September 17, 2019

Liquid & NLG – Happy Bedfellows

If you didn’t already know, NLG stands for the National Leasehold Group and this year, we are proud to say that we’re sponsoring their 2019 Annual Conference.

We’re not new to this whole sponsorship thing, we supported the CIH Home Ownership & Leasehold Management Conference for eight years from 2008 until 2016 and we’re picking up the reigns again.


Who Is The NLG?


Since you’re asking, the National Leasehold Group is an independent networking group formed in 2010 with the strapline ‘promoting new thinking in how we live in modern cities.’

Their initial focus was to promote professional leasehold management in Housing Associations. Since then, the scope of the NLG has grown to include Local Authority property professionals as well as senior leasehold managers and practitioners from across the housing sector and continues to ‘promote leasehold management as a recognised specialism as oppose to a branch of generic housing management.’

Since one of Liquid’s specialist areas is residential property we are delighted to be partnering with one of the most important voices in the industry we serve.


What Does The Leasehold Market Look Like?


Last month we blogged about the state of the residential and commercial property markets but we didn’t look very closely at the options available to those who may not have ninety grand in cash in the bank for a deposit and a salary of £75,000 to get a decent-sized mortgage, so how can you get onto the property ladder?

With the number of middle-aged renters doubling in the last 10 years and up to a third of millennials facing paying rent their entire lives, the government have created a scheme whereby renters can become owners, or at least part-owners, or part-renters-part-owners. You get the point.

We’re talking about Shared Ownership, or to give it its proper name, Help To Buy: Shared Ownership. With over 200,000 shared ownership properties in the UK (and the number is increasing every year), the schemes have had mixed views. Some people regard them as an affordable way to take the first steps into property ownership, others have suggested they are restrictive and expensive but it’s not our place to comment, we’ll just give you the skinny and you can decide for yourself if it’s a road you want to travel.


Enough Babbling. What Is It?


The scheme offers you the opportunity to buy a share of a house or flat (between 25% and 75% depending on what you can afford) and you qualify if you have a household income of less that £80,000 (or £90,000 if you’re in London), if you’re a first-time buyer, a previous home owner who now can’t afford a new one, you currently rent a council of HA property or you’re an existing shared owner looking to move.

Usually, shared ownership properties will form part of private developments because – as was the same with Housing Association property – it’s a requirement of the development’s planning permission application and the BBC have offered up a way to think about it – you own downstairs and rent upstairs.

The cost of ownership is relatively straightforward:

  • The rent is less than the rate charged on the open market and usually charged at 2.75% of the property value per annum
  • You can start with a little as 25% share in some cases
  • Your deposit can be 5% of the price of the share, not of the whole property
  • Stamp duty land tax (SDLT or simply ‘stamp duty’) can generally be deferred until your share reaches 80%

You get a mortgage for the amount you can borrow and you pay rent (a below-market value) on the bit you can’t (as well as paying service charge and ground rent).

While the property remains leasehold, you have the option to buy more shares in the property up to a total of 100% (known as ‘staircasing’) until you own it outright and Stamp Duty can usually be deferred until you own at least 80% of the property but it’s worth checking with your solicitor.

Here’s a good intro to Shared Ownership form


Right now, you can only buy additional shares in 10% chunks but there are proposals afoot from Housing Secretary Robert Jenrick to change the system so that the shares can be bought in 1% increments but as with everything the government does, we’ll wait to see what happens, if anything at all…


Isn’t Help To Buy Basically The Same Thing?


Well sort of.

With Help to Buy, the government provides you with an equity loan of up to 20% (40% if you’re in London). You need to raise a 5% deposit and get a mortgage of 75% (55% if you’re in London) to make up the cost of the property.

The loan is interest-free for five years and after that you will pay an annual fee of 1.75% on the outstanding loan and you’ll have to pay back the loan when you sell up (or when the mortgage term ends, whenever is sooner).

However, you can also pay back some of the equity loan without selling your home; you can pay back either 10% or 20% of the total amount, so long as the loan is worth at least 10% of the value of your home.

Again, the document has all the info you need including the qualification criteria.


What Effect Do These Schemes Have On The Recruitment Industry?


They have a massive effect. More developments = more jobs = more great candidates to fill those jobs.

What’s interesting from our standpoint is that the industry is growing very quickly, to the point that there are now some developments being built that are entirely made up of affordable and designated Shared Ownership properties in towns’ that need it most, including this development in Redruth in Cornwall.

It’s no coincidence that we are listing more jobs in this sector than we ever have and we’re seeing more and more outstanding candidates for the plethora or roles we have available across London and the South East.

Anyway, as we said we’ll be at the 2019 National Leasing Group Conference on November 13th at the Inmarsat Conference Centre, 99 City Road, London EC1Y 1AX. We’ve got a stand and everything so pop by and we can let you know what we’re up to and while we won’t be able to solve the world’s increasingly precarious geopolitical situation, we will be able to solve your recruitment needs in the residential property industry.

It’s the little things…

Catch you soon.


The Liquid Team