Director of Shared Ownership at Currell, Martin Fillery, discusses how the industry is changing and how sales negotiators need to have more skills than ever before
Shared ownership has grown steadily over the last 25 years, as successive governments sought to facilitate home ownership in the face of rising property prices and deteriorating affordability.
The imbalance between supply and demand remains constant with many more homes sought than available, bringing a need to ration the opportunity to buy.
This meant that for negotiators selling shared ownership homes, there was not so much a need to ‘sell’ as to allocate to those most in need or comply with eligibility rules. These rules were designed to ensure the public purse was used wisely.
Tellingly, in the early days negotiators were often referred to as ‘sales coordinators’. The sales coordinator acted as a gatekeeper and form filler, assessing eligibility and ensuring correct processes were followed. There were similarities to dealing with a council waiting list, and many early shared ownership buyers were moving from social rental homes.
The sector has changed considerably; property prices have far outstripped wage growth, making shared ownership the only viable route to home ownership for many. In 1997 the average London house price was 3.7 times the average annual wage – today it is nine times average incomes.
To reflect this, income thresholds were increased (to £90k in London and £80k outside of London) and consequently, most shared ownership buyers today are young professionals exiting the private rental sector. The main target group is young professionals. Demand from this demographic is growing – driven by rising prices and increasing awareness of the shared ownership product.
On the supply side, there is more product and the market place has become competitive. HAs are increasingly commercially aware and constantly raising design and specification standards.
More HAs are developing shared ownership homes for sale, including developing larger sites in-house rather than relying on Section 106 supply. In addition to this increased supply and competition within the shared ownership sector, government initiatives such as Help to Buy are targeting the same purchaser pool.
Prospective buyers have a much wider range of homes to choose from, and the shared ownership sales negotiator needs to help them make an informed decision. This includes not only educating the buyer about shared ownership (still a necessity), but also having a thorough knowledge of the development they are selling and competing schemes.
Once committed to the scheme, the sales negotiator needs to manage the expectations of increasingly discerning and well-informed purchasers; this requires a complete understanding of the product they are offering (including detailed specifications such as heating, appliances and materials).
Consequently, the ability to sell the scheme and close the deal are becoming essential in a market where rising prices are restricting the number of potential purchasers, and supply is increasing. Whilst the supply/demand dynamics are different from the market for private sale new homes, the shift in shared ownership is narrowing this gap, and the difference between selling shared ownership or private sale new homes is being eroded.
The shared ownership sales negotiator increasingly needs to have a broad skill set, with a thorough understanding of the sector and product. This needs to be complemented by knowledge of the local market and competing schemes, plus a keen commercial awareness and the ability to ‘seal the deal’ and see it through to completion. Many now working in the sector have experienced this evolution, and are keen to embrace further change.
With HAs increasing their supply of properties for sale on the open market, and shared ownership homes increasingly seen as part of the continuum of property for purchase, the logical next step is for crossover, with negotiators selling both products, finding the best match for buyers and vendors.
‘I think the main change I have seen over the 17 years I have worked in this sector is the supply/demand of affordable home ownership. When I started out at Tower back in 2000 it was more a case of selection and eligibility as demand far outstripped supply of shared ownership homes. The role of the sales negotiator was to ensure the right person was prioritised according to LA and Government criteria. Now we have a more competitive market with shared ownership competing with Help to Buy. The role of the sales negotiator is now more about effective sales & marketing techniques and being able to close the deal with the buyer. There is still an element of selection and eligibility required, especially in rural locations where local parishes with restrictive covenants still apply, but overall the role is now identical to that of any sales negotiator in a property environment.
The buyer profile has also changed significantly. Whereas 17 years ago a high percentage of sales were to those releasing a social rented home, we have seen this reduce to almost zero and the young professional taking over as the main target group for shared ownership, especially in high value London locations.’ Debbie Small, Sales & Marketing Director, Hyde New Homes