The first ‘affordable’ Shared Ownership flats at Enfield Council’s Meridian Water development are now being advertised, but costs for these homes are well above what most local people can afford. [1]
New two-bedroom homes on the development are currently priced between £427,000 and £590,000. [2] This means that acquiring the minimum 50% Shared Ownership stake will, on average, require a deposit of at least £23K.
Ongoing monthly costs are likely to be well over £2,000 per month. This is made up of approximately £1,200 in mortgage costs*, £536 in rent and £270 in monthly service charges. [3]
Note: *mortgage rates fluctuate and have increased since this calculation was carried out. As an example, a 7.75% variable rate mortgage repaid over 25 years would increase average monthly costs for a 2-bed flat to over £2,500 per month.
It is generally accepted that in order for housing costs to be affordable, they should not take up more than 30% of households gross income. [4] This means that a household would need an income well in excess of £80K per year in order to afford these Shared Ownership flats at Meridian Water.
To put this into context, the average (median) household income in Upper Edmonton is between £25-30K per year, which means these homes will not be anywhere near affordable for most local first-time buyers. [5]
The London Plan describes Shared Ownership as “an intermediate ownership product which allows London households who would struggle to buy on the open market, to purchase a share in a new home and pay a low rent on the remaining, unsold, share” (p.183). [6] However, concerns have been raised about the Shared Ownership model, including issues related to escalating rent costs and service charges, costs associated with ‘staircasing’ (i.e. buying further shares in the property) and problems associated with selling of Shared Ownership properties. [7] Potential purchasers should take care and be aware of the potential pitfalls of Shared Ownership, as well as the possible advantages; a useful resource is https://www.sharedownershipresources.org.
It is very disappointing that a regeneration scheme managed by Enfield Council, on publicly owned land, paid for with public money, is delivering homes which it claims are ‘affordable’ but which are clearly unaffordable to most local first-time buyers.
REFERENCES
- Shared Ownership, Meridian One, London – Greater London. Sage Homes – Share to Buy. Available at: https://www.sharetobuy.com/developments/4675/
- Shared Ownership, Meridian One, London – Greater London. Sage Homes – Share to Buy. Available at: https://www.sharetobuy.com/developments/4675/
- Shared Ownership, Meridian One, London – Greater London. Sage Homes – Share to Buy. Available at: https://www.sharetobuy.com/developments/4675/
- GLA Housing and Land, Housing Research Note 5, Intermediate housing: The evidence base. (london.gov.uk). Available at: https://www.london.gov.uk/sites/default/files/housing_research_note_5_-_intermediate_housing-the_evidence_base.pdf
Office for National Statistics (2021). Private rental affordability, England. Available at https://www.ons.gov.uk/peoplepopulationandcommunity/housing/bulletins/privaterentalaffordabilityengland/2012to2020
House of Commons Library, (2022). What is affordable housing? Available at: https://researchbriefings.files.parliament.uk/documents/CDP-2023-0091/CDP-2023-0091.pdf
The Affordable Housing Commission, (2019). Defining and measuring housing affordability. Available at: https://nationwidefoundation.org.uk/wp-content/uploads/2019/06/Definingandmeasuringhousingaffordability.pdf
5. London Borough of Enfield, (2022). Upper Edmonton Ward Profile. Available at: https://www.enfield.gov.uk/__data/assets/pdf_file/0024/25719/Upper-Edmonton-ward-profile-2022-Your-council.pdf
6. Greater London Authority, (2021). The London Plan. Available at: https://www.london.gov.uk/sites/default/files/the_london_plan_2021.pdf
7. Evening Standard, (2023). Shared ownership downsides: meet the Londoners struggling to sell homes. Available at: https://www.standard.co.uk/homesandproperty/property-news/shared-ownership-downsides-london-homes-b1056989.html
The Independent, (2021). Is shared ownership a solution or a shackle for first-time buyers? Available at: https://www.independent.co.uk/money/shared-ownership-cheap-property-first-time-buyer-b1945385.html
House of Commons Library. Shared ownership (England) the fourth tenure? (2021). Available at: https://researchbriefings.files.parliament.uk/documents/CBP-8828/CBP-8828.pdf
BBC News, (2020). ‘My dream flat left me with a £20,000 repair bill’. Available at: https://www.bbc.co.uk/news/business-55060294
Better Homes Enfield 