For government & housing providers
A faster route to recycle grant and provider capital
POP is designed to give providers and Homes England a clearer and faster route to full market value — and therefore fuller grant recyclability — than retaining unsold equity under Shared Ownership.
Why it matters
The speed of capital recycling is the point
From a provider and public-funding perspective, the speed of capital recycling is vital.
Shared Ownership leaves providers holding unsold equity for an uncertain period, returning below the current cost of debt, with capital and grant only released if customers staircase. POP gives the provider a clearer route to full market value, and therefore full grant recyclability. This has the potential to increase the pace at which affordable housing investment turns into additional homes, and reduce the pressure placed on Homes England.
This point should be central to how POP is positioned with Homes England: a product that accelerates the recycling of grant and provider equity could support a higher rate of affordable-housing delivery over time. The benefit is threefold.
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Customers
A clearer route to 100% ownership
A supported, defined path from renting into full ownership of the same home, rather than an indefinite part-rent, part-own arrangement.
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Providers
Faster recovery of capital
A clearer and faster route to recovering and reinvesting capital into more homes, with full market value received at completion.
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Homes England
Public investment recycled sooner
A product that could recycle public investment more quickly and support the delivery of more affordable homes over time.
POP vs Shared Ownership
Two affordable-ownership routes, compared
Shared Ownership remains relevant where a customer cannot afford full mortgage payments and needs to buy a smaller share. POP is aimed at customers who can afford full ownership but need a structured period to build the deposit.
| Dimension | Shared Ownership | Property Ownership Plan |
|---|---|---|
| Route to ownership | Buy a share now and pay rent on the rest; buy further shares (staircase) over time. | Build a deposit over a defined period, then buy 100% of the home at the end. |
| Ownership during the period | You own a share from the outset and pay rent on the unsold equity. | You occupy the home under a POP agreement and buy it at completion. |
| The monthly payment | Rent on the share you do not own, alongside a mortgage on the share you do. | Payments build the customer's deposit for the same home; any interest is theirs. |
| Reaching full ownership | Depends on the customer choosing to staircase; full ownership may never be reached. | Designed so the intended outcome is 100% ownership at the end of the term. |
| The provider's capital | Unsold equity held for an uncertain period, returning below the current cost of debt. | Full market value received at completion, normally after three years. |
| Grant & public investment | Released only as and when the customer staircases. | Recycled sooner and more fully once the purchase completes. |
| Best suited to | Customers who cannot afford full mortgage payments and need a smaller share. | Customers who can afford full ownership but need time to build a deposit. |
What's needed to pilot it
The collaboration ask
In theory POP works and the financials stack up in its favour over Shared Ownership. Homes England support is needed to resolve two structural questions before it could be piloted.
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Occupation agreement & tenancy structure
POP does not sit neatly within a standard assured tenancy: the customer would have owner-like repair responsibilities and would make monthly payments that are not simply open-market rent.
It is therefore likely to require a new Homes England affordable home-ownership product and a standard POP agreement — in the same way Shared Ownership uses a bespoke framework rather than a conventional tenancy. A practical route is to avoid requiring vacant possession at the end of year three: if the customer cannot purchase, the accumulated funds are treated as rent and the customer can restart the POP cycle or end their tenancy.
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Mortgage lender treatment
The second issue is how lenders treat the accumulated POP balance at purchase. A lender may question whether the customer is bringing a conventional deposit, or whether the payments represent prior consideration for the home.
If POP were established as a recognised Homes England affordable home-ownership product, lenders would have a clearer framework for taking a consistent view. The aim is for lenders to assess the mortgage against the full open-market value of the home, rather than lending only against a percentage of the value remaining after the POP balance has been applied.
Provider detail
Provider, grant & scheme-design notes
Provider- and government-facing scheme-design material. Not intended for customer-facing publication in full.
Provider economics
POP creates a different cashflow profile to Shared Ownership. The provider may not receive ordinary rental income during the POP period if the customer payment is being treated as a deposit-builder payment. The cost of debt service and holding the asset during the POP period is therefore part of the cost of providing POP.
The financial case for POP is strongest where sufficient grant or subsidy is available, and where receiving the full market value at completion — normally after three years — produces a stronger net present value than retaining unsold equity under Shared Ownership over a longer and uncertain staircasing period.
Relationship with Shared Ownership
Shared Ownership remains relevant where the customer cannot afford full mortgage payments and needs to buy a smaller share. POP is aimed at customers who may be able to afford full ownership but need a structured period to build the deposit.
The key policy and provider question is whether Government grant can be structured to support a short, defined deposit-building period that leads to full ownership and faster capital recycling than a retained-equity model.
Setting the purchase price
The purchase price should be clear before a customer enters the scheme. Three approaches are possible, each with a different balance of price certainty and provider risk.
| Pricing option | How it works | Comment |
|---|---|---|
| Full market value at completion | An independent valuation is obtained at the end of the POP period. | Most straightforward for the provider and lender, but gives the customer less price certainty. |
| Market value with capped growth | The price is market value at completion, subject to a cap on annual increases. | Gives customers some protection from rapid price growth while preserving a market-value principle. |
| Fixed entry price | The purchase price is fixed on day one. | Strong for customer certainty, but creates greater market risk for the provider and may require more subsidy. |
Pilot controls
Sensible guardrails for a first pilot:
- Limit the first pilot to straightforward new-build homes with clear title and manageable service charges.
- Use a standard POP key information document so customers can compare homes consistently.
- Require staged affordability checks before entry and before completion.
- Agree lender treatment of POP payments before launch.
- Define what happens on failure to complete, death, relationship breakdown, job loss or relocation.
- Use independent evaluation to test completion rates, customer outcomes, provider NPV and capital recycling.
Illustrative model inputs
Context for the single-property comparison behind these notes. These are illustrative inputs and assumptions, not published model outputs.
- Build cost
- £150,000
- Open market value
- ~£180,000
- Grant
- ~£22,500
- Shared Ownership first tranche
- 30%
- SO rent on unsold equity
- ~2.75% p.a.
- Discount / cost of debt
- ~5.5% p.a.
- POP deposit target
- 15%
- POP term
- 3 years
- Escrow interest
- ~3% p.a.