Better Shared Ownership Campaign

Shared ownership is a much needed scheme aimed at those struggling to afford to buy a home. The scheme is promoted by government and housing associations to be ‘a realistic pathway to full home ownership’. But the reality can be very different. That's why we are campaigning for better shared ownership. Read on for what needs to change.

Paula Higgins CEO & Founder

Better shared ownership – more benefits, fewer drawbacks

Shared ownership is the government’s flagship affordable home scheme. But the proposition is a complex and confusing financial model that can be tricky to grasp – even for experienced property buyers and sellers – and with long term implications and financial obligations.

So how does it work? Put simply, it allows buyers who cannot afford all of the deposit and mortgage payments for a home to take out a mortgage to buy a share of the property (usually between 25-75%) and pay rent on the rest.  Owners can then buy further shares, called ‘staircasing’. 

For years we have been calling for a better shared ownership model that works better for buyers. In particular we have criticised how unfair it is to require owners to pay for 100% of the full maintenance costs when they own only a share of the property. We have also highlighted the administrative and legal costs that stop people from staircasing and the sometimes insurmountable hurdles to selling a shared ownership house. 

Recent reforms to shared ownership

In 2021, the government made positive changes to the scheme:  

• Requiring housing associations to contribute to the cost of essential maintenance and repairs for the first 10 years. 
• Lowering the size of the minimum initial share that can be bought from 25% of the value of the shared ownership home to 10% 
• Allowing owners to gradually staircase by buying an extra 1% of their home every year with no admin fees 
• Giving more control to owner when they come to sell their home 
• Requiring a minimum 990 year lease rather than 99 or 125 years.  

You can read more about these shared ownership reforms and what they may mean for you.

While in 2023, the government announced changes to shared ownership rent reviews. These will be based on the Consumer Prices Index (CPI) plus 1%, rather than the Retail Price Index (which measures inflation) plus 0.5%. And the floor for shared ownership rent increases has been reduced from 0.5% to 0%. This means that rents cannot be increased if CPI is minus 1% or lower. But the new rules will only apply to new leases and some properties will be exempt.

Better shared ownership – What more needs to be done

Although a step in the right direction, more needs to be done to ensure this is a fair and affordable scheme.

For instance: 

• We must not forget the existing shared owners who will not benefit from these changes.
• Housing associations are required to help with the costs of “qualifying” essential repairs at a maximum of £500 a year and only for the first 10 years. This is not as fair as after the initial period owners remain liable for 100% of ongoing costs regardless of the size of their share. Shared owners will continue to fund the full cost of any home improvements while the housing association benefits from any uplift in price.

• By lowering the purchase threshold to 10%, shared owners are more exposed to the risk of ‘rent burn’ on the remaining shares. While rule changes for new leases mean rent reviews will be based on CPI + 1%, for those who bought before these changes were introduced or whose properties are exempt, the standard lease allows for an annual rent increase of RPI plus 0.5%.  The UK has been experiencing the highest inflation rate in a decade which means shared owners will see their rent payments increase and this is not tied to private rent levels for comparable homes in their local area. The government’s own shared ownership guide uses a rent increase of 3.8% (RPI of 3.3%+0.5%) whereas the RPI in April 2023 was four times more at 11.4%.

Recent Reports

The 2023 report, Shared Ownership: The Consumer Perspective, sheds further light on the growing dissatisfaction amongst shared owners, citing conflicts of interest, mis-selling and poor value-for-money.

The study found no evidence that shared ownership succeeds as a pathway to full home ownership for the majority of shared ownership households and real concerns over how shared ownership is advertised to potential buyers. We are dismayed that housing associations continue to flout the Advertising Standard Authority’s 2019 ruling that claims such as ‘part buy, part rent’ and ‘it’s yours’ were misleading as they exaggerate the level of homeownership.

The HOA fully supports Shared Ownership Resources campaign for change. We would like to see :

• An enforceable Code of Practice for shared ownership marketing and promotion to tackle mis-selling. 
• All affordability assessments for potential buyers to include future total housing costs, in particular the increase in rent. The government to make available a shared ownership calculator to help educate.
• Better reporting of data that focuses on the outcomes of shared owners and whether they succeed in taking a full step to get onto the property ladder. Data should include the resales market as well,
• More support and earlier for households where shared ownership is becoming financially unsustainable (including ‘buy back’ in order to maintain social housing stock)
• HMRC should update Stamp Duty Land Tax guidance on simultaneous sale and staircasing transactions and extend the one-year deadline for refunds where shared owners have overpaid as a consequence of incorrect advice.
• Undertake a review of the shared ownership contracts and restrictions in order to have a standard set of conditions, for instance on subletting, and a fairer way to calculate the rent increase.

Commenting on the campaign Paula Higgins, CEO of the HomeOwners Alliance, said: “It’s about time that we take a more forensic look at the shared ownership tenure to understand how successful it is to help first time buyers start their journey into being a homeowner.

“Does it give a helping hand or does it trap people in some sort of limbo between renting and owning that ultimately costs them more and they cannot escape from? The shortcomings of shared ownership should not be used as an excuse to kill shared ownership as we are in the middle of an affordable housing crisis.

The challenge is to get it right.”

New Shared Ownership Council launches

In February 2024, the HomeOwners Alliance was asked to join the Shared Ownership Council (SOC). This cross-industry group is committed to building a better shared ownership offer for consumers through the development of a Code of Best Practice. This is one of our key recommendations for change. Housemark‘s analysis of tenant satisfaction measures shows that the consumer satisfaction amongst shared owners is a dismal 56%, compared to an overall rating of 79% for housing providers in general.

Please make your views known by leaving a comment below, or send an email to hello@hoa.org.uk so you can be added to our virtual shared owners panel.

Parliamentary inquiry into Shared Ownership finds it traps house buyers in ‘unbearable reality’

In March 2024, the Levelling Up, Housing and Communities Committee issued the findings of their nine month inquiry criticising the shared ownership scheme for trapping buyers in an “unbearable reality”.

MPs said the scheme was “drastically failing” to help buyers achieve full home ownership because of rising rents, uncapped service charges and unfair repair costs.

Clive Betts, Chair of the Committee said:

“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 report also highlights the complexity of shared ownership leases and identifies a lack of a single, specialist source of independent and impartial advice for shared owners. The report calls on the Government and Homes England to improve the accessibility and quality of guidance and ensure providers offer the specialist advice needed to understand complex shared ownership leases.

The HomeOwners Alliance submitted written evidence on behalf of the shared owners who have contacted us. We welcome this thorough report from the Committee and look forward to hearing the government’s response.

Frequently Asked Questions