89. The Northern Ireland Co-ownership Scheme was established in 1978 and enables households on lower incomes to purchase between 50% and 75% of the property and rent the remainder from the Co-ownership Housing Association. The Scheme is managed by the Northern Ireland Co-ownership Housing Association (NICHA) which has helped around 18,000 households to become homeowners over the past 26 years. The ultimate aim of most people in the co-ownership scheme is to become full owners by purchasing the outstanding balance in due course. In Northern Ireland around 75% of all households in the co-ownership scheme have achieved full ownership compared to less than 10% in England and Wales.

90. Two recent research reports[138] commissioned by DSD conclude that the Scheme has been successful; represents good value for money; and provides an important niche in the housing market.[139] DSD and NIHE were confident that, as the average income of households which participate in the co-ownership scheme is around £13,500, full home ownership for that group would not be an option. The alternatives would be to go on the social housing waiting list or enter the private rented sector.[140]

91. However, we found that there is no established mechanism for determining demand for co-ownership, and the further question arises whether the scheme meets identified housing need. The University of Ulster suggests that the scheme's "main function is to enable people who would have been able to buy to do so sooner, or achieve other objectives in terms of area of choice or price band".[141] NICHA reacted sharply to this suggestion and indicated that the detailed interview process would ensure anyone who could afford full home ownership would be directed to do so, and also that:

"The very fact that the average income of the person coming through the scheme is £13,500, two-thirds of the Northern Ireland average, and also the fact that the average price of the property we are purchasing is £70,000, shows that it is by far and away targeted at the right people who are on the margins and that is what is being delivered."[142]

While Professor Paris, University of Ulster, accepted that the Scheme has a place if targeted appropriately, his view was that the present arrangements should be carefully examined, and he welcomed current NIHE research being undertaken into the Scheme.[143]

92. We welcome the research being taken forward by NIHE of existing co-ownership participants to consider if alternative options were available to purchasing a home through the co-ownership scheme. This should provide evidence for the first time of the impact of the co-ownership scheme on social housing waiting lists.

93. We recommend that consideration is given to the merits of assessing all applicants for co-ownership under the common selection scheme to ensure that the scheme is addressing real need and having an impact on waiting lists.

94. We found that there are concerns about future funding levels. NICHA said that "uncertain and indeterminate funding" in recent years meant that they were unable to provide sufficient homes to meet demand:[144]

"Two years ago we got funding of £12.9 million. Last year we received funding of £7.9 million and this year we have been given an intimation that the funding will be, to start off with, just over £5 million, so we have gone from 600 houses to 300 houses to 200 houses."[145]

The DSD explained that "The reason that the department's allocation to co-ownership has dropped is that we have been encouraging co-ownership to recycle its receipts on a more proactive basis."[146] However, NICHA was under the impression that "DSD has indicated it will bid for an effective doubling of baseline funding for Co-Ownership within that review process (2004 Spending Review), an amount sufficient to deliver 600 homes annually".[147]

95. NICHA argued that it was a net contributor to the Northern Ireland social housing budget "to the tune of £18 million."[148] This was because "the funds Co-Ownership receives from the Department for Social Development are in the form of Social Housing Grant, in practice it is more of an interest free housing loan which is fully and surely repaid… Indeed, this fits the pattern from the previous ten years when we returned 20% more than we actually received."[149]

96. We are concerned at the erratic and uncertain level of funding provided for co-ownership over recent years. In view of its success, and given the Northern Ireland Co-ownership Housing Association's contention that it is a net contributor to the social housing budget, we find this approach difficult to understand. We recommend that a realistic and sustained level of funding is provided to ensure that the co-ownership scheme can continue to develop.

97. The recent Low Cost Home Ownership Task Force Report in Great Britain[150] recognised that the key obstacle to entering home ownership is affordability. The Report also recognised the role played by shared ownership in enabling people on low income in high cost areas to purchase part of their home and recommended that a stakeholder group be set up to advise the Housing Corporation about improvements in the operation of shared ownership.[151] Professor Murie argued that Northern Ireland's scheme represented a real success:

"The problems with shared ownership in England are partly to do with the diversity of providers and the complexity with detailed differences between different providers. In this sense again Northern Ireland has a great advantage in having a single co-ownership scheme which is tried and tested and presents no problems to lenders and others. It also appears to have been successfully targeted and can be used to achieve mobility within the social rented sector."[152]

98. The Northern Ireland Co-ownership Scheme, operated by the Northern Ireland Co-ownership Housing Association, has an impressive record having helped around 18,000 people into home ownership over the past 26 years. Its main strength is that there is a single scheme in Northern Ireland operated by a single organisation with a proven track record. We believe that the success of the Co-ownership Scheme in Northern Ireland provides a valuable example for the Housing Corporation in its consideration of how to improve the shared ownership scheme in England.

139   HC 493-II QQ149, 151 & 189 Ev 76 & 92 Back

140   HC 493-II QQ150 & 189 Ev 76 & 92 Back

141   HC 493-II Ev 127 Back

142   HC 493-II Q97 Ev 46 Back

143   HC 493-II Q324 Ev 141 Back

144   HC 493-II Ev 42 Back

145   HC 493-II Q94 Ev 44 Back

146   HC 493-II Q390 Ev 174 Back

147   HC 493-II Ev 42 Back

148   HC 493-II Ev 41 Back

149   HC 493-II Ev 41 Back

150   See paragraph 14 Back

151   A Home of My Own, The report of the Government's Low Cost Home Ownership Task Force, November 2003, Chapter 6.64 Back

152   HC 493-II Ev 202 Back