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’.’.
Adding:
“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.
‘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.
Housing associations
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.
Property portals
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.
Mortgage lenders
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.
Mortgage brokers
It’s probably not surprising that some mortgage brokers adopt the same terminology as mortgage lenders.
Councils
Shared ownership has largely been the preserve of housing associations. But some councils are getting in on the act.
Journalism
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. (Even though advertorials should be clearly identified as such).
Can you please explain in simple terms why ‘part-buy part-rent’ terminology is misleading? Thanks
Thanks for your question, Harry. In short, the slogans ‘part buy, part rent’ and ‘it’s yours’ may not appear inherently misleading. But using those slogans in a context which doesn’t clearly explain risks and restrictions that are specific to shared ownership is misleading.
‘Part buy, part rent’ is presumably an attempt to concisely capture the nature of an arrangement where people purchase an interest in a lease (cash or mortgage) and pay rent on the landlord’s equity share. But, from a legal perspective, shared owners have fewer rights than people who purchase outright (whether freehold or leasehold). And they face greater risks.
This is because shared ownership is actually an assured tenancy (or an assured shorthold tenancy depending on the ground rent).
So, using the slogan ‘part buy, part rent’ without explaining applicable risks and restrictions, means that people may make purchase decisions based on their understanding of ‘buying’ and ‘renting’ rather an understanding of what ‘assured tenancy involves. They may not even know that shared ownership is an assured tenancy arrangement!
What are your thoughts on an appropriate wording that the providers should be using instead?
Thanks for your query, Sarah. The ASA ruled that ‘part buy, part rent’ and ‘it’s yours’ slogans are misleading unless – and it’s an essential proviso – risks associated with shared ownership as an assured tenancy are clearly communicated.
There are three ways of tackling this.
Firstly, create a different slogan which more clearly captures the legal actuality of shared ownership. I don’t envy the copywriter faced with that challenge!
Secondly, continue to use the same ‘part buy, part rent’ slogan but don’t omit restrictions and risks of shared ownership as an assured tenancy from advertisements. Again, not necessarily an easy task.. But essential if homebuyers are to exercise their rights, as consumers, to informed decision-making.
Thirdly, don’t change the messaging, change the product instead. Shared ownership doesn’t have to be an assured tenancy. If legislation were updated to make shared ownership a ‘conventional’ form of leasehold like any other then the need to explain risks and restrictions arising from SO as an assured tenancy would disappear. This is my preferred option, and I’d hope it’s one that shared owners and housing associations alike could agree to lobby for. (Probably the conveyancing sector too!).