All home partners work in Wigan, with 90% employed in the village where St William’s is situated.
To involve the local community, volunteering and training opportunities were given to college students, while other stakeholders, like the local primary school, benefited too.
Furthermore, it created an immediate neighbourhood, as home partners fostered relationships working side by side. This avoided the development being soulless, like some new schemes can be.
Sweat-equity benefits are clearly plentiful then, and St William’s won a UK Housing Award and four other accolades. So it was disappointing to find many lenders losing their appetite to provide mortgages. Some were reluctant to recognise the sweat-equity element, while others did not like applicants receiving Universal Credit or working part-time; we need them to be more flexible.
As a result, this scheme was only possible because of the £4m capital investment we made, which in turn was supported by a £1.6m grant from Homes England’s Affordable Homes Programme (AHP) and brownfield land funding through the Greater Manchester Combined Authority.
“Some lenders were reluctant to recognise the sweat-equity element, while others did not like applicants receiving Universal Credit or working part-time”
Even with these significant contributions and a fully costed business plan, it was a challenge.
Lenders need to review their stress-testing criteria and view shared ownership as a core housing product that taps into a significant segment of the market, a halfway house for those who can’t access social housing nor afford outright homeownership with a full mortgage.
The government should look at the wider impact this type of product innovation has. Higher grant rates could be linked to social and economic returns and factored into the overall new-home target.
The sector has already made a compelling case to the government for greater funding certainty via longer AHPs and an extended rent settlement.
From a sweat-equity shared ownership perspective, greater lead-in times would allow us to work more closely with contractors and home partners to formalise results.
Sweat equity could contribute to mortgage applications and provide accredited skills and training, leading to employment with construction trades being a natural fit.
It could also extend to the groups of people we as a society should be supporting more, such as those with disabilities or support needs, ex-service personnel, young people leaving care, and key workers who aspire to get on the housing ladder.
With greater government support and lender flexibility, we could look at alternatives to the Bank of Mum and Dad, too. Instead of putting their hands in their pocket to help with a deposit – something not every parent can afford – they could get their hands on a shovel and contribute to their offspring’s on-site sweat-equity hours.
These are just some examples of the type of product innovation the FCA is calling on lenders to recognise.
Shaping the debate with the government and the financial authority is something the sector should be actively involved in, so we can ultimately build, and house more people.
This is our and the government’s collective task.
John Ghader, chief executive, Prima Group
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