Social landlords ‘may be more effective at resolving complaints from shared owners than from renters’, Ombudsman says

Social landlords may be more effective at resolving complaints from shared owners than from social renters, the Housing Ombudsman has said.

In a new report looking into shared ownership, the Ombudsman said that there is evidence which suggests the dissatisfaction rate among shared owners is higher than for social renters, yet the volume of complaints has not risen in line with this and remains “proportionate” to the number of shared ownership homes.

It said: “This suggests a higher volume of complaints should be coming to the Ombudsman.

“This is a concern, although that landlords are comparatively more effective at resolving complaints from shared owners could explain why this is not the case.”

The Ombudsman’s new insight report reveals that, 50 years after the launch of the product, there are still “strong criticisms” of shared ownership due to its “inherent complexity” and issues relating to sales processes, defects, repairs, cladding and services charges, as well as the management of relationships with agents and freeholders.

These issues have led to the Ombudsman developing nine key tests for assessing shared ownership complaints.

The Ombudsman’s report notes issues with sales processes, stating that social landlords must make sure prospective buyers are given clear information regarding the property that they are purchasing, and that the legal obligations set out in the lease are clear.

In addition, it stated that the correct rent and service level charges must be included on sale documents, and that any financial incentives must be recorded correctly and honoured.

The Ombudsman noted cases where landlords failed to be proactive in reporting defects to developers during the defect liability period, which lasts up to two years.

For instance, a Bromford Housing shared owner reported a roof leak shortly after moving in, but the housing association did not ensure the necessary repairs were completed. The Ombudsman indicated that the landlord then incorrectly placed responsibility for the repair on the resident.

The report ‘Insight on data and individual cases relating to shared ownership’ notes that the Ombudsman is still seeing cases of landlords “not doing enough to communicate regularly and empathetically with residents about cladding issues”.

It noted examples of Clarion, L&Q and Southern Housing residents who were unable to sell, staircase, or re-mortgage their properties until any issues with the cladding on their blocks were resolved. In these cases, the Ombudsman stressed the importance of keeping residents informed and managing their expectations.

Over a quarter (27%) of the shared ownership complaints the Ombudsman investigated between April 2023 and March 2024 were about repairs.

The insight report said that the Ombudsman anticipates an increase in complaints regarding the initial repair period, which can lead to confusion and delays in handling repairs.

Introduced in 2021, the initial repair period grants shared owners a repairs allowance of up to £500 per year for 10 years following the completion of their home. However, shared owners of properties built under the 2016-2023 Affordable Homes Programme are not eligible for this initial repair period, while those under the 2021-2026 programme are.

The Levelling Up, Housing and Communities (now called the Housing, Communities and Local Government) select committee’s inquiry into shared ownership pointed out that this situation risks creating a “two-tier” market.

The Ombudsman said that issues arise when defects are incorrectly classified as regular repairs, or when residents are wrongly expected to handle repairs that should actually be the landlord’s responsibility.

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In regard to managing relationships with private freeholders and managing agents, the Ombudsman says landlords must monitor and manage their performance as if the service was in house. Landlords may need to intervene on behalf of residents to resolve issues, even when the managing agent is appointed by the freeholder.

Richard Blakeway, Housing Ombudsman, said: “Criticisms of shared ownership stem from its inherent complexity, fundamental inequities in its design, and responsibility for residents without the same level of control.”

He added: “While this report cannot fix these problems, it gives residents the opportunity to learn about complaints they can bring to us to make their housing situation better, whilst also giving landlords the opportunity to learn from the complaints we have had to provide a better service to shared owners.

“A simple concept has led to a complicated product and miscommunication has too often undermined the relationship between landlord and shared owner from outset.

He said that “one of the most striking lessons” from the review is that landlords are more successful at addressing service failures in their complaints process for shared owners compared to other tenures.

He stated that this must provide lessons for overall complaint handling.

Blakeway concluded: “We may be at an inflection point for shared ownership. Any future reform of shared ownership must address the recurring reasons for dissatisfaction and service failure that is so evident in our casework.”