Publication - FOI/EIR release

North/South Lanarkshire property price threshold reviews and calculation: FOI release

Published: 1 Aug 2018

Information request and response under the Freedom of Information (Scotland) Act 2002.

Published:
1 Aug 2018
North/South Lanarkshire property price threshold reviews and calculation: FOI release

FOI reference: FOI/18/01873
Date received: 2 July 2018
Date responded: 30 July 2018

Information requested

A copy of all property price threshold reviews carried out under the Open Market Shared Equity Scheme since its inception in 2009 until April 2018 for each of the price thresholds in the North and South Lanarkshire area.

You also requested details as to how these thresholds are calculated and what independent adjudication is used to ensure an open and transparent process in the setting of the thresholds.

We contacted you on 10 July to clarify the request, and informed you that there have been no formal reviews of the Open Market Shared Equity scheme threshold prices undertaken since the start of the scheme, and therefore there are no review documents to provide. However, threshold prices have been updated at various points during the operation of the scheme, and therefore we agreed that we would provide you with information on each of the price thresholds set for the North and South Lanarkshire area from 2009 to April 2018 and the underlying house price figures that have been used as a basis to calculate the threshold prices.

At the point of clarifying the request you had also asked for information on how many times this scheme has been accessed in North and South Lanarkshire since its inception in 2009 until 2018. I provided information on this on 11 July in the form of links to published Scottish Government Affordable Housing Out-turn Reports, but this information is also included in this document for completeness.

Response

Information on the different Open Market Shared Equity scheme price thresholds (also referred to as Local Maximum Price Ceilings) within each area, has been made available throughout the operation of the scheme within various published documents. For example see the following links:

Open Market Shared Equity Pilot - local price thresholds as at 31 March 2009 - https://beta.gov.scot/publications/open-market-shared-equity-pilot-local-price-thresholds/

Open Market Shared Equity (OMSE) Administrative Procedures – local price thresholds as at 2012 - http://www.gov.scot/Publications/2012/01/09104419/18

Open Market Shared Equity (OMSE) Administrative Procedures – local price thresholds as at 2014 - https://beta.gov.scot/publications/open-market-shared-equity-omse-administrative-procedures/pages/17/

Open Market Shared Equity (OMSE) Administrative Procedures – local price thresholds as at 2016 – https://www.gov.scot/Publications/2016/05/6131/17

Open Market Shared Equity (OMSE) Administrative Procedures (the current version of the procedures, although there were no updates to the threshold prices made at this point) – https://beta.gov.scot/publications/open-market-shared-equity-omse-administrative-procedures-9781788513555/

These documents show that in 2009 the price thresholds for the North and South Lanarkshire area were set at:

• £65,000 for apartment size 2
• £70,000 for apartment size 3
• £80,000 for apartment size 4
• £115,000 for apartment size 5
• £175,000 for apartment size 6

After which each of these price thresholds has remained at the same level for the time period of the scheme up to the current version of the Administrative Procedures.

The following information provides further details of the underlying house price figures that have been used as a basis to calculate these threshold prices.

The price thresholds used for the first five years of the Open Market Shared Equity scheme were based on detailed 2007 based house price data broken down by property size. For each area and property size combination, the lower quartile sale price was calculated and used as the threshold in urban areas (such as for the North and South Lanarkshire area), as a way of identifying affordable housing in the private sector.

The thresholds were updated in April 2014 to incorporate more recent detailed 2010 based house price data broken down by property size that had become available. Thresholds were increased in areas of house price growth based on the lower quartile price, and they stayed the same and were not reduced in areas were prices had dropped.

The underlying calculated lower quartile 2010-based house price figures for the North and South Lanarkshire area, which have been extracted from a search of files, were:

• £60,000 for apartment size 2
• £70,000 for apartment size 3
• £80,000 for apartment size 4
• £100,000 for apartment size 5
• £165,000 for apartment size 6

These calculated values were either lower than or the same as the existing thresholds, and so in line with the overall methodology the existing thresholds were kept the same and not reduced.

In April 2016, in the absence of any more up to date detailed house price data broken down by property size, the thresholds were updated using overall house price trends in each of the target areas between 2010 and 2015 and applying these trends to the underlying 2010 threshold data, i.e. the overall price trend in each area between 2010 and 2015 was applied to each calculated apartment size specific figure from the 2010-based data. Thresholds were increased in areas of house price growth based on the lower quartile price, and they stayed the same and were not reduced in areas were prices had dropped.

In the case of the North and South Lanarkshire area, information extracted from a search of files shows that lower quartile house prices were calculated to have fallen from £76,500 in 2010 to £72,000 in 2015 (averages across all sizes of properties), a drop of 6 per cent. The latest calculated values were each therefore lower than the existing thresholds, and so in line with the overall methodology the existing thresholds were again kept the same and not reduced.

The Open Market Shared Equity threshold prices are set with the aim of targeting the scheme to those who need help to access the affordable housing market and to ensure that, across Scotland, all areas are able to benefit from a viable scheme with a reasonable number of purchases. A review of the Open Market Shared Equity threshold areas is currently underway. This includes considering options for revised threshold areas with COSLA and local authorities, with final decisions on threshold areas expected in the autumn. Following this the Scottish Government will calculate thresholds prices, based on up-to date house price data, for the range of property sizes within each Open Market Shared Equity threshold area.

In terms of information on how many times the scheme has been accessed in North and South Lanarkshire since its inception in 2009 until 2018, the available information is contained in Scottish Government Affordable Housing Supply Out-turn Reports that are published each year and which contain information on the number of Open Market Shared Equity sales ("OMSE unit completions") for the scheme by each local authority area.

See links:

https://beta.gov.scot/publications/affordable-housing-supply-programme-out-turn-report-2016-2017/

https://beta.gov.scot/publications/affordable-housing-supply-programme-out-turn-report-2015-2016/

https://www.webarchive.org.uk/wayback/archive/20170105043605/http:/www.gov.scot/Topics/Built-Environment/Housing/investment/ahip

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