The Lead Untangles: Is shared ownership a 'trap'?

Marketed as affordable home ownership, critics say the government-backed housing scheme can trap buyers in rising costs. We dig into the detail.

Is shared ownership also shared risk? Pic: Unsplash

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At a glance facts

Shared ownership is meant to offer an answer to the housing crisis for aspiring homeowners, including lower-income households.

The National Audit Office [NAO]has highlighted problems with shared ownership, including rising service charges and the transaction costs of buying bigger shares of a property, amid claims by residents they are trapped by the model.

How does shared ownership work?

Shared ownership allows eligible buyers to purchase a portion of a home – typically between 10 per cent and 75 per cent – while paying rent on the remainder to a housing provider, usually a housing association.

To qualify, households must earn £80,000 a year or less (£90,000 in London) and be unable to afford a suitable home on the open market.

Buyers take out a mortgage on their share and pay a deposit, usually between 5-10 per cent of that portion. Alongside mortgage repayments and rent, they also cover service charges and ground rent – costs that can rise over time.

Owners can increase their stake through “staircasing”, gradually buying additional shares in the property. But each step typically involves valuation and legal fees, which can make it costly to progress to full ownership.

All shared ownership homes are leasehold. Residents are responsible for their interiors and, if they live in flats or new build estates, may be liable to pay a share of exterior and communal area maintenance and repairs.

The context

Annual delivery of shared ownership homes has increased over the last decade from 11,128 homes in 2014-15 to 20,353 homes in 2024-25, according to the NAO, making it the largest affordable housing scheme in the country.

There are around 250,000 shared ownership homes in the country – a mix of new build and resale. Most are in London and the South East, where it is even harder to get on the housing ladder than the rest of the country.

Many residents are content with shared ownership, and analysis for the Leeds Building Society last year found a number of benefits. Its report said that after shared owners had been in their property for 10 years, it would cost less than renting in 93 per cent of areas. Growing equity value meant shared owners would be on average £29,000 better off than private renters by the 10-year mark – £42,000 in London. “Shared ownership delivers strongly,” concluded the report’s authors.

The NAO conclusion was less glowing, saying: “Complexities around service charges and the ‘staircasing’ model (whereby customers increase the proportion of the property they own rather than rent) mean many who take up the scheme don’t fully understand the longer-term financial risks.”

Shared owners bear the full brunt of maintaining their property and, particularly if they are living in flats, uncapped service charges – even though they only own a share of it.

The NAO added: “Customers report concerns with rising costs such as increased service charges over time, along with transaction costs that apply each time shared owners want to buy a bigger portion of their property.”

Others have been more damning. In a 2024 report, the Levelling Up, Housing and Communities Committee said, “rising rents, uncapped service charges, liability for repairs and maintenance costs and complex leases make shared ownership an unbearable reality for many people seeking to become 100 per cent homeowners”.

Repairs and maintenance services are often not done in good time and are of poor quality, the committee found, and shared owners face difficulty in selling their shares if properties are affected by remediation issues, “with many people ending up ‘trapped’ in properties they can no longer afford.”

Speaking to the BBC last week after the release of the NAO report, single parent Jamie, who bought a 25 per cent share of a three‑bedroom flat in north London, said her service charge had increased by 50 per cent in less than four years – to more than £8,000 a year – meaning her housing costs were more than half her income.

Complaints to the Housing Ombudsman have risen sharply in recent years, proportionately more than the increase in shared ownership properties. But there are wider questions too – whether shared ownership is a progressive use of taxpayers’ money as a response to the housing crisis, and how sustainable it will be as the market changes.

A shared ownership-only development by housing association subsidiary Gecko Homes in the desirable South Manchester suburb Chorlton currently lists available flats (one- and two-bed) from £265,000 to £403,000, which might stretch some people’s definition of “affordable”. The average price of a two-bed flat in Chorlton is £210,000.

These flats are also not guaranteed to hold their price. In the North West, 41.6 per cent of flats were sold for a loss last year, according to the HomeOwners Alliance. In London it’s 40.9 per cent and in the North East 63.6 per cent.

What people are saying

“Shared ownership remains an important route into home ownership, but it is complex, and weaknesses in information, affordability, data quality and redress mean that Government does not yet have a full understanding of how the model works for consumers.” – Gareth Davies, head of the NAO

“If we really want to help people own their own home, it is incumbent on the Government to see how they can make this scheme work better.” – Sir Geoffrey Clifton-Brown, chairman of the Public Accounts Committee

What happens next?

Housing minister Matthew Pennycook says he expects providers to improve conditions for shared owners under the new social and affordable homes programme launching this year, “giving greater consideration to long-term customer affordability, increasing transparency and fairness on costs, and giving customers the ability to opt out of fees for services that are optional”.■

About the author: Kevin Gopal is a Manchester-based journalist who has returned to freelancing after editing Big Issue North from 2007 until its closure in 2023.

About The Lead Untangles: In an era where misinformation is actively and deliberately used by elected politicians and where advocates and opposers of beliefs state their point of view as fact, sometimes the most useful tool reporters have is to help readers make sense of the world. If there is something you would like us to untangle, email ella@thelead.uk.

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