A £4.1bn budget will be made available to both housing associations and private developers to deliver a total of 135,000 additional shared ownership homes, equivalent to £30,000 per home.
The funding opens up opportunities for development and investment into a historically undersupplied market, according to Savills.
The real estate adviser estimates that there is market capacity to absorb at least 60,000 additional shared ownership homes per year, with a focus on areas where demand is highest, such as the south of England.
Build volumes averaged less than 8,000 per annum in the three years to March 2015, suggesting a huge mis-match between supply and demand, said Savills.
“The government’s policy and financial commitment to this form of home ownership could be a real game changer,” said Mervyn Jones, director, Savills housing consultancy.
“Investment activity in the sector has so far been limited, but there is now a clear opportunity for new investment vehicles that will not only accelerate the delivery of much-needed shared ownership homes but also create stable returns to the investor.”
The numerous subsidised home ownership schemes now available, such as Starter Homes, Help to Buy and shared ownership, mean demand for each may overlap. If these are not properly differentiated from each other, potential buyers for the homes could be reduced to a smaller pool due to a lack of understanding, which would mean actual demand is met at a slower pace and developers could hold onto properties for longer, according to Savills.
“We could see developers retaining the first tranche sales of shared ownership homes, but they will then wish to pass on the management responsibility and secure a capital return for the unsold equity,” said Piers de Winton, director in residential investment at Savills.
“Housing associations are likely to remain best placed to take on the management of the new units, while the unsold equity creates a new investment asset which would go to the highest bidder. The net result could be a speeding up of delivery.”
In London, prospective shared ownership purchasers must have a combined household income of below £90,000, which the Savills report said would make the scheme difficult to viably deliver because of the price of property in the capital, unless very small initial shares were sold.
The rent on the remainder of the property would then have be reduced to below the standard rental income of 2.75% of the value of the share owned by the housing association.