Select committee pans shared ownership schemes for failing to deliver affordable route to homeownership

Shared ownership schemes are “drastically failing to deliver an affordable route to homeownership for too many people” and subject buyers to rising rents, uncapped service charges, and a disproportionate exposure to repair and maintenance costs, the Levelling Up, Housing and Communities (LUHC) Committee has said.

The shared ownership model enables people to buy a share in a property, usually from a housing association, and pay subsidised rent on the rest. Sometimes known as ‘part buy, part rent’, shared ownership requires a smaller deposit and mortgage, making it, in theory, a more affordable route into homeownership than buying on the open market.

However, in a report, Shared Ownership, the LUHC committee said: “For there to be a genuine place in the market for shared ownership, the Government must take urgent and significant action to reform how shared ownership schemes currently operate.”

The report suggested that rising rents, uncapped service charges, liability for repairs and maintenance costs and complex leases made shared ownership “an unbearable reality” for many people seeking to take the step to become full, 100% homeowners. 

The report identified the main issue faced by most shared owners as service charges levied by the provider or landlord. These rising costs inhibit the ability of shared owners to increase their share in the property (“staircase”) over time and achieve the aim of 100% homeownership.

“This is exacerbated by the fact that shared owners are unfairly liable for 100% of the repairs and maintenance costs of their property despite owning only a proportion of it. Many of the repairs and maintenance services shared owners then receive are not done in good time and are often of poor quality,” the MPs said.

The committee called on the Government to:

• explore how it can extend the improvements made to shared ownership leases from 2021 onwards to properties delivered under the 2016–2023 Affordable Homes Programme;
• explore how it can ensure shared owners are only ever liable for repairs and maintenance costs proportionate to the size of share they own and ensuring the Regulator for Social Housing updates its Tenant Satisfaction Measures to include satisfaction with repairs and maintenance for shared owners;
• ensure Homes England improves the accessibility and quality of guidance, e.g. better signposting to existing services such as the Leasehold Advisory Service and ensuring providers offer the specialist advice needed to understand complex shared ownership leases; and
• continue to urge providers to offer flexibility for shared owners in situations where they are unable to sell due to building remediation issues, and explore the potential for requiring providers to buy back shares in such situations.

Clive Betts MP, Chair of the Levelling Up, Housing and Communities (LUHC) Committee, said: “Shared ownership was hailed as an answer to the housing crisis especially for first-time buyers. However, we have found that for too many people shared ownership becomes an unbearable reality, where a blizzard of charges and an unfair burden for maintenance and repair costs means that they are unable to afford full homeownership.

“Rising rents, hefty service charges, complex leases, disproportionate repairs and maintenance costs are experienced by too many people who take the shared ownership route. The Government needs to take clear and urgent action to tackle these issues and ensure shared ownership genuinely delivers affordable homeownership”.

Harry Rodd