Rothbiz reported last month that at Wellgate Place, 11 one and two bedroom apartments remain unsold and that the authority was considering changing the tenure from shared ownership to affordable rent.

The first home opened in February 2022 as part of an ambitious £30m+ development of more than 170 homes across three key town centre sites, heralding the next stage in Rotherham town centre’s transformation.

The ‘Trilogy Collection’ includes Westgate Riverside, Wellgate Place and Millfold Rise and properties have been made available for sale, affordable rent and through shared ownership.

Council documents show that the 11 shared ownership apartments at Portland House at Wellgate Place remain empty having been handed over to the authority in May 2022, with officers concluding that the “market has reacted well to shared ownership houses, but not to shared ownership apartments.”

Shared ownership involves buyers purchasing a 25% – 75% share in the home and then paying rent on the percentage of the property not purchased along with a service charge. The Wellgate Place examples were on the market with a total value of the properties at £100,000 for the 1 bed, and £120,000 for the 2 bed.

On the site of the former car showroom on the edge of the town, 20 houses have all sold – including 12 through shared ownership and eight on the open market. Elizabeth House has 23 apartments for council rent for the over 50’s and the council’s rented homes “are almost all let” despite the uptake being slow. For Portland House and its apartments for shared ownership, all 11 remain available.

A council report shows that previous strategies included the aim that grant funding bids would be expected to deliver circa 88% shared ownership. This was later reduced by national housing body (and part funder), Homes England, but it was still substantial when funding bids were being submitted.

Advertisement

The report states: “Shared ownership however was not a significant part of the Rotherham housing market at that time and in being an early adopter, the Council effectively took on a market making role in delivering this tenure at reasonable scale into areas where shared ownership had little existing presence.

“There was also the view that the creation of homes in the town centre, particularly through home ownership products, would benefit the wider regeneration of the town centre.

“Learning from the delivery of the town centre programme has established that the market has reacted well to shared ownership houses, but not to shared ownership apartments. The likelihood is that the combination of a mortgage requirement, payment of rent on the unowned share in addition to service charges on apartments may be too much for the market to bear in what is still a borough of relatively depressed market values. This is also reflected in other shared ownership schemes across the borough. Shared ownership houses generally have no, or minimal service charge obligations.

“One block of apartments at Portland House, Wellgate place is proving difficult to sell under shared ownership terms. They were handed over to the Council in May 2022 and no sales or reservations have been taken. There has also been limited interest overall. The Council are now incurring costs while ever they remain empty.”

The high level of service charges are likely to be the main concern for buyers. The report explains that the average service charges per property is
estimated to be around £2,224 per year / £185 per month. In some instances, it can work out cheaper to purchase a house from the other town centre developments, as these do not generally include a service charge.

Other issues relate to the volatility in the housing market and the difficulty for prospective buyers in obtaining mortgages for the shared ownership properties. The report adds that the location of the development “has caused some concern with surveyors in terms of valuations” with some zero valuations being returned from “one or two particular surveyors who have limited knowledge of the area and the Council’s ambitions.”

Having looked at other options, such as financial incentives and addressing the service charges, or putting the properties on the open market, Rotherham Council has now made the decision for a change in tenure from shared ownership to affordable rent.

The properties are due to go out to council tenants and not be restricted to the over 50’s like the adjacent apartment block.

Trilogy Collection website

Images: Google Maps