I’m an optimist so I’ve always been aware of the positives of shared ownership.
The upsides
Since I bought my 40% share in 2013, open market rents have increased so much there is no way I could afford to rent privately now. And, if I’d rented the whole time, I wouldn’t have gained the equity I’ve built up in my home.
The downsides
On the other hand, my rent on the landlord’s 60% share went up faster than my wages. And, although most of my neighbours are lovely, my housing association failed to act on my complaints about one particular neighbour’s anti-social behaviour. Estate rent charges (also known as estate service charges) have also turned out to be a problem for me.
I managed to staircase to 100%
At first I hoped to sell up and downsize once I’d paid off my mortgage. Though I was a bit worried that my problem neighbour might cause me problems selling if I had to declare the issues I’d faced with them.
Since then I made a judgement call to purchase the remaining 60% share. I’m hoping that my neighbour eventually moves out. If I hadn’t gone ahead when my mortgage was due up last year, I might have never been able to afford to staircase to 100%. I was all too aware that house prices would most likely continue to rise. Also that stamp duty would probably become more costly as time went on.
I didn’t understand how estate rent charges would affect me
What I didn’t know about was estate rent charges. I read the Shared Ownership Resources feature: Estate service charges: should I be worried?
But now I’ve realised that I face a double disadvantage.
Duplicate estate rent charges
I pay two estate rent charges; one to the estate management company and one to the housing association.
I found out about the potential of a second rent charge, from my very efficient solicitor, during the conveyancing process. But it wasn’t confirmed until nearly completion. It was a horrible shock and I really didn’t know what to do.
Shared ownership was the only way for me to own a home – be that by staircasing or moving on. However, I couldn’t even entertain selling because of my neighbour and the rules about declaring ASB (which would reduce my capital). In addition, there were no guarantees that the second rent charge wouldn’t have been picked up by a buyer’s solicitor. So I was damned if I did and damned if I didn’t… It’s a gamble either way! I had to weigh up what was in my best interests, and hope that any future reforms will help me in my situation.
My housing association refused to vary my lease
Both estate rent charge arrangements included draconian measures in the event of arrears (under Section 121 of the Law of Property Act 1925). When I staircased to 100% I was able to vary the clauses regarding Section 121 with the estate management company. But my housing association refused..
My solicitor says the situation of paying two different estate rent charges – on staircasing to 100% – is not unusual for many ‘affordable’ homes. It’s an emerging issue, which affects all the homes on my estate. I fear this is going to sting many shared owners as they staircase to 100% and obtain the freehold. Most shared owners have no idea until they’ve bought and suddenly get an unexpected demand from the housing association. It was a bitter pill for me to swallow, but I was stuck between a rock and a hard place.
Campaigning for a better deal on estate rent charges
Now I’m in touch with HorNet (the Home Owners’ Rights Network). HorNet campaigns for a fair deal for homebuyers on new-build estates that haven’t been adopted by the local council. They’re concerned about homeowners who are liable for costs they have no say over, and which aren’t regulated like standard service charges.
I already wrote about my experience of shared ownership back in in 2022 (My SO Home: No. 20).
But I wanted to write this update to warn other shared owners considering staircasing to 100% to be aware of risks associated with estate rent charges. Also to encourage anyone who’s affected by the same issues as me to get in touch with HorNet for information and support.
Featured image: Rodion Kutsaiev on Unsplash
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