b'6.0 / Funding Shared OwnershipSO Resi by Metropolitan Thames Valley 6.0 / Funding Shared OwnershipSO Resi by Metropolitan Thames Valley6.0 / Funding Shared OwnershipIs it an attractive proposition for lenders In recent years more for-profit registered providers have entered the market. They undergo and investors? broadly the same level of scrutiny and regulations as a not-for-profit providers.Long-term social impact funds are looking to target equity in existing assets and will partner The rate at which the shared ownership sector has grown, particularly in the past fewwith a housing association taking a sale and leaseback approach. The housing association years is a testament to demand and the financial backing registered housing providersmanages the properties with both partners sharing the risk on income. Regulations on this have secured to deliver product. Low interest rates have of course helped.kind of financing have been tightened up in recent years to better protect customers. The most common route to developing is for housing associations to borrow against theirA more recent trend in the market is investment firms setting up as registered providers. existing assets. This isnt without its challenges. The thinking around how shared ownershipOne option, potentially the easier one, is to buy up an existing registered providers stock. assets are valued is changing. Currently, the assumption is based on the existing use ofThis frees up capital for the registered provider to build more homes. shared ownership into perpetuity, but a portion of the shared ownership product is HPIBut some are also setting up so they can develop. There is an opportunity to collaborate inflation linked.with housing associations who can provide wrap-around support and the infrastructure to For those financing shared ownership development, it is a product which almost operateshelp investors using their long-term experience in the sector. like a fixed, Full Repair and Insure lease (FRI), so there arent hidden extra costs. Its aWhile shared ownership is unlikely to become a mainstream investment asset, the increasing relatively secure income stream with HPI indexed-linked increases, which differs from a lot ofinterest and development of new partnership models will undoubtedly help in delivering other products that are available. more product.There is an initial capital receipt and longer-term rental income plus additional capital receipts when owners staircase - linked to the current market value. What funders dont have is control over the access to those future capital receipts. One of the issues of the past has been the lack of data on the performance of the asset which Cambridge University research is looking to address. There are risks. Unlike an affordable rental product, shared ownership is market-driven; the asset could get securitized at a certain value if the market changes and there isnt any control over the number of buyers who staircase which can reduce the level of security. Naturally, lenders want the surety of knowing the asset they funded fundamentally remains the same type of asset. Nonetheless, a combination of the viability of the asset and demand from buyers outstripping supply means more funders are looking at shared ownership. An increasing desire to commit to products which deliver on the ESG agenda (Environment, Social and Corporate Governance) is adding to the interest.20 / Shared Ownership Market Review 2020In conjunction with Cambridge University Shared Ownership Market Review 2020In conjunction with Cambridge University / 21'