Shared ownership ‘failing to deliver an affordable route to homeownership’ MPs warn

A committee of MPs has called for reform to shared ownership, saying the tenure does not provide an affordable route on to the housing ladder for “too many people”.

A report by the Levelling Up, Housing and Communities Committee published today said rising rents, uncapped service charges, liability for repairs costs and complex leases make shared ownership “an unbearable reality for many people seeking to become 100% homeowners.”

It 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.” More than 200,000 households currently live in shared ownership properties across the UK.

The report makes several recommendations to reform the product. It calls on the government to explore the possibility of changing the terms of shared ownership leases to that shared owners only ever have to pay service charges for repairs and maintenance proportionate to the size of the share they own.

The committee also calls on the government to collect evidence to assess the viability and affordability of rent to buy compared to shared ownership, as well as collecting and publishing data around shared ownership staircasing trends. It said this data should then inform decisions around how many homes to allocate for shared ownership and Rent to Buy in the affordable homes programme.

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The report also said that shared ownership is predicated on shared owners being able to save enough to ‘staircase’ – i.e. increase their share of the property – eventually to 100%.. However currently “there is no guarantee that staircasing will be possible” for many shared owners.

It says Homes England should assess how fit for purpose its eligibility and affordability calculator is as currently it “does not explicitly recommend providers assess the likely affordability of future staircasing for prospective shared owners before the purchase is made”.

Clive Betts, chair of the 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”.

The Levelling Up, Housing and Communities (LUHC) Committee has also today launched an inquiry on improving the home buying and selling process in England.

The inquiry will examine the transaction process, the information available to buyers, and the role of conveyancers and estate agents. It is asking for evidence to be submitted by 18 April.