Times are tough for first-time buyers trying to get their foot on the ladder. Mortgages are still hard to come by, prices remain elevated, and access to ownership remains low.
Small wonder that many FTBs reach for shared ownership (SO) as the solution. It's a step on the ladder, by buying a share of your property from a housing association and then paying a (subsidised) rent on the rest. The longer you live there, the more chance you will have to buy shares and "staircase" up. Plus you can start to buy a property with a small deposit: 5 per cent to 10 per cent of the share you are buying.
It's a small but significant sample of the housing market and one that has been heavily promoted to young buyers.
It sounds a reasonable solution to the affordability crisis. But is it so great? Jeannie Brehaut, a yoga teacher, regrets the day she bought her shared ownership flat in the Barbican area at Lamb's Passage, London, three years ago. "It has been nothing but trouble," she says. "Basically, One Housing Group [her housing association] want shared owners like me to buy. But once we move in they are not accountable – even though the lease is with them and they are landlord and joint owner."
Brehaut bought her flat as part of a shared ownership deal and feels that the whole thing has been a farrago of problems, from "eco" features that don't work to poor repairs.
"There's a biomass heating system installed which was part of the eco-friendly appeal of the development, but it has never been turned on," says Brehaut, who is also furious at service charges that have never been itemised despite what she says are repeated requests; "an appalling response to major maintenance issues", such as repeated leaks from a badly installed eco-toilet system in her flat, and no hot water and heating for extended periods.
If she had been a private buyer or a social housing tenant, it would have been simpler, she believes. "I also had to instruct a solicitor and visit my local MP just to get repairs started," she says.
The One Housing Group refutes Brehaut's allegations. "Following completion of all new-build developments, we undertake a snagging exercise to check for problems. This usually picks up all problems, but unfortunately in a few instances this does not pick up all issues," says a spokewoman.
"Nicholas King Homes, the construction company employed by One Housing Group, were responsible for fixing any defects at our Lamb's Passage development during the 12-month period following completion."
"We have addressed all defects and issues with the Lamb's Passage development in a timely manner and made every effort to rectify them as soon as possible, keeping residents informed throughout the process." The housing association denies it received any complaints from the local MP or residents about the development.
One might argue that Brehaut's case points to structural problems in the SO model. But Timothy Waitt, a solicitor with Anthony Gold Solicitors of London, who acted for Brehaut, is unhappy with the way that shared ownership tends to be administered. "Shared ownership leases are carefully drafted by the housing associations' lawyers to protect their interests rather than the tenant-buyer, and unfortunately the law has not worked out a way to balance their competing rights," he says.
Thus, certain leasehold problems disproportionately bedevil SO properties, such as the tenant's right to have repairs done. "It's a common myth that housing associations will have an interest in the property and will therefore work with the shared ownership tenant," says Waitt. "Paradoxically, they often treat the tenant as if the property is theirs alone and resign all interest, apart from collecting rent and service charges."
It's a charge the shared ownership industry denies, but buyers' interest groups are critical. "SO is not going to solve the housing crisis facing young people and families in this country," says Katherine John, a spokeswoman for Priced Out, which campaigns for affordable homes.
Marc Vlessing, a developer who created Pocket Homes for struggling FTBs, is also critical of shared ownership, with a major objection being that it is often subsidised by the government. He says the private sector is using subsidies for SO to get in on the low market, on the basis that they are selling "affordable housing". "If they succeed they make money; if not, they are buffeted. They socialise their losses and privatise their gains."
John recognises SO has a place in an under-supplied housing market, but says: "SO has its merits, but it is using public money to prop up the property market."
There are also criticisms that SO deals can have structural flaws. Some SO tenants end up paying more than a market equivalent for their flats, while others have ambiguous leases. They may also be potentially difficult properties from which tenants can trade up. "We would urge first-time buyers to be very cautious about opting for SO, which they may remain trapped in if they want to start a family and move to a bigger property," says John.
Housing Minister Grant Shapps realises that the squeeze is on for FTBs: "Just as anyone buying with a mortgage can feel their new house is their home, so should anyone buying through a shared-ownership property. I'm determined that we pull out all the stops to help those who want to get on the property ladder to do so."
Shapps, who is quick to point out he has held meetings with industry leaders and launched the new FirstBuy scheme for those struggling to save up a deposit, articulates a cross-party consensus that the first-time buyer situation will not disappear without a supply remedy.
John and her colleagues from Priced Out, who have been burning the midnight oil trying to find ways forward for "generation rent", says the Government "needs to focus on long-term, structural reforms, including strengthening tenants' rights, building more homes and enforcing sensible lending".
Meanwhile, many FTBs will opt for shared ownership. For many wishing to own their own home, there is no alternative.Reuse content