A Fair Housing Market for All

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The All-Party Parliamentary Group for Housing Market & Housing Delivery launched their report ‘A Fair Housing Market for All‘ in March 2021.

Last year I submitted written evidence to the APPG on my concerns about shared ownership. I was subsequently invited to make a presentation to the oral evidence sessions on 11 November 2020. My focus was affordability over the long-term, and transparency by housing associations about long-term costs and risks of shared ownership.

I am pleased to see the following included in the final report as one of five key recommendations:

‘The Government should consider mandating better information on leases, service charges and enfranchisement for Shared-Ownership purchases’.

Whilst future transparency on long-term costs and risks does nothing in itself to help legacy shared owners – lumbered with short leases, and statistically unlikely to staircase to 100% or to sell on to full ownership – nonetheless all first-time buyers are entitled to accurate and complete information about the shared ownership tenure.

Selected extracts from my presentation

It is irresponsible of housing associations not to provide sufficient information about long-term costs and risks to enable buyers of shared ownership homes to make informed financial decisions – prior to purchase – about whether or not shared ownership is an affordable option for them.

One problem is agreeing what affordability actually means in practice. This is, of course, much more difficult than it sounds. Affordability will vary from one household to another, depending on aspects such as financial commitments over and beyond housing costs, and on how households expect their income to change in the future (whether up or down).

What is absolutely key to defining what affordability means is determining over what timescale it is being measured.

At present affordability seems to be defined in relation to an extremely short time-scale. Wilfully maintaining a blind spot to unavoidable future costs does a great disservice to first time home buyers of shared ownership.

In theory, consumer protection regulations should ensure that housing providers reveal anything that would materially affect a buyer’s decision-making process. It’s not evident that consumer protection regulations are effective, or that the ASA is keen to enforce them.

It is hugely disingenuous to claim that the objectives of the Nat Fed 2020 marketing campaign are to end confusion around shared ownership and to bust myths; and then proceed to simply set up straw men to knock down.

An argument sometimes made is that future charges are only a fraction of the market value of that home at that time (an assertion obviously less true for anyone who has purchased a home with fire remediation issues). But there is a lot of clear blue water between a paper valuation of a home and home owners’ access to cash to pay charges on that home. How have we provided decent affordable homes for people if they can only raise cash needed to pay charges by selling that home? Especially given that the focus of shared ownership marketing is on staircasing and therefore clearly implies purchasing a home for the medium to long-term.

What is beginning to play out is a generation of home buyers bought to extreme financial and emotional distress by an interplay of inadequate information at the point of purchase, short leases, lease extension, staircasing and liability for fire remediation costs.

Costs and risks are mounting up in ways that are very far removed from the over-simplistic marketing rhetoric. And shared owners who simply cannot keep up with the mounting costs may lose not only their home, but any equity invested in it so far, due to the assured tenancy nature of the tenure. Shared ownership is really not home ownership in the sense that people are led to believe given the over-simplistic marketing messages.