City Hall is channeling £220m into helping Londoners own their own homes. Boris Johnson has announced funding for two projects, one of which encourages developers to build homes for shared ownership. The other is a scheme to help people who would struggle to find a deposit.
£180m is going to the new First Steps Challenge Fund, with the aim of 'accelerating delivery' of 4,000 new homes for shared ownership by 2020. £40m is going to Gentoo's Genie scheme, a very interesting looking idea that allows people to gradually buy their home without a deposit and takes the place of a mortgage. This will be the first time Genie has been available in London. All the money is recoverable, so it's not City Hall throwing money at the housing crisis but providing stable loans to developers of non-luxury housing. If the free market won't do it — and it's clearly not — then we'd argue this is a role the state should do more of.
The idea of shared ownership is that people buy a share in a home and pay rent to a housing association on the remainder, usually with the option to buy the whole lot at some point. The problem — apart from the tiny number of homes this funding will affect, 6,000 in total out of a needed 500,000+ by 2021 — is that shared ownership isn't as affordable as it used to be. Eligibility for the Mayor's First Steps scheme is limited to gross household income of £66k for a one or two bedroom home and £80k for three or more.
Two people working 40 hours a week on minimum wage would earn £27,040 a year gross, on London Living Wage that works out at £38,064. Darren Johnson of the London Assembly Greens tells us that average incomes of people in shared ownership schemes in Islington is £43k and £49k in Wandsworth. And then there's the cases uncovered by the Evening Standard last year, like the Camden flat that wanted someone earning precisely £66k a year.
Boris Johnson called shared ownership "crucial in helping the unprecedented numbers of people in London desperate for good quality low cost housing". Looking at the figures, we would question the 'low cost' part of that statement. If shared ownership is aimed at struggling young professionals then that's fine, but let's stop calling it 'affordable' — the same word that's used to describe the replacement for social rent (i.e. council housing) and aimed at the very lowest income earners. Shared ownership is helpful, but it's not necessarily what many of us would class as affordable. So more funding please, but maybe for more Genie-style schemes instead.