Housing crisis: Shared ownership an ‘unbearable reality’ which has ‘failed to deliver’, MPs warn

Shared ownership has “failed to deliver” as an affordable route to home ownership, MPs have concluded, with many residents “trapped in properties they can no longer afford”.

Rising service charges, liability for repairs and complex leases are making the scheme an “unbearable reality”, found a report from MPs on parliament’s Levelling Up and Housing Committee. Chaired by Labour MP Clive Betts, the committee has called for “urgent and significant” reforms.

Shared ownership works by allowing homebuyers to buy a share of a property and pay rent on the remaining share. Residents must also pay service charges and have the option to “staircase” up to 100% by purchasing parts of the share they did not originally buy.

“Shared ownership was hailed as an answer to the housing crisis especially for first-time buyers. However, we have found that for too many people shared ownership becomes an unbearable reality, where a blizzard of charges and an unfair burden for maintenance and repair costs means that they are unable to afford full homeownership,” said Betts.

Rent increases are capped, but service charge increases are not. As part of an inquiry into the tenure, MPs heard evidence from multiple residents who were struggling to cope with rises and found their ambitions of 100% ownership impossible to achieve.

One shared owner found price hikes meant plans to staircase has been “blown out of the water by these constant rent rises”.

Another described service charge increases of 170% within two years of moving into a property. One resident paid £4,589 in annual service charges, an increase of 39% in two years.

It was designed as a way to help more people onto the housing ladder. Yet in a stark warning, MPs said the scheme instead risks a two-tier market where shared owners cannot sell their properties, and instead become trapped paying rising rent and fees with no hope of escape.

“Rising rents, hefty service charges, complex leases, disproportionate repairs and maintenance costs are experienced by too many people who take the shared ownership route. The government needs to take clear and urgent action to tackle these issues and ensure shared ownership genuinely delivers affordable homeownership,” Betts added.

Almost half of new homes constructed under the government’s Affordable Homes Programme are being sold as shared ownership, with around 202,000 households in England living in shared ownership properties.

Almost three quarters of shared owners are aged between 20 and 40, while half are single adults.

Despite not owning 100% of their home, many shared owners are responsible for 100% of maintenance and repair costs – something the committee’s report described as “unfair”.

The MPs called on the government to urgently review service charges and repairs, ensuring residents only pay in proportion to the share of the property they own. They also asked the government to see if Rent to Buy presents a better alternative for those wishing to get on the housing ladder.

They also recommended that Homes England, the body which runs the scheme, should make clear to buyers how likely they were to afford to staircase.