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Shared Ownership has failed to deliver - MPs slam process and costs

Shared ownership has failed to deliver an affordable route to home ownership for too many and for too long, says a new report.

The all-party House of Commons Levelling Up, Housing and Communities Committee published the report following an inquiry into the shared ownership scheme. 

The MPs conclude that: “the Government must take urgent and significant action to reform how shared ownership schemes currently operate”, and “must ensure shared owners do not become ‘trapped’ in properties they can no longer afford”.


Shared ownership offers the promise of an affordable stepping stone to full home ownership. The scheme is available to people who cannot afford to purchase a home on the open market, and who meet specified eligibility criteria.

Buyers purchase an initial share of 10% to 75% of the home’s full market value and pay rent on the remainder to the landlord. They may then ‘staircase’ - that is, buy additional shares - although there is no requirement to do so.

However, real life experiences reported to the Committee by shared owners raise troubling questions; in particular, whether shared ownership remains affordable over the longer term, and how many people actually achieve 100% home ownership.

The report identifies a number of hazards for shared owners.

These include disproportionate liability for service charges, which can sometimes rise rapidly or unexpectedly; above inflation annual rent increases; difficulties in extending short leases; and problems arising from complex ownership arrangements (where multiple sub-lessees have different rights and responsibilities).

Many shared owners reported inadequate access to essential information, prompting the Committee to state that: “It is unacceptable that shared owners are having to make significant financial decisions without appropriate advice being readily available”.

On service charges, the Committee notes that: “Shared owners are unfairly liable for 100% of the repairs and maintenance costs of their property despite only owning a proportion of it”, recommending that “shared owners only ever have to pay service charges… proportionate to the size of share they own”.

The report also identifies difficulties in selling on, with shared owners whose homes have building safety issues describing challenges over and above those encountered more generally. 

This was acknowledged in the recommendation that: “The Government should either require providers to buy back shares from shared owners in situations where they are trapped and unable to sell shares due to building remediation issues or, if not, set out the reasons why it has decided not to do this”.

The report refers to Dr Alison Wallace’s research into risks arising from affordable home ownership schemes, which found that monthly costs of shared ownership could exceed that of open market buyers after only 15 years - despite not owning 100% of the property.

Some of the issues identified in the report are partially addressed by the new model for shared ownership, which offers benefits such as a 990-year lease. 

However, the Committee noted that the new model was not retrospective, creating the ‘unfair’ risk of a two-tier market further disadvantaging existing shared owners. For this reason, they recommend that the Government urge providers to voluntarily update ‘old’ lease terms, and consider offering them financial incentives to support this.

The report comes after the recent second reading of the Leasehold and Freehold Reform Bill and makes this reference: “The Government should ensure that any legislation passing through Parliament which has provisions to reduce the cost of, and simplify, the process of leasehold extension (for example, as in the Leasehold and Freehold Reform Bill) also applies to leaseholders in shared ownership properties”.

Paula Higgins, chief executive of the HomeOwners Alliance, adds: “It's beyond an injustice that shared owners, who are in many ways more disadvantaged than other leaseholders, do not have the same statutory rights.

“Leaseholders were granted the statutory right to extend their lease 30 years ago. Shared owners rightly feel that the significant issues they face are systematically overlooked; especially as they do not seem to benefit from initiatives to strengthen consumer redress for buyers of newly built homes, for those owning leasehold properties and for renters with council and housing association landlords.

“The tragedy is that the issues shared owners experience are the same as all three groups, yet they end up in the 'too difficult box' for regulators. As a minimum, the Leasehold and Freehold Reform Bill should be amended to give shared owners the statutory right to a lease extension.”

  • G romit

    Yet another ill-thoyght through scheme that causes more problems.

    But let's see who really benefits - just follow the money.................


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