Shared ownership is not a completely new idea, dating back to the 1970s when John and Denise Elliott “... made history when they became the first couple to buy half a house – and pay rent on the other half” of a three-bed house in Birmingham.[1] At the time, the couple believed this novel model of homeownership had allowed them to buy a property they could not otherwise afford.
The 1980s Housing Act then introduced the form of shared ownership that is used today, where buyers had the right to “staircase” or buy additional shares of their property over time. [2] New standard model leases were brought into use in 2010 and were further revised in 2021 in the Affordable Homes Program.[3]
However…there are numerous pitfalls associated with shared ownership, with some describing the ownership model as combining the worst features of both renting and buying property.
Firstly, shared ownership properties are always leasehold, leaving property owners vulnerable to extra fees such as ground rent and service charges. And the owner is typically responsible for the entire service charge, even if they only own a small percentage of the property. Also, as mentioned in the last article, many people have seen astronomical increases in service charge and ground rent in recent years.[4]
Also, unlike tenants, shared owners are often responsible for all repairs to the property (again, even if they only own a small share of the property).[5]
Then there are the higher mortgage rates that are common for shared ownership properties, not to mention the larger than average increases in rent on the unowned portion of these properties. Plus, many buyers have had major problems when they tried to sell their share of the property so they can move.[6]
And a final problem is so many shared ownership properties are new builds, and there increasing evidence the quality of many typical new build properties has become increasingly poor. [7]
[1] https://eprints.whiterose.ac.uk/125976/1/s1_ln274373881756490215_1939656818Hwf_1111660938IdV_108740058727437388PDF_HI0001.pdf
[2] https://researchbriefings.files.parliament.uk/documents/CBP-8828/CBP-8828.pdf
[3] https://www.housing.org.uk/our-work/building-new-homes/AHP-2021-26/
[4] https://www.bbc.co.uk/news/articles/c884m42lvk8o
[5] https://www.gov.uk/shared-ownership-scheme/repairs-home-improvements#:~:text=Help%20and%20advice-,Repairs%20and%20home%20improvements,has%20an%20initial%20repair%20period.
[6] https://www.moneysavingexpert.com/mortgages/shared-ownership-scheme/
[7] https://www.theguardian.com/lifeandstyle/2023/oct/21/cracked-tiles-wonky-gutters-leaning-walls-why-are-britains-new-houses-so-rubbish