The Advertising Standards Authority (ASA) ruled – on 21 September 2022 – that the description ‘part buy, part rent’, or similar, in advertisements for shared ownership is misleading (unless risks associated with the tenure as an assured tenancy are clearly specified).
The ASA say:
“We… understood that there were potential risks that existed with Shared Ownership which would not exist for those buying a property outright. Specifically, Shared Ownership schemes were, in the eyes of the law, considered to be ‘assured tenancies’.’.
“We therefore considered that the ad [sharedownership.net] should have made those risks clear when describing the scheme as “part buy, part rent”, or stating “It’s yours” and by omitting that material information, the claims exaggerated the level of ownership and proprietary rights attained by those who took on a Shared Ownership arrangement. For those reasons, we concluded that the ad [sharedownership.net] was misleading.”
The ASA also upheld a complaint that sharedownership.net misleadingly omitted information related to the costs of lease extension. However, they did not uphold a complaint that the claim “You can usually staircase…. all the way up to 100%” was misleading.
The ASA rulings and full report are available here. Shared Ownership Resources will publish further commentary on all three aspects of the ruling over the next few weeks.
‘Part buy, part rent’ terminology
So just exactly how widespread is ‘part buy part rent’ terminology? In short, it’s pervasive. Many housing associations rely on ‘part buy, part rent’ terminology, or similar, to market shared ownership to potential buyers. But the term also been taken up by property portals, mortgage brokers, mortgage lenders, councils and journalists amongst others. Explanations of the assured tenancy (or assured shorthold tenancy) nature of the shared ownership tenure are, however, much less common.
The examples provided below aren’t exhaustive. But they give an idea of quite how widespread the use of ‘part buy, part rent’ terminology, or similar, has become in the housing association sector.
On 14 May 2021 Shared Ownership Resources co-wrote an Open Letter to James Munro, Head of the National Trading Standards Estate and Letting (NTSELAT) Agency Team.
The letter made a number of recommendations to assist NTSELAT in developing best practice guidelines for estate and letting agents. One of the recommendations was to specify that shared ownership is an assured tenancy until 100% staircasing is complete.
In May 2022 NTSELAT issued new guidance for agents. Unfortunately that guidance didn’t take on board this recommendation. In fact, by conflating shared ownership with conventional leasehold, the guidance perpetuates confusion regarding the nature of the tenure. ‘Part buy, part rent’ terminology continues to be used on property portals. as is apparent from the examples below.
On 29 April 2021 Shared Ownership Resources sent an Open Letter to Newbury Building Society asking the following question, amongst others.
“When you said ‘first-time buyers of shared ownership aren’t any different from any other first-time buyer’ did you take into consideration risks arising for shared owners from their legal status as assured tenants?”Shared Ownership Resources Open Letter to Newbury Building Society
Their response: “[your questions] would be more suitably directed to a housing association/lawyer for a response”. This was concerning. In a 2017 article Shared Ownership: Risks and rewards for lenders law firm Walker Morris offered the following advice.:
“it is incorrect, and therefore misleading and potentially an offence in contravention of the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs) for housing associations, landlords, developers or lenders to advertise or refer to shared ownership schemes as “part buy, part rent”, or indeed by using any other terminology or slogan which suggests that the customer purchases anything other than an assured tenancy leasehold interest at any time prior to the 100% staircasing stage”.
Regardless, a number of mortgage lenders continue to promote shared ownership mortgages – and the shared ownership scheme – using ‘part buy, part rent’ terminology.
It’s probably not surprising that some mortgage brokers adopt the same terminology as mortgage lenders.
Shared ownership has largely been the preserve of housing associations. But some councils are getting in on the act.
Some newspapers have content partnerships with those responsible for national shared ownership campaigns. It isn’t always easy to distinguish between editorial and advertorial content. (However, advertorials should be clearly identified as such).