Heylo Housing launches “Let’s Share” - a new way for Local Authorities and Housing Associations to use shared ownership to deliver rented affordable housing across the country

  

PRESS RELEASE (6th October 2015)

Heylo Housing Limited (“Heylo”) is bringing the affordability benefits of shared ownership to Local Authorities and Housing Associations looking to deliver rented affordable housing.

Using Let’s Share, Local Authorities and Housing Associations acquire 40% shares in the properties at 60% of open market value (OMV) via 125 year market standard shared ownership leases and receive a blanket consent from heylo to sub-let the properties to tenants on whatever terms they decide.

Nicholas McAlpine-Lee, CEO of Heylo said “Let’s Share brings the affordability benefits of a shared ownership solution to Local Authorities and Housing Associations looking to maintain a supply of new rented affordable housing delivery. The Local Authorities and Housing Associations buying a share have effective full ownership, just like any other shared owner. The embedded discount and shared ownership offer results in a much lower cost of delivery than traditional Section 106 rented stock.”

Buying a 40% share at 60% of OMV and paying a low rent (starting at 2.75%) maximises financial resources and maintains delivery. The full occupation rights of the standard form shared ownership lease and blanket consent for sub-letting ensures full control over the lettings to tenants. In the future the Local Authority or Housing Association can sell their share and realise the value from the embedded discount as well any increase in the value of their share.

Nicholas McAlpine-Lee again, “Based on a £160,000 property this means that Local Authorities and Housing Associations can acquire a single unit of Section 106 affordable housing for 24% of open market value, just £38,400, and cover their costs (the Let’s Share rent, their own management and any maintenance) through sub-letting at a rent of less than £97 per week.”

Developers receive 60% of the full open market value on Section 106 rented properties which means that, in today’s constrained environment, allowing the rented element of Section 106 to be changed to Let’s Share delivery will enable Local Authorities and Housing Associations to continue to supply rented affordable housing.

The "Let’s Share" shared ownership solution has been developed to complement heylo’s existing affordable housing solutions - “Home Reach” (a consumer shared ownership solution) and “Your Front Door” (a mortgage free shared ownership discounted market sale solution).

Currently operating in over 40 Local Authorities Heylo is a joint venture with a leading Local Authority and is backed by significant pension fund investment. For more information on Let’s Share, Home Reach and Your Front Door visit www.heylohousing.com.

Can the UK really build 1,000,000 new homes in the next 5 years?

  

Press Release (23rd September 2015)

Given housing demand in the UK Heylo believes that the short answer is yes. The more difficult question is who will actually build them?

With over 250,000 planning permissions granted last year and at least the same number again of NHBC registered plots currently across the UK one could ask why aren’t we on track to deliver this level of house building already? The answer requires some economic theory about competition (courtesy of the excellent resource that is Wikipedia). For those of you thinking "yawn" just go with this for a minute…

 "Cournot competition is an economic model used to describe an industry structure in which companies compete on the amount of output they will produce, which they decide on independently of each other and at the same time. It is named after Antoine Augustin Cournot (1801-1877) who was inspired by observing competition in a spring water duopoly. It has the following features:

 ·         There is more than one firm and all firms produce a homogeneous product, i.e. there is no product differentiation;

·         Firms do not cooperate, i.e. there is no collusion;

·         Firms have market power, i.e. each firm's output decision affects the good's price;

·         The number of firms is fixed;

·         Firms compete in quantities, and choose quantities simultaneously;

·         The firms are economically rational and act strategically, usually seeking to maximize profit given their competitors' decisions."

 There are many markets around the globe with participants that exhibit some if not all of Cournot’s competition features which are also undersupplied markets – the UK house building sector is no exception.

 When you consider the large volume businesses that deliver the majority of new build housing supply in the UK and the timelines involved for new build development it clearly makes sense for these firms to be “economically rational and act strategically” controlling, as best they can, the demand supply dynamic to maintain prices and profits. 

Therefore, looking to graph below (and historic new build housing delivery figures), the 'run rate' of new build delivery in the UK has been consistently around 130,000 for a number of years (one must suspect this is to ensure that demand and price is maintained to protect profitability and more importantly the viability of house builders over the longer term through economic cycles).

Housing was a key feature of the campaigns in the last general election and is now part of a ‘national conversation’. UK housing investment has taken off (and we are proud and delighted to play our part and do much, much more). There are planning permissions ready to be utilised and more land waiting for housing behind that.

Who will build them? The obvious delivery agents in the short term are house builders. They currently deliver the vast majority of all UK new build housing and are already “geared up” to expand.

If we want these organisations to build more, much more (and quickly), then we need to address Cournot’s competition model and the, quite correct, behaviours that have made house builders successful, because let’s face it, no private business is going to embark on a long term strategy to oversupply, push down prices and decrease margins.

 Looking at the demand, supply, price graph above, how do you maintain prices (at a steady rate) and continue profitability whilst significantly increasing supply and new build housing delivery? The answer must be to create more demand... but how?

Make home ownership more accessible and enfranchising more buyers through part-buy models.

The Government's Help to Buy programme has shown that reducing the funding requirement enfranchises more buyers assisting sales rates.

However, there is a product which can make buyer markets even bigger... so big that the increased demand could support the building of up to 300,000 new build properties each year by existing market participants (supply chain permitting of course) - see the graph below.

Shared Ownership, which has existed since the 1970's, is a part-buy, part-rent, low cost home ownership solution that can enfranchise 4 times more buyers compared to private outright purchase - or alternatively sell homes 4 times faster.

Buying a share of the property and charging an affordable long term rent on the unpurchased share means that the initial cost of purchase and ongoing cost of occupation is lower and appeals to a broader market – enfranchising thousands stuck in “generation Rent”.

In the UK there are currently more than 200,000 buyers on shared ownership waiting lists - and to be honest the tenure is not that widely known about. One waiting list organisation, Share to Buy, has a register of over 80,000 'wannabe' shared ownership buyers in and around London alone.

In light of this, delivery rates of new build share ownership properties reported by the Homes and Communities Agency for 2014/15 were 7,102 completions and 3,334 starts on site - the majority of which are actually 'built' by house builders as part of planning obligations – therefore these 200,000 people are a ‘dam waiting to be broken’.

However, whilst shared ownership is the ideal solution to deliver a step change in output by private house builders (indeed the demand for 1,000,000 new build shared ownership properties across the UK at current prices is unlikely to be a constraining factor), Heylo acknowledges that the tenure, market standard leases and processes could be improved.

Firstly, the shared ownership offer has been confused over the years with too many names and inconsistencies.

Second, the true nature of a shared ownership position' needs to be addressed (particularly in respect of a protection of tenants’ equity in distressed scenarios). Heylo believes that the Homes and Communities Agency standard form lease (expected by lenders) should more closely reflect the position of a typical mortgaged property and that simple changes to the lease could achieve this.

Thirdly, given that shared owners are responsible for the maintenance of the whole property but the landlords benefit over time from this maintenance in respect of the value of the landlord’s share, the increased value to the landlord could be more equitably shared with the customer via an improvement in the lease terms when customers purchase the property outright.

Fourthly, mortgage availability, pricing and the simplicity of transacting sales and purchases of what is essentially leasehold property needs to be much improved.

Fifth and finally, given consumer protections at law under the Landlord and Tenant Act and related statues, delivery of shared ownership by private organisations should be further encouraged to significantly ramp up delivery.

These changes and increasing demand to fulfil a step change in new build housing supply should be straight forward. In fact it would be much more straight forward than reversing 200 years of economic competition theory and dismantling, amending or replicating the current house building sector if we truly want the 1,000,000 new homes the UK so desperately needs in the next 5 years.

 

About Heylo Housing

Heylo, a joint venture with a leading local authority backed by pension fund investment, is currently active in over 40 Local Authorities. Having already acquired over 500 shared ownership affordable housing properties, Heylo is contracting with major house builders to deliver thousands of affordable homes across the UK over the next 5 years under its Home Reach brand.

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Heylo launches “Your Home”, an affordable ‘do it yourself’ shared ownership solution for second hand properties, with an initial funding allocation of £50m

PRESS RELEASE  (21st September 2015)

Heylo Housing Limited (“Heylo”) has launched a ‘do it yourself’ shared ownership solution for individuals and families looking to part-buy, part-rent a second hand property anywhere in the UK using shared ownership.

Available exclusively from Heylo, “Your Home” is a mortgage free way to buy a share of a property for sale with estate agents across the UK with just a 10% cash deposit.

Customers part-buy, part-rent via a 999 year shared ownership lease which gives them security of ownership as well as the added benefit of at least 75% of any increase in the value of the part of the property they did not buy.

Nicholas McAlpine-Lee, CEO of Heylo said “We are delighted to launch Your Home and address a gap in the shared ownership market for people wanting to part-buy, part-rent a second hand property. Once approved by our Independent Financial Adviser partner, Your Home provides customers with full control over the home buying process with the benefits of Heylo standing behind them as a cash buyer.”

Heylo has committed an initial funding allocation of £50m. However, after 2 preliminary emails to just 30,000 recipients Heylo received over 2,000 enquiries and is already considering a significant increase to its initial funding allocation.

Nicholas McAlpine-Lee again; “We have deliberately focussed on freehold houses and limited our marketing efforts to ensure that the Your Home product was easily understood and the buying process was working well. We hoped that Your Home would be well received but we have been amazed by the speed and scale of consumer response.”

Heylo is currently processing more than 500 applications from this initial group and hopes to help over 250 households realise their home ownership aspirations over the next 6 to 9 months.

Nicholas McAlpine-Lee again; “With our Your Home website (www.YourHome.org.uk) getting over 20,000 visitors in the first month and our first Your Home completions coming through we are currently planning our next phase of much broader marketing and looking to significantly increase Your Home affordable housing delivery.” 

Heylo, a joint venture with a leading local authority backed by pension fund investment, is active in over 40 Local Authorities. Having already acquired over 500 shared ownership affordable housing properties, Heylo has contracted with major house builders to deliver over 1,000 affordable homes across the UK over the next 3 years under its Home Reach brand.

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Ashley Lane, former Group Partnerships Director of Persimmon, joins Heylo Housing team

  

  

PRESS RELEASE (17th September 2015)

Ashley Lane, previously Group Partnerships Director of Persimmon Partnerships, has joined the Heylo Housing (“Heylo”) team to engage with house builders and local authorities to deliver affordable shared ownership homes across the country required as part of planning obligations.

Nicholas McAlpine-Lee, CEO of Heylo said “We are delighted to welcome Ashley to the team. His reputation, experience and knowledge will greatly assist Heylo secure its significant growth ambitions through partnerships and contracts for the delivery of new affordable housing.” 

Ashley Lane said “I am delighted to be working with the Heylo team. The contribution Home Reach and Heylo can make to solving the issue of home ownership accessibility is immense. I look forward to meeting developers and local authorities in the near future to tailor contractual proposals which solve their housing needs and make schemes truly viable with certainty, simplicity and reliability.”

Heylo has already acquired over 500 properties in 25 local authorities since it launched in September 2014 and has signed contracts with leading developers to deliver Heylo’s unique Home Reach solution for Section 106 shared ownership affordable housing.

Home Reach is a new model for the delivery of new build shared ownership homes across the UK in partnership with developers and local authorities. Only available from Heylo Housing, the Home Reach contract, is a re-useable suite of development and sale agreements designed to operate across multiple sites to maximise efficiency and enhance value from affordable housing delivery.

Heylo, which is a joint venture with a leading local authority and backed by pension fund investment, is in the process of signing a series of Home Reach contracts with national and regional house builders to drive affordable housing delivery and to satisfy current and future Section 106 obligations.

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Larkfleet and Heylo Housing sign agreement to deliver shared ownership affordable homes over the next 5 years

PRESS RELEASE (11th September 2015)

Larkfleet Limited (“Larkfleet”), a UK top 50 house builder, and Heylo Housing Limited (“Heylo”), a newly created joint venture with a leading local authority, have signed a 5 year contract to deliver affordable shared ownership homes across the country required as part of planning obligations.

Heylo has acquired over 500 properties in 25 local authorities since it launched in September 2014 including a portfolio of properties developed by a national top 5 house builder and this is the second long term agreement Heylo has entered into in the last 4 weeks.

Nicholas McAlpine-Lee, CEO of Heylo said “We are delighted to be entering into our second long term agreement and proud to be doing so with a highly respected housebuilder such as Larkfleet. ‘Home Reach’ is a new developer-led model for the delivery of new build shared ownership homes. It will support the much-needed supply of affordable housing across Larkfleet’s key operational areas of Lincolnshire, Cambridgeshire and Rutland – as well as having the potential to support Larkfleet’s recently announced plans to expand across the rest of the UK.”

“The Home Reach contract, a first of its kind, is a re-useable suite of development and sale agreements designed to operate across multiple sites to maximise efficiency and enhance value from affordable housing delivery.”

Heylo, which is backed by local authority pension fund investment, is in the process of signing a series of contracts with national and regional house builders to drive affordable housing delivery and to satisfy current and future Section 106 obligations.

Nicholas McAlpine-Lee again; “Heylo’s efficient operating model and long term funding is able to deliver improved receipts from affordable shared ownership homes which can be employed to unlock viability challenges and maintain affordable housing delivery.”

“Home Reach provides Larkfleet with full control over construction, specification, delivery and sales of shared ownership affordable housing properties with the contractual certainty of satisfaction of Section 106 obligations by an approved alternative affordable housing provider unaffected by the recent changes to the housing association sector model.”

Karl Hick, CEO of Larkfleet Group, said; “We are delighted to have signed this Home Reach agreement with Heylo which will help underpin the Larkfleet Group’s development and growth ambitions with a partner who can give us certainty, simplicity, and reliability over the next 5 years.”  

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Bellway and Heylo Housing sign agreement to deliver more than 1,000 shared ownership affordable homes over the next 3 years

PRESS RELEASE (27th August 2015)

Bellway PLC (“Bellway”), the UK’s 4th largest national house builder, and Heylo Housing Limited (“Heylo”), a newly created joint venture with a leading local authority, have signed a 3 year contract to deliver affordable shared ownership homes across the country required as part of planning obligations.

Heylo has acquired over 500 properties in 25 local authorities since it launched in September 2014. This includes a portfolio of properties developed by Bellway’s affordable housing subsidiary, Bellway Housing Trust.

Nicholas McAlpine-Lee, CEO of Heylo said “We are proud to partner with Bellway and delighted to bring this new developer- led delivery model for new build shared ownership homes, known as Home Reach, to the market.”

“The Home Reach contract, a first of its kind, is a re-useable suite of development and sale agreements designed to operate across multiple sites to maximise efficiency and enhance value from affordable housing delivery.”

Heylo, which is backed by local authority pension fund investment, expects this to be the first in a series of contracts with national and regional house builders to drive affordable housing delivery and to satisfy current and future Section 106 obligations.

Nicholas McAlpine-Lee again; “Heylo’s efficient operating model and long term funding is able to deliver improved receipts from affordable shared ownership homes which can be employed to unlock viability challenges and maintain affordable housing delivery.”

“Home Reach provides Bellway with full control over construction, specification, delivery and sales of shared ownership affordable housing properties with the contractual certainty of satisfaction of Section 106 obligations by an approved alternative affordable housing provider unaffected by the recent changes to the housing association sector model.”

Simon Scougall, Group Commercial Director of Bellway said; “We are delighted to have concluded the sale of the Bellway Housing Trust properties and to have signed this Home Reach agreement with Heylo which will help underpin Bellway’s development and growth ambitions with a partner who can give us certainty, simplicity, and reliability over the next 3 years.”  

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