ao link
Twitter
Facebook
Linked In
Twitter
Facebook
Linked In

You are viewing 1 of your 1 free articles

Shared ownership needs ‘urgent reform’ amid ‘unbearable’ costs, MPs say

MPs have called for “urgent” reforms to shared ownership, after an inquiry found uncapped service charges, rising rents and unfair maintenance costs mean it is unaffordable.

Linked InTwitterFacebookeCard
Clive Betts
LUHC committee chair Clive Betts said shared ownership schemes are an “unbearable reality” for many people (picture: David Woolfall)
Sharelines

Shared ownership needs ‘urgent reform’ amid ‘unbearable’ costs, MPs say #ukhousing

In a new report, the Levelling Up, Housing and Communities (LUHC) Committee has found that shared ownership was supposed to be an “affordable route to homeownership”, but has “failed to deliver on this for too many people, for too long”.

It said the government should explore how to improve lease terms for shared owners by making sure they are only liable for repairs and maintenance costs proportionate to the size of their stake in the property, as part of a broader package of reform to the scheme.


READ MORE

Is shared ownership worth reforming?Is shared ownership worth reforming?
The government needs to get behind shared ownership in the same way it did with Help to BuyThe government needs to get behind shared ownership in the same way it did with Help to Buy
What the submitted inquiry evidence tells us about shared ownershipWhat the submitted inquiry evidence tells us about shared ownership

Shared ownership enables people to buy a share in a property, and then pay a reduced rent on the remainder to a landlord, including housing associations and councils. Participants can start off with 25% then increase at a later date via ‘staircasing’ or gradually increasing their share in the property.

It is frequently cited as a route into homeownership for people who might otherwise not be able to afford to buy a house, because it enables buyers to pay a reduced deposit and take out a smaller mortgage.

However, research in May 2023 warned that the product risks becoming “financially unsustainable” for lower-income buyers over time due to its “upward-only” costs and a system that requires them to buy as much as they can afford at the outset.

The LUHC Committee echoed these findings on Thursday, writing that rising service charges levied by providers have frequently left owners “regretting having made the purchase in the first place”.

One person who submitted evidence reported that her service charge rose by between 140% and 170% in the two years from moving into the property in August 2021 to submitting her written evidence in August 2023.

The committee also singled out properties delivered as part of the 2016-2023 Affordable Homes Programme, in which shared owners are required to cover 100% of costs for repairs.

MPs said that this, combined with the “numerous and often unnecessarily expensive charges involved in the process of staircasing, makes it very difficult for many shared owners to complete their objective of staircasing to 100% and achieving their aspiration of full homeownership”. 

The report said the government and Homes England should create a single source of independent and impartial advice for shared owners, because of the complex nature of some shared ownership leases. 

Clive Betts, chair of the LUHC Committee, said that for many people it 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.”

A Department for Levelling Up, Housing and Communities (DLUHC) spokesperson said: “Shared ownership has a vital role to play in helping people onto the property ladder, and since 2010 we have delivered 156,800 new shared ownership homes.   

“We are taking action to ensure that the scheme provides best value for shared owners, including proposals in the Leasehold and Freehold Reform Bill to give the right to extend their leases by 990 years.”

Sign up for our tenancy management newsletter

Sign up for our tenancy management newsletter
Linked InTwitterFacebookeCard
Add New Comment
You must be logged in to comment.
By continuing to browse this site you are agreeing to the use of cookies. Browsing is anonymised until you sign up. Click for more info.
Cookie Settings