Shared ownership, which was designed to help people unable to place large deposits and secure large mortgagees get on to the property ladder, is under scrutiny.
Shared ownership allows aspiring homeowners to buy a part of a new home (between 25% and 75%) then rent the remainder from a housing association, with the option to increase their ownership of the property at a later date.
Giles Peaker, editor of the Nearly Legal housing law blog, wrote for the Guardian that there is no such thing as shared ownership. Instead he believes that shared ownership is “”just a tenancy, with an expensive down payment for an option to buy the whole property at a later date”.
One person who took part in a shared ownership found that after falling behind on her rent she was evicted from her part-owned property and the court ruled that she had no right to the £30,000 she had already paid for her share.
Traditional home ownership is unaffordable for most young people and shared ownership was one of the original measures to try to place home ownership within easier reach for people in low and middle income brackets. The problem many are seeing is that shared ownership is much less flexible than renting or the outright owning of a property.
The selling of a proportion of a shared ownership property is a slow process as demand is low for second-hand shared ownership properties and the sale must often be left to the housing association. This means it can take months to find a buyer and subletting is not permitted so shared owners cannot rent out their property should their circumstances change.
Shared owners are not exempt from the annual rent increases or extortionate fees common in the private rented sector. Rent on the proportion of the property you don't own is regularly increased and monthly service charges are prone to sudden large increases. You are also solely responsible for repairs and maintenance of the property, regardless of how much you own.
Only 22% of shared owners have successfully completed the outright purchase of their homes, leaving many to struggle with the problems of trying to sell a part-owned property should they need to move for any reason.
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