Norges Bank has responded to proposed regulations for rent to own and shared ownership models in new housing projects, calling for clearer rules on when providers require authorization as financial institutions. While the models currently represent a small share of the housing market and have limited implications for financial stability, greater use or concentration among financing providers could create risks outside the established regulation of housing finance. These models shift part of the financing and associated risk from households and banks to providers and their funding sources, potentially reducing the share of home financing covered by the Lending Regulations. Norges Bank said any ownership cap for legal entities using shared ownership models should give substantial weight to provider bankruptcy risk and the scope of those lending rules. Risk rises with ownership concentration, aggregate exposure across housing entities, funding arrangements and provider solvency. Norges Bank supported further assessment of measures to reduce the likelihood and consequences of a provider bankruptcy, which could affect participating households and other owners in the housing project. It also called for further analysis of authorization requirements and the regulatory obligations that apply to providers, supporting equal regulatory treatment and clearer parameters for the market.
Norway's Norges Bank calls for licensing clarity and closer scrutiny of alternative home purchase models
Norges Bank called for clearer authorization requirements for providers of rent to own and shared ownership housing models. The models currently pose limited financial stability risk, but wider use could shift housing finance outside the Lending Regulations and increase risks linked to provider concentration and bankruptcy. Ownership caps should reflect those risks, provider funding and solvency.