In February 2021 SO Resi (MTVH) launched a report: Shared Ownership Market Review 2020. The underlying research was conducted by the Cambridge Centre for Housing & Planning Research (CCHPR).
The report states that demand for what the authors describe as an ‘affordable route to home ownership‘ is growing. In his introduction Kush Rawal, Director of Residential Investment at MTVH, said:
“We are pleased that this report – the first of many that we plan to commission – proves the valuable role that shared ownership has in helping people take their first steps on the property ladder. We are determined to guide people every step of the way, with simple, clear and transparent language that ensures that there are no surprises down the line.”
Is shared ownership ‘a great product’?
It is perhaps not altogether surprising to see a focus on demand and on facilitating entry to shared ownership schemes. On the other hand, it’s disappointing that evaluation of longer-term outcomes and impact for shared owners themselves is conspicuous by its absence. Yet there are tantalising hints the assertion that: ‘Shared ownership is a great product and it works’ isn’t backed up by the research.
“As our number of shared owners have grown, it’s inevitable that you are going to come across a greater number of people for whom it just didn’t work out for whatever reason and their criticism now needs to be listened to.”
‘”Lots of people say shared ownership is a great product, but people become increasingly dissatisfied with it over time.’“
“People come to shared ownership wanting to own 100% of their home but however good the customer feedback there was still a sense of dissatisfaction with the systems for buying further shares.“
SO Resi case studies
The report includes a few case studies. These are similar in style and content to those found in shared ownership adverts and advertorials. Unfortunately, the research team did not interrogate discrepancies between the reported aspirations of first-time buyers and their likely future prospects as indicated by statistics presented in that same report. (Nor any potential gap between the research team’s understanding of them as ‘residents’ and their own understanding of their legal status vis-a-vis their home).
“… long-term our plan is to staircase to 100%”. (Olly and Jess, SO Resi Alford residents)
“… it means less stress if and when I want to sell my home further down the line”. (Helen Lambert, SO Resi Ware resident )
“Shared ownership was an opportunity for us to invest in something of our own”. (Terry Harvey, SO Resi Ealing resident)
A foot on the property ladder?
According to the CCHPR research only 2-3% of owners staircase to 100% each year. And even this statistic is likely to be an over-estimation; it had apparently not occurred to the research team to analyse staircasing numbers between shared owners staircasing to 100% in their own home, and those undertaking simultaneous staircasing and selling purely in order to sell.
The data suggested that: ‘the majority of those who are going to sell, tend to do this within the first five years but a larger number remain in their property for the longer term’. The report didn’t address the key question of whether shared owners remain by choice or necessity. Nor did the research team assess how many shared owners successfully transition to full ownership via selling their share.
But overall the data clearly indicated that the aspiration to staircase to 100% was unlikely to be achieved. Many shared owners were likely to find that their starter home didn’t in fact propel them up the property ladder. Worryingly, an increasing number would find themselves at risk of repossession, with no reimbursement of any of the monies paid for their home.
Who exactly is shared ownership a great product for?
The final appendix to the CCHPR/SO Resi report included concerns raised by the Law Commission:
‘Members of the public do not always exactly understand how shared ownership schemes operate, or the precise legal nature of the legal arrangement which the purchaser of a shared ownership property is entering into… In effect, the shared ownership leaseholder is at risk of losing his or her lease, and the entire purchase price paid for it, for non-payment of rent. There is no relief available from this outcome, such as there is where an ordinary long leaseholder loses their lease through forfeiture’.
Overall, this report is more concerned with risks to institutional lenders than to shared owners. Shared ownership is apparently an attractive proposition for lenders and investors, generating relatively secure income streams.
Is shared ownership a ‘great product’ for shared owners themselves? It’s a question CCHPR and SO Resi pretty much fail to address. Nonetheless, the research strongly implies that shared ownership model does not deliver on the promises made for it.
I agree here that “Shared ownership is apparently an attractive proposition for lenders and investors, generating relatively secure income streams.”
In my experience and those of nearby residents the financially vulnerable are being used as a cash cow in every avenue possible. There is so little protection for those in shared ownership property that even the threat of non payment of service charges meaning forfeiting your lease is enough to stay quiet and not raise issues that simply are unjust.
This is why when you see shared ownership marketing and housing associations “research” you’ll never have a true view. People are too fearful to speak up. You would be too if you’d spent every penny you have investing in a home riddled with problems but you could lose. Housing associations and all the related income streams are secure, there’s no fear here and 100% of the legal protection.
Research needs to be commissioned independently, to obtain the real life everyday views rather than the polished opinions of 2%