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Developing the Sustainable Home Ownership Partnership
Stephens,
M., Dailly, M. and Wilcox, S. (2008) Developing
safety nets for home-owners
York: Joseph Rowntree Foundation FULL
REPORT (pdf) SUMMARY (pdf)
Background
In response to the inadequacy of the existing safety net for home-owners, the JRF Inquiry into Managing Risk and Sustainable Home Ownership in the Medium Term was established in 2004.
After extensive consultation with stakeholders the inquiry reported in 2005 and recommended that two means of strengthening the safety net should be explored further. These were:
- the development of a housing tax credit; and
- the establishment of a Sustainable Home Ownership Partnership (SHOP).
Housing tax credits are being investigated further by Professor Steve Wilcox and the DWP.
SHOP is designed to provide pooled funding which can be accessed by borrowers in order to manage clearly delineated circumstances which have the potential to lead to mortgage arrears and possession. Under SHOP both ISMI and private insurance would be reconfigured into a single scheme, to which lenders and government as well as borrowers would contribute.
AimsThe aim of the project is to develop the SHOP proposal in order to assess its feasibility and cost-effectiveness as a means of providing a more comprehensive safety-net than currently exists, so contributing to the sustainability of home-ownership.
Key aspects of the feasibility and implementation of SHOP are considered including:
- What is the optimal institutional structure for SHOP?
- What should be the essential design features of SHOP?
- What are consumer views on the principle of SHOP and aspects of its design (e.g. whether it should be voluntary or compulsory)?
- Does SHOP represent Value for Money?
- Policy and practice relevance
The essential policy relevance of SHOP lies in the area of the government's commitment to extending home-ownership, and to ensuring that home-ownership is sustainable. Its immediate relevance lies in the obsolescence of current state safety net (ISMI) due to its poor fit with new mortgage products. It is probable that ISMI will come under increasing scrutiny as the 2007 Comprehensive Spending Review approaches, and there are likely to be opportunities to develop alternatives such as SHOP.
Methodology
The project employs a range of methods to develop the SHOP proposal and to assess its feasibility:
- desk-based reviews of legal sources and other governance to inform SHOP's institutional structure;
- the application of economic principles to the possible design and implementation elements of SHOP;
- focus groups to establish consumer preferences for design; and
- cost/ benefit analysis to establish SHOP's value for money.