Shared ownership: has potential, needs reform

Two weeks ago Shelter launched its call for a bigger, better shared ownership market for low to middle income families.

In our report, Homes for forgotten families, we found that 1.8 million families typically earning £20,000 – £40,000 were unable to afford a family home in their area through full ownership. With home ownership out of reach and social housing in short supply, the only realistic option for most of these families is to raise their children in our insecure private rented sector.

We found that the only existing model that aligned with their aspirations to own a home, and proved affordable to a wide number of families, was shared ownership.

Our report was very clear that shared ownership offers the most potential to meet these needs and aspirations, but that it also needs a comprehensive shake-up before it can be scaled up to be a realistic, sensible option for England’s low to middle income families.

Our policy proposals set out a wide range of components needed for a successful government led housing programme, but did not uncritically endorse every existing example of shared ownership.

On the contrary, there are significant concerns with the current shared ownership offer, many of which were raised by those responding to our report. These concerns will need to be dealt with if shared ownership is to be scaled up, and we will be addressing them as we develop our thinking for making shared ownership a truly good, fair, and affordable option for low to middle income families. And we’re keen to get others’ views on how best to do this.

Legal issues

Nearly Legal has rightly highlighted legal issues with the current shared ownership model. The main issue stems from a 2008 court case in which a shared owner abandoned the home, stopped making rent payments, and was able to be evicted without having the right to take back the share they owned.

It is clearly unfair that they could not get back what they put in. However, I understand that most housing associations would use their discretion to ensure that in the very rare occasions where a shared owner was completely unable to make the rent and mortgage payments, that they would get back their equity stake.

While it may be a very rare occurrence, it’s clearly not good enough that someone could build up all that equity and have no legal right to it. This would need to be addressed if families were to have confidence that they were indeed building up an asset.

We are keen to hear any suggestions that others may have for developing a legal structure that would safeguard shared owners’ equity in the worst case scenario of their home being repossessed.
Control and responsibility issues

People have also rightly highlighted issues with the current shared ownership offer being too restrictive when it comes to selling the home, as well as conditions on shared owners when they are in the home.

  • Currently, most shared owners have to advertise the home to a closed waiting list of prospective shared owners, usually for a period of three months before they can sell it on the open market. This is a symptom of the undersupply of homes for this market. Under our proposals, with significantly increased supply and less need for rationing, we believe shared owners should be able to sell their homes on the open market to all eligible households.
  • Shared owners typically face restrictions in letting out their home if their circumstances change. It makes sense to ensure that scarce subsidy doesn’t help someone become a Buy to Let mogul, but one of the key advantages of being a home owner is having that flexibility to hold on to your asset through life changes. Should it be easier for shared owners to let out their home, but should it be for a maximum defined period at first, e.g. one year?
  • Currently, shared owners, even those with small shares, are liable to pay for the full cost of any repairs to the home. Some find this unfair, especially where the housing association owns most of the home. Do we need a re-think on the extent to which each party is responsible for the repairs? Could this be accounted for in a different rent structure?

Shared ownership is at crossroads. The model has been around for more than thirty years, but so far it has only helped a relatively small number of people (0.8% of English households). Nevertheless, it could help 95% of the 1.8 million forgotten families who want to own, but can’t in today’s market.

One of the benefits of shared ownership having been around so long is that all these issues have come to light. None of them are insurmountable.

Rather than starting afresh with a new, un-tested model, shared ownership offers the chance to learn lessons, adapt the framework surrounding it, and develop a strong, fair, affordable offer for these families.

Now is the time to share your ideas as we develop our thinking on how to make shared ownership a genuinely good option for these families.


One Comment
  1. I know I’m not homeless but still concerned about when you get managed through a management company. E-mailed Places for People not because I do not have a decent home, despite mice in ceiling, but their attitude to me, I’m not on great wages so only way to get a home on my wages was shared ownership, lived here for over 5 years today got letter through door. Response was:I received a letter following your estate walkabout on 17/6/2014 which I was unable to attend due to work commitments. The walks always seem to be on weekdays when many people have work commitments which in my perspective seems not very customer focused.

    I was disappointed to note that security issues were not raised in your letter, the pedestrian gate was broken despite being repaired on a regular basis and then seems to be broken again a few days later. I would also like to mention the door leading to flats by the main car park area bangs constantly and the locking mechanism bounces out leading to the building being less secure.

    Back in 2009 when I viewed this property with the estate agent I was advised that I could use the outside “porch” area for personal belongings. This made total sense to me as it was not in effect a communal area as it is not a fire exit for any other resident or advertised as a storage unit for any other resident. I would be extremely surprised if residents or members of the public hanging around in an area which gives access through 1 door that solely gives access to my flat door, so very surprised this is an issue to you as this has never been brought up before over the past 5 years I’ve lived in the property, why is it an issue now? If I left my personal belongings in the communal area that provides a fire route escape for other residents I believe you would have a valid point. As a matter of fact I was going to arrange out of my budget to paint this area as it needs re-decoration and put a fire safety lock on the door due to lack of security on the site. I would like to point out I did pay more for this flat than others I was offered on the “rows” on other side of the building. I find your tone in this letter highly patronising and extremely pedantic as I interpret your letter as being the space outside my flat.

    In April 2009 I was again advised by the estate agent that my service charge would not increase by much over 5 years later despite a refund of a few hundred pounds last financial it’s almost tripled.

    My experience of neighbourhood officers for Places for People has been extremely negative where they have been more concerned about wielding their power or even making situations worse rather than making it a nicer environment for their so called “customers” to live in and your service to the “customer” is not excluded to some other departments that provide a service to your customer.

    I haven’t met you, this is the first walkabout about by the “neighbourhood” officer I’ve been informed of in years and you are threatening legal action to me if I don’t remove my items from a communal area? It seems perfectly all right for Places for People not to do a walkabout for years but when Places for People do visit, residents seem to have to crack the whip when People for Places actually decide to do a walkabout and dish out instructions via a letter. I am disgusted by the letter. Has Places for People lost sight of who their customers are? I don’t understand a company that is registered as a charity that feels quite happy to treat people like that. I work for local government within the children in care and care leavers, I would never treat them like this but it seems acceptable to treat people on a low wage like that? Any advice please?

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