The UK government facilitates shared equity chiefly through the Homes and Communities Agency. As of 2009 this was under the banner of HomeBuy. This aims to help households earning up to £60,000 p.a. New Build HomeBuy is where purchasers buy at least 25% of a newly built home, and pay rent on the remainder. The HCA generally subsidises housing associations or other providers to hold the remaining share. The rent is capped at 3% of the value of the unsold share, but typically set at 2.75%. Purchasers may buy additional shares whenever they can afford to do so; this is known as 'staircasing'. HomeBuy Direct was introduced in 2009, under which the government and a housing developer jointly fund an equity loan of 30% of the valuation, so that the purchaser only needs to pay a mortgage on 70% of the value. If the purchaser buys an additional share, all three parties participate in any increase in value. The HCA allocated £300 million to the scheme for 2009—2011, and 10,000 homes are available under the initiative.

Card image cap
Financial Services
Business Model Patterns:

Fractional Ownership

How they do it: Homebuy allows low income households in England to purchase a home. Hereby the government and a housing developer provide part of the capital needed to purchase a house, and the customer only has to pay / get a mortgage for the remaining value of the home. The financier owns part of the home, but the customer has the full right to live in the home.

Card image cap

Target The Poor

How they do it: HomeBuy targets people who otherwise wouldn’t be able to come up with the equity to purchase a home on their own. By setting the conditions so that only low income citizens can make use of the program, the government ensures that their subsidies go to the right people.

Card image cap