
rent or interest on HA’s share
• 913 since 2011
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WA and ACT
Commonalities
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Government-managed
Existing PH tenants (but WA also other low-middle income)
DOH properties
Govt-specified lender
HA share max 30%
Homeowner pays for outgoings
Homeowner does not pay rent on HA share
Differences
• WA linked to new build and to sales
• WA has option for not buying out HA’s share
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Benefits
•Households
•Government
•Construction industry
• M Thomson & others, A new approach to delivering shared equity
opportunities in Western Australia: a case study evaluation,
AHURI & PwC, 2013
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Benefits of the concept –
for a consumer
• Tangible
 Fiscal (cp. Emilio Ferrer)
• Intangible
 Ontological security
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Ontological security
'Saunders (1984, 1990) … argued that one of the key
advantages of home ownership over other tenures was its
ability to provide ontological security which he defined as:
Where people feel in control of the
environment, free from surveillance, free to be
themselves and at ease, in the deepest
psychological sense, in a world that might at
times be experienced as threatening and
uncontrollable (Saunders 1990: 361).
(Hulse & Saugeres 2008)
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Ontological security (again)
‘Home is an encompassing category
that links together a material
environment, in this case the physical
structure of a house, with a deeply
emotional set of meanings to do with
permanence and continuity.’
(Dupuis and Thorns 1998)
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Consumer aspirations
‘… most participants were looking for a
stepping stone that helped them realise “the
dream”, rather than a variant thereof.’
‘Many participants picked up on the dangers of
their incomes not rising as fast as house prices,
creating a situation where the proportion of
asset accruing was growing, but in absolute
terms, stretching even further away from the
level of equity required to transition to “full”
ownership.’
(Pinnegar and others 2009)
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Not a ‘pathway’
to full ownership (necessarily)
• Typical starting investment 40%
share in England and Scotland;
only half move to full
ownership – ‘permanent
hybrid tenure’ (JRF 2008)
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Economic and social benefits
• Good quality housing
• Affordable mortgage payments comparable
to private rents
• Security of tenure
• Financial security, including a financial
investment for the future
• Pride in owning a home
• Improved social status and self-esteem
(AHURI 2013)
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Maximizing consumer benefits
• Affordability outcome
 Affordability calculator
• Fair trade for consumer
 Rights and responsibilities:
 Transparent and appropriate  co-owner
agreement
 Security and other benefits from homeownership
 Independent legal and financial advice
• (Social) mission-based landlord
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www.communityhousing.org.au/S8_Shared_Home_Ownership.html