Ritchie unveils new housing initiative for owner occupiers in regeneration areas

Social Development Minister Margaret Ritchie MLA, today outlined plans to support owner occupiers remaining in their communities once regeneration work has been completed.

The Minister wants to ensure that communities stay together as much as possible after regeneration takes place.

At present, owner occupiers who have to give up their home in regeneration areas get compensation. However, it is often insufficient to buy a new home in their community after regeneration takes place.

In imaginatively addressing this issue, the Minister has come up with two new options. Firstly, the owner occupier will be able to buy a social home in the area without having to meet the five year qualifying period.

Secondly, owner occupiers will be able to part rent, part buy a home in their area. Many owner occupiers simply have no means to make up the shortfall between valuation of their present home and a new home in their area.

Margaret Ritchie said “When I launched the New Housing Agenda last year, I made it clear that I wanted to develop more housing opportunities to sustain communities. These new opportunities for owner occupiers in regeneration areas will extend the choice currently available to them. It will allow them the chance to stay together during and, more importantly, after the work has been completed to renew their neighbourhoods”

The part rent part buy proposal will allow owner occupiers to invest the compensation for their former home into their new home with any difference between the two valuations taken as a ‘Golden Share’ by a Housing Association.

Rent or interest will not be charged on this Golden Share which will only be realised once ownership of the property changes. The former owner occupier will, in effect, swop the value from their former home into the new home. They will not have to pay a penny more than they were previously paying before their former home was acquired.

The Northern Ireland Housing Executive has already begun work to identify those owner occupiers currently living in affected areas. A detailed policy paper will be published in the coming weeks and a period of consultation with all stakeholders will then begin.

Notes to Editors:

1. This policy will be available for those owner occupiers in affected areas who will have their home vested or compulsorily acquired to make way for regeneration work after January 2009, provided they have lived in the area for at least one year.

2. While there are approximately 200 owner occupiers currently living in areas already identified for major regeneration activity, others, particularly across Belfast, are yet to be declared. This new initiative will support existing and potentially new communities who will be subjected to this form of major regeneration activity.

3. The proposals at a glance are:-

Option 1:

Social housing House Sales Scheme (HSS) early buy-out

This means owner occupiers can move into their new social house on day one and immediately apply to buy it, without a five year qualifying period as a social tenant. The new home will then be eligible for purchase at current market value. Depending on the cost involved in providing the new home, discount may be possible in keeping with the existing rules governing the House Sales Scheme.

Option 2:

Shared Equity

To allow regeneration activity to take place, many private homes have to be acquired from owner occupiers. Compensation is paid equating to the full market value of the owner occupiers home. However it will often have a lower market value compared to a new home that will be put back in the area post regeneration.

Many owner occupiers simply have no means to make up this shortfall between the two valuations. This results in them having to move away from their community to find more affordable housing in line with the compensation they received for their old home.

An example of the Golden Share is as follows:

If the value of a property acquired from a former owner is £105,000 and the current market value of the new housing going back in an area is £135,000, the resident reinvests their £105,000 from the sale of their old home into this new home in effect owning 72% of their new home. The Housing Association would retain a rent free golden share of 28% that can be bought out at current market value anytime by the new home owner, but as long as the home remains in their ownership, there will be no time limit for them to buy out this equity.

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