Make Shared Ownership Better for Londoners
Many shared owners encounter issues with costly service charges, poor maintenance of their property, expensive lease extensions and difficulty staircasing to full ownership.
Shared owners are primarily first-time buyers, who have had no experience of the home-buying process. Purchasing a more complex shared ownership property can carry financial and administrative burdens to shared owners, who may not know what exactly they are getting into.
Shared ownership properties in London are also increasingly expensive. The incomes of new shared owners, and the deposits they have to put down to purchase their share, are typically beyond those of the average earner in London. The maximum household salary allowed for shared ownership in London is £90,000, whereas for London Living Rent the cap is only £60,000.
The London Assembly Housing Committee has written to the Mayor of London on whether shared ownership is working for Londoners and has made a number of recommendations to him. The Mayor should:
- Require housing associations to report on service charges and maintenance costs for each block of shared ownership homes.
- Require housing associations to manage the lease extension process and report annually on how many of their shared owners have 85 years or less remaining on their lease.
- Require housing associations to provide prospective shared owners with a key features document, which should outline a clear description of the ownership model, the length of the lease and other associated costs.
- Require housing associations to report annually on the tenure types that shared owners who sell their property are moving into and staircasing sales and make this information publicly available.
- Publish guidance outlining routes for redress for shared owners, who feel they are not receiving an adequate service for service charges and contribution to major works.
- Advocate to Government for devolution of the affordable homes programme, and allocate a greater proportion to housing options that are more affordable for Londoners on lower and middle incomes.
- Consider using different grant rates to incentivise a greater number of London Living Rent homes instead of shared ownership, and evaluate the different costs and benefits to London and to tenants from both tenures.
Unmesh Desai AM, Chair of the London Assembly Housing Committee, said:
“Shared ownership helps many people fulfil an ambition to experience some benefits of home ownership. But for many, they feel that the shared ownership model simply doesn’t work for them, they had not been given enough information at the point of purchase and are now lumbered with spiralling and ever burdensome costs for the foreseeable future.”
“The Housing Committee wants to see housing associations make great improvements to their processes when handling shared ownership sales and when dealing with shared owners after they purchase a property.”
“Shared owners need to be given clear information from the very outset, so they know what they are getting themselves into and can make an informed decision. The Mayor has a role to play in all of this, by using the funding levers he has, he can require housing associations to act in a more transparent and fair manner when it comes to shared ownership.”
“We are also concerned that shared ownership is not the best form of affordable housing to meet Londoners needs, and are calling on the Mayor to incentivise the building of more London Living Rent homes which are better suited to normal people on working incomes.”