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Exploring Experiences of Shared Ownership Housing: Reconciling Owning and Renting

Authors:

Abstract

This report provides findings from ‘crisis moments’, a Leverhulme Trust funded research project. The research comprised: a series of 71 in-depth interviews that explored shared owners’ experiences in London, the South-East and East of England; 20 in-depth interviews with providers and stakeholders; and a total of six weeks’ observation in two housing associations, examining the day-to-day practices of managing shared ownership homes. The study objectives were to understand more about this hybrid housing tenure through considering stakeholder, resident and housing association experiences and perceptions of the tenure. We did so through examining various events, ‘crisis moments’, that were said to occur and occurred during a shared owner’s residence. This policy report is timely because the Department for Communities and Local Government (DCLG) (DCLG, 2015b: para 4.3) has promised that it will undertake a review of shared ownership focusing on possible longer-term options for change to report to minsters in summer 2015. This policy report provides empirical detail of the everyday lives of shared owners, their struggles and their perceptions about the project, which should support that review.
Exploring experiences of shared
ownership housing: reconciling
owning and renting
JULY 2015
Exploring experiences of shared ownership housing 2
Dave Cowan, University of Bristol
Alison Wallace, University of York
and
Helen Carr, University of Kent
Exploring experiences of shared ownership housing 3
Exploring experiences of shared ownership housing 4
Acknowledgements
The research team would like to thank the following: the Leverhulme Trust, which funded this
study; the many shared owners who agreed to share their experiences with us; the key
stakeholders who gave us their time and especially the two registered providers here termed
Fixhamand Greendale who kindly gave us access to their operations.
The cover photo (Birmingham City Library/Birmingham Post) depicts the first buyers of
Birmingham’s 50:50 scheme in 1975.
Disclaimer
The views expressed in this report are not those of the Leverhulme Trust, Fixham or Greendale
or any other agency. Every effort has been made to trace copyright holders and to obtain their
permission for the use of copyright material. The authors apologise for any errors or omissions
and would be grateful if notified of any corrections that should be incorporated in future
reprints or editions of this report. Responsibility for any errors rests with the authors.
Exploring experiences of shared ownership housing 5
Contents
Acknowledgements 4
Disclaimer 4
Contents 5
Summary 8
Key findings 8
Policy recommendations 12
1 Introduction 19
Research aims and methods 21
Report structure 22
2 Why support homeownership and what can it achieve? 23
Introduction 23
Homeownership 23
Shared ownership: a history 25
Chronology 25
Foundation stones 28
Subsequent periods: recognising strengths 28
and weaknesses 30
Building on success? 31
Conclusion 32
3 The lease 33
Fundamental clauses 33
Other core terms 34
Audience 35
The 2009 redraft 36
Legal constructions: Richardson 36
Legal responses: other 38
Conclusion 38
4 Introducing the case study providers 39
Greendale 39
Fixham 42
Conclusion 44
5 Understanding the shared ownership product 45
Introduction 45
Staff responses 45
Shared owners’ own research 47
Registered provider as source of advice and information 48
Solicitors as a source of advice and information 50
Disagreement with the lease 52
Consequences of misunderstanding the lease 53
Conclusion 53
6 Property and estate management 55
Exploring experiences of shared ownership housing 6
Property management 55
New build: quality issues 55
Improvements 56
Third party-managing agents 57
Service charges and estate management 58
Rent and rent arrears 59
Communication 61
Conclusion 62
7 Managing the share: selling on and buying up 63
Introduction 63
Resales 63
Staircasing 65
Conclusion 67
8 Reconciling tensions in shared ownership: social or private? 69
Introduction 69
Do policy makers or providers see shared ownership as social or market housing? 69
Who and what is shared ownership for? 70
Management 71
Marketing 72
Shared ownership tenure 73
Do shared owners see themselves as social or private housing? 74
Conclusion 77
9 Reconciling tensions in shared ownership: owner or tenant? 78
A significant question 78
Shared Owner perceptions 79
Conclusion 82
10 Conclusions and policy recommendations 83
Locating shared ownership 83
Discriminating shared ownership 84
Characterising shared ownership 86
Policy recommendations 87
References 94
Appendix A: Shared owners topic guide 99
Appendix B: Overview of shared owner participants 101
Fixham Sample 101
Greendale Sample 104
Exploring experiences of shared ownership housing 7
Exploring experiences of shared ownership housing 8
Summary
This report provides findings from crisis moments, a Leverhulme Trust funded research
project. The research comprised: a series of 71 in-depth interviews that explored shared
owners’ experiences in London, the South-East and East of England; 20 in-depth
interviews with providers and stakeholders; and a total of six weeks observation in two
housing associations, examining the day-to-day practices of managing shared ownership
homes. The study objectives were to understand more about this hybrid housing tenure
through considering stakeholder, resident and housing association experiences and
perceptions of the tenure. We did so through examining various events, ‘crisis moments’,
that were said to occur and occurred during a shared owners residence.
This policy report is timely because the Department for Communities and Local
Government (DCLG) (DCLG, 2015b: para 4.3) has promised that it will undertake a review
of shared ownership focusing on possible longer-term options for change to report to
minsters in summer 2015. This policy report provides empirical detail of the everyday
lives of shared owners, their struggles and their perceptions about the project, which
should support that review.
Using this lens of ‘crisis moments’, the research considered what difference, if any, the unique
construction of shared ownership tenure made to residents’ experiences of home.
Key findings
The drive to homeownership evident during the twentieth century has slowed down and
has been in reverse, a trend that has continued since the global financial crisis. The Coalition
government developed a number of initiatives designed to enable households to access
homeownership, such as help to buy and greater incentives to exercise the right to buy.
Despite the relatively weak evidence base for the benefits of lower-income homeownership
in the UK, shared ownership remains a politically pragmatic policy approach to combat
rising entry thresholds to homeownership and weaknesses in other tenures.
Shared ownership has been particularly favoured over the last 25 years in public grant
funding to the social sector because of its perceived benefits and greater output for capital
investment than other general needs social housing.
A significant coalition of political parties, pressure groups and other non-government
organisations, including housing associations and tenants’ rights groups, have now publicly
endorsed the need for expansion of shared ownership.
As a result of this support, some weaknesses of shared ownership that require reform have
been identified. Those weaknesses have yet to be tackled. The government review will need
to address these weaknesses head on and produce action, which almost certainly should
result in a legislative programme for change.
Exploring experiences of shared ownership housing 9
The shared ownership lease is the key document structuring the relationship between the
parties. It is a lengthy, complex document which is not necessarily easy to translate because
there are many implicit elements of it as a result of case law interpretations of words and
statutory overlays.
The Homes and Community Agency’s investor function requires providers to use certain
fundamental terms in all grant-funded properties. The most significant such term is the
mortgagee protection clause (MPC). The audience for the lease is not necessarily the parties
but the lender, and this was a key concern in the 2009 redraft.
Legal responses to the lease recognise its hybrid nature. It is on the one hand an assured
tenancy, with the security provided under the Housing Act 1988, as well as being a long
lease, for the purposes of other sets of statutory protections, and a contract, setting out the
legal relationship between the parties.
The potential problems with service charges, evident in all residential leases, are
exacerbated within shared ownership, both in terms of responsibilities for all repairs and in
the apportionment of charges.
Both case study providers Greendale and Fixham have provided shared ownership for a
lengthy period.
Both have a tenure neutral approach to shared ownership management, although Greendale
aligns shared ownership with leaseholders, and Fixham more broadly.
Both might be described as entrepreneurial organisations working at the interface between
socialcommercial practices. Both can evidence considerable attempts to alleviate issues
among their shared owners, including downward staircasing.
Both have issues with third-party managing agents and have strategies to deal with them,
albeit recognising that many of the problems are beyond their control.
During the observation phase of this work, slightly different tensions became apparent in
the management of the shared ownership stock. For Greendale, there were emerging issues
about repairs. For Fixham, there were emerging issues about shared-owner satisfaction.
Shared ownership arrangements can be complex and confusing and prospective shared
owners are not necessarily best placed to understand the obligations and the extent of them,
although both providers went to some lengths to communicate the nature and extent of the
obligations to buyers. However, resale buyers may not receive the same level of information.
Both providers had panels of legal advisers, who had experience of shared ownership
transactions and who assumed that buyers would be given information about the lease and
information about the nature and extent of their obligations. Modern conveyancing practice
does not necessarily support that assumption and few buyers were provided with much in
the way of advice.
Exploring experiences of shared ownership housing 10
While some owners clearly did not appreciate the detail of their lease, what was also
apparent was that over time the position came to be one of disagreement with the lease.
Claims to the provider were therefore also based on appeals to reason and for advice and
support rather than wilful misinterpretation. Providers’ reaffirming the synergies between
the responsibilities of shared owners and full homeowners in the wider market frequently
served to emphasise the imbalance in the relationship and the misnomer of the ‘shared’
epithet.
There were particular concerns about the quality of new-build properties in one of the case
studies but the other case study was not immune from such complaints. And those concerns
were exacerbated by problematic communications between the relevant parties and the
defects guarantee period running out.
Buyers did not appreciate having to pay an administration charge to register improvements
to the property and some decided not to register the improvements at all as a result.
There were particular and egregious concerns about third-party managing agents as
regards their quality and costs. Buyers tended to blame the providers (as well as the
managing agent) for the problems, even though they felt similarly powerless and out of
control. Buyers often expressed themselves as feeling as if they were the third party and,
therefore, out of the picture.
Service charges remain the most significant area of concern for shared owners, the
problems ranging across: miscalculation; being charged for services not in fact provided; the
lack of control they had over the service charges; and understanding their apportionment.
Few buyer participants admitted to missing a payment of rent, service charge or mortgage,
but both providers had well-oiled mechanisms for assisting buyers and notifying lenders.
There was some concern at the high proportion of salary being used to pay housing costs
and future mortgage base rate increases may have significant effects.
Both providers had communication issues with their buyers, and buyers commonly felt that
they were being treated like general needs tenants in the way that the provider
communicated with them.
In some respects, it appeared that resales were regarded as an afterthought or not part of
the provider’s core business. Models of dealing with resales of property about to be
repossessed differed between the organisations. Fixham took a proactive approach and
“saved” a number of properties to the tenure.
Staircasing is a selling point for the tenure. That is, the ability to staircase upwards was of
particular interest to our buyer sample. Buyers were savvy about staircasing. They
recognised that they would find a larger share harder to sell, if they decided to do so. There
were disagreements and concerns over valuing practices and costs of staircasing and
resales.
Exploring experiences of shared ownership housing 11
Shared ownership is a hybrid tenure which challenges existing binary characterisations
between social and private housing, but is marketed very much as a private, aspirational
tenure to particular cohorts as the first rung on the property ladder.
Although shared ownership is meant to provide a tenure home for a particular set of
households, largely unable to afford to buy on the open market, or unable to access general
needs social housing or wishing to move from it, and having a low income, some of our
buyers were unclear as to why they were selected. Further, it is also the case that shared
ownership properties in certain locations are pricing out low-income households.
The management of shared ownership housing tends to be different from the management
of general needs social housing, with a more hands-off approach in respect of shared
owners. Simple satisfaction surveys do not necessarily capture the complexity of the
relationship between the buyer, the property and the provider, and one should be wary of
ascribing too much influence to them.
Shared owners are clear, in general terms, that they are distinguishable from general needs
social housing and do not see themselves as being part of social housing at all. They resent
being treated as if they are. Shared ownership is a hybrid tenure, so that rather than there
being a binary divide between owning and renting, it operates along a continuum.
This is a significant question because shared ownership is successful because it is regarded
as, and marketed as, “ownership”. Most buyers saw themselves as being owners because
they were in control of their homes and because they would mark themselves as owners
when completing forms.
However, this feeling of being in control was often out of synch with the rest of our
interviews in which the buyers had described themselves as being out of control. These
contradictory feelings were particularly clearly expressed over the buyers’ lack of contact
with the provider. Buyers were quizzical about this, suggesting that they believed providers
would or should have taken an active interest in their capital asset; however, they were also
pleased that the provider did not take such an interest.
Exploring experiences of shared ownership housing 12
Policy recommendations
Shared ownership has slowly expanded since the first shared owners took the keys to their
property in 1975. As a favoured vehicle for affordable homeownership at a time when
traditional homeownership seems unachievable, it is likely that its expansion will accelerate.
There is political and policy consensus that shared ownership is an asset to the sector and
pressure groups which previously opposed its use are now supporting it. Government grant and
private equity flows into the sector and many buyers are pleased with the opportunity it offers.
Yet our research suggests that there are problems with the product that lead to lower
satisfaction levels than exist across social housing more generally. While our qualitative
approach has highlighted that that “satisfaction” is more complex than simple surveys and
questionnaires might suggest, and understandings about the tenure are contradictory (partly
because the tenure itself is contradictory), we do not see lower satisfaction as inevitable. We
propose a package of policy, legislative and organisational changes which we consider respond
appropriately to the problems we have identified and which should, at the least, form part of
the government review of shared ownership.
We recommend the following changes.
1. Clear, consistent marketing of shared ownership
We recognise that there are plenty of variations on the theme of shared ownership and
different types of interventions by providers, which are part of the distinctive and often
entrepreneurial spirit of the housing association movement. However, at heart, they are all
“part-rent, part-buy”, as is emphasised by the model lease and its fundamental terms. There
is evidence of confusion about the product which clear, consistent marketing would help to
remedy.
Clear, consistent marketing must reflect the reality and lived experience of shared owners
so that the gap between what buyers’ expect and that reality is closed. In so doing, this
should increase buyers’ satisfaction. For example, to describe the shared ownership product
in marketing materials as “literally shared ownership” creates expectations which the
product may fail to live up to. One way of closing that gap is to explain the product to buyers
prior to them viewing any property. Another example is that shared ownership is nearly
always described as a step on the path to full homeownership. Marketing material could be
more explicit in explaining that for some people full homeownership may be unattainable
but nonetheless shared ownership offers value in terms of security, stability and the
acquisition of a valuable asset.
Clear, consistent marketing should be provided by way of a key facts document which sets
out nationally agreed explanations of the offer, any distinctiveness about the particular
product on offer and the product’s legal status. The current document, provided at the time
of the redraft in 2009/10, is not used in practice and events as well as our understandings of
the lease have moved on since then.
A clear, consistent explanation of relevant eligibility criteria including any scheme-specific
eligibility criteria would assist with the development of the tenure, so that individuals can
Exploring experiences of shared ownership housing 13
easily understand whether or not they can access shared ownership. This is the role of both
help-to-buy agents and the provider.
2. The “social business”
The providers in this study would both describe themselves as social businesses, a phrase
which implies certain productive tensions for them. Buyers’ expectations can be raised and
dashed by a failure to appreciate the modern role of social housing providers. Buyers should
be made aware about the strengths of the social housing movement as well as its limits. For
example, one strength of shared ownership is that buyers were made to feel like owners by
virtue of the lack of contact between themselves and their providers. However, sometimes,
they would like their provider to appear to be taking an interest in its share of the property.
This is, again, a communication issue.
Providers should decide what their offer to buyers is and make that offer clear and
transparent. The issues here are around the extent to which they will act as a social safety
net and the offer to shared owners over their life course in the tenure. Therefore the
circumstances in which, for instance, they will make service charge reductions or provide
payment schemes or enable downward staircasing should be made explicit. There is a need
for such explicit statements to go beyond a once-and-for-all publication or a website, but to
be publicised more often.
3. Expectations: conveyancers
Many shared ownership providers have panels of conveyancers which are recommended to
buyers. Some assumptions can be made both by buyers and providers about those
conveyancers. Buyers may see them as being “part of” the provider and not acting for the
buyer; providers believe that the conveyancers, who have already been involved in shared
ownership transactions, will provide better quality information to buyers. There is no
evidence that either is the case.
Modern conveyancing practice is not equipped to provide information to buyers about the
specifics of shared ownership leases. Less reliance should, therefore, be placed on
conveyancers as information providers. It should not be assumed that conveyancers will
explain to buyers their obligations beyond providing them with a copy of the lease.
That increases the onus on providers to provide relevant, simple and clear information to
buyers. The rationale for the provision of that information is that buyers tend to have less
experience and knowledge about housing markets and the sales process than other first-
time buyers because of the eligibility criteria for the scheme and because shared ownership
and leasehold are not straightforward products.
Exploring experiences of shared ownership housing 14
4. Leasehold reform
Although the twin-track nature of the lease (being a long lease for certain purposes and an
assured tenancy) may have advantages to different sections at different times, it is
confusing, lacks logic and is difficult to explain to a lay audience.
It is clear from our data that certain aspects of the full repairing lease are (or become over
time) problematic to buyers and appear to be weighted in favour of providers and/or
lenders. If we are serious about shared ownership becoming the fourth tenure, then we
need to have a lease that is robust and sensible for all the actors. This is particularly true if
we accept that not all shared owners will become full homeowners.
A body like the Law Commission for England and Wales should be asked to recommend
changes to the law, taking account of the interests of all of the actors.
5. Lenderprovider communication
Lenderprovider communication is a crucial element of the shared ownership relationship
but one which is lacking, despite updated guidance and good practice. The use of service
level agreements can be valuable. However, most often, this value is personality-based and
the mobility of personnel has potential to damage ongoing relationships. Social housing
providers have wide experience and knowledge of how this can be rectified through, for
example, other partnership arrangements. That knowledge and experience can be used to
counteract this issue.
Named points of contact, which are kept updated, or generic email addresses can be
valuable tools (the latter were used successfully with the mortgage rescue scheme).
When lenders capitalise rent or service charge arrears, this can provide an immediate
solution to an issue for all parties. However, providers and buyers should be aware that it
can be a false economy because lenders will recoup that outlay subsequently. If there is a
lender resale of the property, the MPC will enable the lender to recoup that outlay. Better
communication and appreciation of the commercial realities at the initial stage, when
arrears arise in the first place, would lead to better communication between lender and
provider.
We also recommend that the Civil Procedure Rules Committee, the Civil Justice Council,
consider amending the recently updated Pre-Action Protocol for Possession Claims based on
Mortgage or Home Purchase Plan Arrears. If a clause was introduced requiring a lender to
have pre-action contact with the shared ownership provider, this would make a substantial
contribution to resolving this issue.
6. Practical changes: staircasing
Staircasing can be daunting and off-putting, particularly when there are extra costs
involved. Our data clearly indicates that most buyers intend to staircase when they access
shared ownership but various factors beyond life-cycle factors prove problematic. The
Exploring experiences of shared ownership housing 15
growing disconnect between earnings and house prices increases the difficulties in
staircasing. We suggest that there should be online and printed advice about points to
consider when thinking about staircasing (housing market, salary, future earnings potential
etc.).
Providers can better facilitate staircasing by removing or reducing upfront costs and/or
providing an online calculator that can show new housing costs as the buyer’s percentage
share changes.
7. Practical changes: third-party managing agents
Our research has identified some significant issues where third-party managing agents are
involved with the management of properties which include shared ownership units. These
problems are generally inherent in the leasehold relationship. However, our research
findings are that providers are often blamed for these issues, which are mostly outside their
control. This damages both the provider’s reputation as well as the shared ownership
product itself.
Providers should be proactive in: (a) explaining the management structure of shared
ownership units; (b) regularly updating shared owners about their interactions and
activities with the managing agents; (c) assisting shared owners, should they seek to
exercise their right to manage, participate in leaseholder/resident meetings, or set up
resident associations. The Residential Property Tribunal should always enable shared
owners to be represented in leasehold disputes even if they are not direct parties to the
lease.
8. Practical changes: service charges
Service charges are problematic in leasehold tenure generally. They feature regularly at the
Residential Property Tribunal. There are a number of statutory remedies but the
landlord/tenant relationship remains potentially antagonistic. Indeed, the tensions have
become more complex since the introduction of right to manage and collective
enfranchisement and the increasing number of lessees who are Buy-to-Let landlords.
Until there is reform that responds to the changing landscape of leasehold tenure, the best
method of managing the landlord/tenant relationship is to provide good quality information
upfront to occupiers and throughout the relationship. In particular, incomprehensible
service charge documents unnecessarily create mistrust. All parts of the organisation should
“own” this communication – as all parts of the organisation bear the brunt of inadequate
communication so as to ensure that such communications are personal, understandable,
clear and transparent, as well as providing adequate explanations for costs incurred. Being
able to provide this information annually with clear and transparent service charge
statements would ameliorate some of the ongoing problems and contribute to increased
satisfaction in the sector
Exploring experiences of shared ownership housing 16
9. Practical changes: administration charges
We recommend that providers review their administration charges to check whether they
are necessary and proportionate. In particular, shared owners find charges for making
improvements frustrating as they feel they are bearing the cost for work from which the
provider will ultimately benefit (even if that is not the case), and yet they are charged when
they inform the provider of the work. Clauses that require shared owners to return the
property to its original decoration when they sell are also potentially counterproductive and
reflect an old-fashioned attitude to shared owners rather than understanding them as
players within a housing marketplace.
10. Practical changes: organisations
What became clear to us during this research project is that provider organisations are
complex. Different elements within those organisations have different pressure points and
different working practices.
A whole organisation response to shared ownership would undoubtedly improve buyers’
experiences and contribute to increased satisfaction responses.
11. Resale
The government has been consulting on the resale process. The right of the provider to
nominate a subsequent purchaser has been regarded as a barrier to resales by householders
and lenders. The government is seeking to streamline the process and has made a variety of
different suggestions for reform, including removing the ability of the provider to nominate
a purchaser of a property where the former shared owner has staircased up to 100 per cent
or where the shared owner has yet to staircase up, or reducing the nomination period.
Our data from buyers supports a streamlining of the resale process. Buyers were concerned
about the level of fee charged by providers for marketing, a poor resales service offered by
providers and, in particular, the valuation process (believing generally that they would be
better served by the private market). The provider data does not necessarily accord with
those views, and recognises that buyers’ perceptions of the market may be skewed.
The loss of shared ownership stock to social housing is a political question. In our opinion,
to the extent that the resale market is streamlined, this raises questions as to the original
eligibility threshold for accessing shared ownership. If resale buyers do not have to cross an
eligibility threshold, why should original buyers? Therefore, our opinion on this issue is that
it is not a marginal question but absolutely centre-stage to the very underpinning of the
shared ownership offer.
As a result, we believe that a pragmatic compromise should be that buyers should be
entitled to sell their shares on the open market at any time but any purchaser from that
buyer should have to be approved by the provider.
Exploring experiences of shared ownership housing 17
12. Newsletters
Newsletters are undoubtedly useful. They are useful marketing devices as well as
communication and information provision. They can also be problematic and generate
dissatisfaction, however good the motive behind them.
Generic newsletters for all occupiers are unsuited to shared ownership or long leasehold.
More targeted information is undoubtedly the way forward including paperless
communication. That way forward is less frequent, but more targeted, communication
providing advice on specific shared ownership matters, updated policies or services
(including reminders about staircasing and mobility packages), services provided to buyers
struggling with their mortgages, rent or service charges.
13. Information and data collection
We live in a cost-cutting age in which national statistical databases are rigorously tested for
their utility. There are opportunities with shared ownership for additional data collection.
These opportunities will affect targeting, information provision and understandings about
the tenure, including supporting movement within and beyond the tenure.
The following data collection would appear to be important: identify moving destinations of
shared owners to understand housing pathways, for example, through the use of exit
surveys; and scrutinising lenders’ sale of properties and uses of the MPC to ensure that
providers and borrowers are not left with large debts.
In particular, such data collection would likely prove to be an encouragement to lenders to
enter this market, whose systems do not sufficiently differentiate between tenure types.
Therefore, the actual risks of repossession of shared-owner properties are largely an
unknown. A database of staircasing activity would also assist providers modelling and
business planning (although there is a database used by one group for benchmarking).
Exploring experiences of shared ownership housing 18
Exploring experiences of shared ownership housing 19
1 Introduction
Homeownership is in decline. There are numerous government interventions to stem this loss.
Shared ownership housing has been a long-standing primary offer to fill the gap between those
who aspire to own and those who are actually able to buy. It derives from various housing
schemes in the 1960s and 1970s, but crucially formed part of the suite of low-cost
homeownership initiatives offered by the Conservative government following the 1979 election
and has continued to be promoted since then.
In its simplest formulation, shared ownership enables a buyer to acquire a share in a property;
the remaining share in the property is held by a social housing provider.
1
The buyer formally
acquires a long leasehold interest in the property, which represents their share. The lease also
sets out the terms and conditions on which the buyer occupies the property. The buyer pays
rent on the unpurchased share to the provider. If they have a mortgage on the purchased share,
that will also require paying. There is also a service charge, usually payable monthly. Buyers can
acquire further shares in the property, often up to 100 per cent this process is known as
“staircasing”. Formally, in law, shared ownership is “social housing” (as defined by the Housing
and Regeneration Act 2008).
Despite its significance to housing providers, overall the impact of shared ownership on housing
markets has been marginal (Heywood, 2012). Nonetheless, there is an increasing number of
calls for a major expansion of the shared ownership offer, particularly in London and the South-
East (Resolution Foundation, 2013; De Santos, 2013; Mayor of London, 2014a; Chartered
Institute of Housing (CIH)/Orbit Group, 2015). The housing market displays a number of factors
that constrain access to homeownership, including a chronic shortage of new homes, a more
stringent mortgage market than previously and significant affordability problems in many
locations. Shared ownership is designed to overcome these constraints by allowing people to
own a share of a property, or at least have an equity stake in the property, thus requiring lower
deposits and smaller mortgages. As a result, it reaches a wider set of households than other
help-to-buy shared equity and mortgage guarantee options (De Santos, 2013).
Over the last decade in England, affordable homeownership options have comprised over a
third of all additional affordable homes (DCLG, 2014b, Table 1000) and until recently shared
ownership made up the majority of those affordable homeownership homes. Figure 1 illustrates
the balance between the different schemes between 2003 and 2012.
1
We recognise that social housing providers are not the only providers of shared ownership; there are an
unknown number of commercial providers: Burgess et al, 2009. However, our research focused on shared
ownership in social housing, which is believed to be the predominant form of this product.
Exploring experiences of shared ownership housing 20
Figure 1: Affordable homeownership schemes in England by type of scheme
Source: derived from DCLG (2014b), Housing Statistics Live Table 1010
Despite remaining a relatively small percentage of the current stock, shared ownership occupies
an important part of policy discussion and comprises a significant proportion of social housing
providers’ outputs.
But this is disputed terrain. Shared ownership has its proselytes and its decriers. Public
commentary frequently veers between the two and often simultaneously for example, the
same newspaper can carry positive and negative stories about shared ownership on the same
day. Proselytes see the potential for shared ownership to make a significant contribution to
overcome growing constraints in the UK’s shifting housing tenure system. Decriers offer
negative portraits of shared ownership products, focusing on various aspects like repairs and
mobility.
Previous research provides a mixed picture of buyers’ satisfaction with their purchases and has
highlighted constraints on the staircasing and mobility of shared owners, as well as problems
with the resale market (Wallace, 2008; Cambridge Centre for Housing and Planning Research
(CCHPR), 2012), high housing costs for many shared owners (Bramley et al, 2002; Clarke et al,
2006), and lower rates of satisfaction with housing providers and services among shared
owners than among general needs tenants (Tenant Services Authority (TSA), 2009). A
significant legal case also revealed critical flaws in the security of a resident’s equity holdings in
their property when a lease is ended due to rent arrears (Bright and Hopkins, 2011).
Moreover, although the importance of shared ownership to policy discussions is high, data
resources and the existing evidence base remain limited, posing a threat to investment and
commitment from lenders and other investors (Wallace, 2008; CIH/Orbit Group, 2015).
Although there have been other studies of shared ownership, there has been limited exploration
of its consumers’ understandings of this product. For example, buyers’ self-perceptions as
“owners” or “renters”, whether they see themselves as part of the social or private housing
sectors, have not been explored fully; nor has buyers’ appreciation of the strengths and
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Shared ownership
Shared equity
Assisted purchase
Section 106
Exploring experiences of shared ownership housing 21
weaknesses of the legal underpinnings of the property they call their home been investigated.
Some of the weaknesses of shared ownership have been recognised by agencies and providers
which, in a complex and imperfect housing market, welcome a scaling up of shared ownership
opportunities. They have proposed numerous ways to reform and streamline the range of
shared ownership products (CIH/Orbit Group, 2015; De Santos, 2013).
In this context, the Leverhulme Trust funded the research team to examine the experiences of
shared ownership housing from the shared owners’ and housing providers’ perspectives. The
aim of the study was to add to the limited evidence base by providing more meaningful
observations about the intentions, experience and achievements of the unusual hybrid tenure
arrangements associated with shared ownership.
Research aims and methods
The key research question was how, if at all, do the various actors understand the hybrid
ownership model in terms of homeownership?
The study objectives were, therefore, to understand more about this hybrid housing tenure, and
how it measured up to expectations of homeownership, through considering resident and
housing association experiences and perceptions of various events that typically occur during a
shared owners’ residence. Using the lens of what the research team termed ‘crisis moments’, the
research considered what difference, if any, the unique construction of shared ownership
tenure made to residents’ experiences of home. It was hypothesised that these moments
buying, payment difficulties, staircasing, major and minor repairs, estate management events,
remortgaging, selling etc. would reveal any convergence or divergence between owners and
providers’ expectations of ownership and renting and the different parties’ ideas about what
should happen and what actually occurs. This was borne out in the research and provided a
useful entrée into the issues concerned.
There were four key work streams to the study:
1. A review of existing evidence on shared ownership housing (including a review of social
media discussions and marketing material). The literature review was used to consider
the policy and practice objectives and achievements of shared ownership through time,
as well as document a range of contemporary portrayals and perceptions of shared
ownership housing.
2. In-depth face-to-face interviews with 20 key policy or trade bodies with interests in the
shared ownership sector. These included government, housing, mortgage and advocacy
organisations. These interviews were undertaken in autumn 2013.
3. Six weeks observation of the day-to-day management of shared ownership properties
in two registered providers here called Fixham and Greendale providing c. 80,000
words of fieldwork notes. The housing associations were based in the London, South-
East and East regions. Both associations are key providers of both general needs social
rented and shared ownership homes.
4. In-depth face-to-face interviews with 71 shared owners, which were undertaken
between May 2014 and August 2014 for Greendale (n=33) and between October 2014
and February 2015 for Fixham (n=38). The interviews were recorded with permission
and transcribed verbatim. The interviews lasted for between 45 minutes and two
Exploring experiences of shared ownership housing 22
hours. The invitations for the interviews were sent out randomly to shared owners in
designated locations to provide a range of experiences in different housing market
conditions. Research participants were given a £20 shopping voucher as both an
incentive to participate and to give thanks for supporting the research.
Report structure
This report comprises the headline findings of this work and begins by providing an overview of
what the existing evidence base tells us about homeownership and shared ownership in the UK,
to provide the background to what the policy intentions are towards this sector and what it can
and cannot be expected to achieve (chapter 2). The report then continues by presenting the
main findings of the research. In chapter 3, we discuss the lease, the device through which all
the relationships are mediated. In chapter 4, we introduce the two case study providers,
Greendale and Fixham. The remaining chapters detail our findings from the shared-owner
interviews. These are structured around understanding the shared ownership product (chapter
5), managing shared ownership properties (chapter 6), buyers’ selling and staircasing
considerations (chapter 7), and exploring perceptions of social/private housing and
owning/renting in shared ownership (chapters 8 and 9 respectively). The final chapter
concludes by discussing the implications of the research for policy makers and providers
(chapter 10). It is followed by policy recommendations. The appendices provide an analysis of
our buyer sample and our buyer topic guide used for the interviews.
Exploring experiences of shared ownership housing 23
2 Why support homeownership and what can it achieve?
Introduction
This chapter provides a brief outline of what the existing evidence tells us about
homeownership and shared ownership. It sets out the changing trajectories of homeownership
compared to other housing tenure and the constraints on new entrants to the tenure. The
uncertain evidence about the benefits of homeownership are outlined and the development of
shared ownership as an intermediate housing offer are highlighted. Proposals for the shared
ownership sector to expand to meet current housing pressures are noted.
Homeownership
Homeownership is in a further transition period, with a decline in the number of households
owning from 71 per cent in 2003 to just 63 per cent by 2013/14 (DCLG, 2014b). Outright
homeowners (33 per cent) now exceed mortgaged homeowners (31 per cent), who represent
the lowest proportion since the mid-1980s. Similar tenure shifts have occurred across the UK,
but, in England, the private rented sector has grown from 11 per cent in 2003 to 19 per cent by
2013/14 and is now larger than the social rented sector (DCLG, 2014b), which once housed a
third of the UK’s households (DCLG, 2014b). The private rented sector accommodates people
locked out of homeownership as well as social renting. These tenure shifts have been the most
apparent for younger cohorts. In 2003, only 21 per cent of people aged 2534 years old lived in
private renting, compared to 48 per cent in 2013/14 (DCLG, 2014b).
These rapid changes in the balance of housing tenure exacerbate publicly expressed concerns
about rental costs and insecurity in the private rented sector, access to social housing in high-
cost areas, and younger people’s constrained access to homeownership (Duxbury and McCabe,
2015). While most people still aspire to own their own home, aspirations to own and social
attitudes towards renting and being settled in rented accommodation are softening among
younger cohorts, providing the potential for there to be further contraction of the
homeownership tenure in the future (Halifax, 2014). Deposit constraints exist among higher
earners but lower-income households struggle to find sufficient income to enter
homeownership. Parental assistance has become commonplace, risking older generations’
financial security in retirement and favouring first-time buyers from wealthier families (Halifax,
2014).
Almost half (48 per cent) of households aged between 2534 were renting privately during
2013/14 compared to 21 per cent in 2003/04 (DCLG, 2014b). Moreover, Family Resources
Survey data indicates a slight shift away from homeownership across the UK among people in
semi-skilled and routine occupations towards professional and managerial occupations
(Wallace et al, 2014). Homeownership is, therefore, moving towards higher income and older
households.
The Coalition government 20102015 made a series of demand side housing market
interventions to bolster homeownership, introducing further right-to-buy measures, help-to-
buy and starter home initiatives. These were all aimed at reducing entry costs to
homeownership and include mortgage guarantees, equity loans and discounted sales (Tunstall,
Exploring experiences of shared ownership housing 24
2015). A range of factors means that current interventions face challenging housing market
conditions if the ambition is to reverse the downward trajectory of the homeownership tenure.
These factors include: wages for younger people remaining nearly 8 per cent below the level
when the recession hit in 2007/08 when compared to the full recovery of older cohorts’
incomes (Cribb and Joyce, 2015); the increasing concentration of wealth in older cohorts
(Wilcox and Perry, 2015); the Mortgage Market Review, which raised entry thresholds to
mortgages and hence homeownership (Policis, 2010); the regulatory regime that favours Buy-
to-Let investment on less expensive interest-only mortgages over first-time buyers on more
expensive repayment loans (Wilcox and Perry, 2015); the shortfall in the number of homes
being built compared to household requirements (KPMG, 2014); and the increasing use of
UK/London housing markets to park global capital (Green and Bentley, 2014).
Interventions to bolster homeownership and overcome affordability and other constraints in
the housing market are premised on meeting aspirations to own, but O’Sullivan and Gibb (2012)
query whether this is a sufficient basis for public policy and call for homeownership to be
subjected to the same scrutiny of positive outcomes as other public investments.
A number of qualities are attributed to homeownership but are often poorly evidenced. As well
as an association with capital gains, homeownership is also linked to good neighbourhoods,
better quality homes and, as there is no landlord relationship, greater control (Whitehead and
Yates, 2010). Homeownership is also associated with abstract notions of independence, security
and pride (Munro, 2007). It is claimed that the benefits of the tenure extend beyond the
individual buyers to the local neighbourhoods, increasing social capital (Roskruge et al, 2013),
civil participation, citizenship and voting (DiPasquale and Glaeser, 1999), and educational
attainment (Bramley and Karley, 2007). Despite calls to highlight other attributes of ownership,
for low-income households, homeownership remains an important way to accumulate any
assets (Herbert et al, 2013). In addition, homeownership in later life can mean reduced costs
and contributes to a lower incidence of poverty in retirement (Tunstall et al., 2013).
However, homeownership also attracts risk, as traditional mortgage products are misaligned
with modern flexible and less secure labour markets (Ford et al, 2001). Homeowners may have
spent the equity stored in their home through their life course to manage critical life events
(Parkinson et al, 2009) and in so doing have increased their risk of repossession (Searle, 2012).
A trial of homeowners in the US found no evidence of social or community benefits overall,
new owners did not vote more, did not undertake more external repairs and evidence of
homeowners’ contributions to local amenities and social capital was weak and/or inconclusive
(Englehardt et al, 2010). Evidence of lower-income homeowners accumulating significant
wealth is also limited as they remain in homeownership for shorter periods, are less likely to
trade up, refinance to lower interest rates less frequently and, rather than transcend
inequalities in the labour market (Thomas and Dorling, 2005), homeownership can accentuate
wealth inequalities because more affluent owners gain the most (Hamnett, 1999; Belksy et al,
2005; Boehm and Schlottmann, 2008; Burridge, 2010). Therefore, the evidence of the wider
benefits of homeownership are claimed but are, however, quite uncertain, not least as selection
effects may be at play, meaning people with positive attributes may be more inclined to
purchase their home (Rohe et al, 2000; O’Sullivan and Gibb, 2012).
Nonetheless, certain aspects of the tenure do produce profound impacts for the occupiers and
have helped sustain people during financial crises, not by spending their housing assets, but by
Exploring experiences of shared ownership housing 25
valuing its security as a protective quality in its own right (Elliot and Wadley, 2013; Wallace et
al, 2014). Most critically, housing discourses make homeownership seem the normal housing
pathway and people are stigmatised if they do not achieve homeownership (Gurney, 1999;
Ronald, 2008). The ideology surrounding the tenure is as complicit in sustaining aspirations to
own as the economic and structural pressures in the context of shrinking state roles across
various countries (Jacobs and Manzi, 2013).
In addition, Whitehead and Yates (2010) contend that investment in homeownership can avoid
higher government spending. This is because there are benefits in reducing subsidies for
housing, and in housing support, as it shifts responsibility for dwelling and stock maintenance
to individual households; and, they suggest, possibly makes a positive contribution to the
neighbourhoods and social and political and economic stability.
The development of intermediate housing tenure, including shared ownership, must be seen
against this context. Investment in homeownership is politically expedient as it meets both
public aspirations to own with minimal public costs for their support (Boelhouwer et al, 2004).
If this is correct then perhaps the rhetorical attributes of being able to promote an intermediate
homeownership policy is in practice more important than the rather limited scale of such
projects to date. Nonetheless, supporting access to homeownership has been a key tenet of UK
housing policy for many decades using a number of instruments, including shared ownership.
Shared ownership: a history
Different histories can be told about shared ownership. There is the chronology of its
development, there are key moments in time at which point the tenure shifted, and there are the
histories of the providers, lenders and buyers. The last of these is provided in subsequent
chapters. Here, we begin with a chronology followed by discussion of some foundation stones
and subsequent developments.
Chronology
Figure 2: Evolution of shared ownership schemes in England 1964 to 2013
1964
Residents were members of and owned stakes in a fully mutual
housing society and rented their property from this co-operative
(40,000 households)
1975
Birmingham City Council obtains permission from Department
of the Environment for scheme. Subsequently followed by
Greater London Council scheme in Cheshunt
1977
Community leasehold arrangements
LSE 70% maximum stake in property
IFS purchase of street property, renovated and sold below
market value
Exploring experiences of shared ownership housing 26
1980
Housing Act 1980 replaced community leasehold and co-
ownership. Specifically introduced staircasing facility to model,
to allow incremental increase in shares owned up to 100% and
excluded shared ownership from enfranchisement/long
leasehold extensions (s 140). Amended Housing Act 1974 to
enable the Housing Corporation (HC) to make grants for shared
ownership (Sch 18, para 1). The HC increased resources
accordingly
1981
The right-to-buy provision in Housing Act 1980 that made
explicit the rights for council tenants to buy the property in
which they reside, also extended to co-ownership tenants
1982
To address slump in housing market, could take excess property
from the wider market via shared ownership arrangements
1983
Expansion of SOOTS to provide for open market shared
ownership properties
1984
DIYSO over-subscribed as too popular and draining resources
from other measures
HOTCHA introduced
Right to buy extended to provide partial purchase of council
tenants’ homes on shared ownership arrangements
1986
Joseph Rowntree Housing Trust introduced ability to staircase
down as well as up: to provide equity in later life, or prevent
housing repossession in times of financial stress, can convert
from full to partial ownership, or from partial ownership to
renting
1989
Replaces LSE
Replaces IFS
1990
Grants to social housing tenants to purchase property in open
market and provide vacancy in social housing
1993
HC funded 18,000 shared ownership homes
1998
TIS/CIS and DIYSO phased out. Homebuy provided a 20%
equity loan to first-time buyers
2001
The first dedicated homeownership programme for key workers
people working in the public services who, without assistance
from starter home initiative, would have been unable to afford
homeownership in London and the South-East of England and
might have left the area where their skills were needed. Starter
home initiative provided assistance to key workers to buy their
first homes
Exploring experiences of shared ownership housing 27
2004
Replaced starter home initiative. A London/South-East focused
package of assistance with house purchase aimed at key workers,
notably police, nurses and teachers, including equity loans of up
to £50,000 (plus loans of up to £100,000 for some teachers in
London) and shared ownership. It also includes intermediate
rent
2006
Scheme for social housing tenants, without the right to acquire,
to purchase at a discount (related to the right to acquire discount)
a part share of their home via equity sharing or shared
ownership, or outright. Participation is voluntary and Homes
and Communities Agency (HCA) fund on demand
2006
Shared ownership arrangements aimed at key workers, social
tenants and other first-time buyers identified by regional housing
boards as being in priority. Minimum share held by resident
25%, and in some schemes the developer holds remaining share
and charges a typical 2.75% annual levy on their equity share
2006
Equity sharing arrangement of Homebuy rebranded open market
Homebuy has attracted private sector support in offering loans
from lenders instead of solely from public funds
Short-lived schemes (2008/09) were marketed as
MyChoiceHomeBuy or OwnHome, where a charge of 1.75% was
levied against the equity loan, which rose after 5 years, and were
part-funded by public purse HCA and by lenders. Discontinued
due to funding problems
2008/09
A specific intervention during the housing market downturn to
help providers with unsold shared ownership stock convert to
Intermediate Rent for a limited period of up to 5 years , during
which deposit-constrained purchasers could benefit from a
reduced market rent and save for a deposit and purchase on
shared ownership terms at the end of the tenancy period
2009
Offers equity loans on new-build stock offered by private
developers. Equity loans on new-build are also facilitated by
English Partnerships under the First-time buyers initiative
2011
Equity sharing scheme on new-build properties aimed to
increase demand for stalled housing sites in the market
downturn and meet aspirations to own
2013
Replaced FirstBuy. Equity share scheme widens entry criteria
and is available on new-build properties up to £600,000
2013
Mortgage guarantee is a new scheme, as opposed to a
repackaged existing scheme, where the government underwrites
15% loans to facilitate lenders to offer low deposit 95%
mortgages to first-time buyers
2015/6?
Help people who need a limited period of support through a
sub-market rent so they can save for a deposit. Announced June
2013 Spending Review
Source: updated from original by Tony Shepherd in Martin (2001); Wallace (2008); Whitehead et al (2010)
Exploring experiences of shared ownership housing 28
Foundation stones
Shared ownership emerged from a disparate range of local schemes, with co-ownership
schemes in the 1960s based on collective co-operative models of lower-cost homeownership
and aimed at higher earners early in their career who were on a pathway to homeownership
anyway to the community leasehold projects in the 1970s based on individual leases and
aimed at inner-city low-income tenants; and Birmingham City Council’s “half and half scheme
from 1975 (Cousins et al, 1993; Martin, 2001). These hybrid arrangements were aimed at
different types of households in different housing markets and were thought to be both a
stepping stone to full homeownership as well as a permanent hybrid tenure (Allen, 1982). This
suggests that the tension surrounding whether shared ownership is a transitional or a more
enduring arrangement has a long history and one which is contingent on events.
In 1975, Birmingham City Council, possibly the first developer of shared ownership, was
actively seeking mechanisms to assist its own occupiers to buy not just the council’s own
housing but also other non-council properties. It introduced various initiatives to enable them
to do so. One such initiative, which was granted permission by the then Department of the
Environment, after a lengthy hiatus, was for a 50:50 scheme. It was both experimental and bold.
Our stakeholders, some of whom had been in the sector for a considerable time, told us about
the reasons for the failure of the co-ownership model, which had been pioneered by the Housing
Corporation Act 1964. These reasons were as much due to external market factors (the turn to
‘fair rent’, political expediency) as with any particular benefit inherent in the tenure itself. As
KS/2 put it:
Shared ownership was born it got its name from John Stanley and rang bells politically
the word ownership was important politically. The tail end of the 749 Labour government,
before the label was born, the then minister Reg Freestone, who served the entire term,
wanted something to replace the doomed co-ownership; he was attracted to a variant of the
shared ownership model that was co-operative as he was a member of the co-op party. The
idea that shared ownership might have a co-op community leasehold was what it was
called the community involvement was to collectively manage and own it. That didn’t really
stick and there was a committee under the chairman of Campbell to look at co-op housing
and that was what came out of that. John Stanley wanted to promote it.
Subsequent periods: recognising strengths …
In the 1980s, there was a policy move towards a more explicit emphasis on shared ownership
being a transitional tenure alone (Forrest et al, 1984; Booth and Crook, 1986; Whitehead, 1986).
Alongside the right to buy reforms that dwarfed the achievements of shared ownership in
bolstering UK homeownership the Housing Act 1980 also included other initiatives such as
mortgage interest tax relief, homesteading and improvements for sale; it was not until 1983 that
council tenants had the right to buy on shared ownership terms. However, it was other reforms
to the status of leasehold enfranchisement, removal of the 50 per cent maximum share, clarity
about repayments of grants on sale and smoothed stamp duty anomalies that then existed that
cemented low-cost homeownership initiatives in the UK housing system (Booth and Crook,
1986; Cousins et al, 1993). At this time, the predominant shared ownership product used by
social landlords was “do-it-yourself shared ownership” (commonly abbreviated to DIYSO).
DIYSO operated by enabling an existing tenant to buy an alternative property on shared
Exploring experiences of shared ownership housing 29
ownership terms; the DIY element was that the tenants themselves could choose the property
they wished to purchase on shared ownership terms. By the late 1980s/early 1990s, some
curtailments on the buyers’ control were introduced, such as some rural schemes were capped
at a maximum 80 per cent share (Cousins et al, 1993), which strengthened the providers’ social
role.
By the 1990s, demand for shared ownership outstripped supply but the sector remained
marginal with only 1.5 per cent of total housing stock (Cousins et al, 1993). It came to be
recognised that DIYSO itself had problems: first, it was an expensive method of levering shared
ownership into the housing system; second, it did not contribute to the development of housing
stock; and third, it led to pepperpotting of housing stock, which made it more expensive to
manage. However, it remains a popular idea in principle (Resolution Foundation, 2013). DIYSO
began to be phased out by the mid-1990s.
After some initial ambivalence towards homeownership, the New Labour government
introduced a shared equity low-cost homeownership scheme, Homebuy, in 1999, and targeted
groups such as key workers (Battye et al, 2006). Together with shared ownership itself, these
twin products were seen as fulfilling that government’s emphasis on mixed communities. It was
not until the recommendations from the Low Cost Homeownership (LCHO) Taskforce (2003)
that shared ownership was propelled to the position that it currently holds, where it attracts
roughly a third of the social housing programme funding.
The LCHO Taskforce (2003) considered the divergent needs of different housing markets. The
report suggested that affordable homeownership could meet the housing needs of squeezed key
workers in the South and introduce mixed tenure within regeneration schemes in the Northern
regions. Streamlining the market was considered important, as was harmonising the leases used
across the sector, not least to ensure lenders would support the burgeoning market. Following
the report, a range of low-cost homeownership arrangements were branded as Homebuy with
variants aimed at different market segments using shared equity, shared ownership and partial
purchase of socially rented homes (Office of the Deputy Prime Minister (ODPM), 2005).
Although there have been funding troughs, in general terms shared ownership has been well
served by housing grants from the HC and its successors. Between 1990/91 and 1993/94,
shared ownership captured between 11 and 17.5 per cent of the overall development
programme for housing associations in England, rising to 28.5 per cent in 1996/97 (Bramley
and Dunmore, 1996: 10910). That proportion rose to 30 per cent in 2004/05, and the HC’s
2006/08 investment programme devoted £970 million to intermediate homeownership out of
£3.9 billion (Hills and Lomax, 2007: 15). Other developments have been funded without grant
by associations (around 12 per cent in 2007: Spenceley, 2008: 12). The 20112015 affordable
homes programme (DCLG/HCA, 2010) moved the goalposts considerably as a result of the
Coalition government’s predilection for “affordable rent” products. However, a non-specific
proportion of grant funding remained available for shared ownership.
Exploring experiences of shared ownership housing 30
… and weaknesses
Support for Homebuy was premised on a range of factors including the opportunity for asset
accumulation for lower-income households and serving members of the armed forces, meeting
aspirations to own, creating mixed communities, and generating social housing vacancies
(ODPM, 2005; National Audit Office (NAO), 2006). A further significant factor was the surpluses
generated by shared ownership sales, which enabled social housing providers to cross-
subsidise other activities. Wallace (2012) noted that many of these motivations are aimed at
reducing public subsidies in housing and welfare policy rather than focused on the outcomes for
buyers (although it should be noted that social housing occupiers are a diminishing group of
potential purchasers). Griffith (2011) echoed that sentiment, highlighting that the prime
beneficiary of many housing market interventions after the financial crisis has been the house-
building industry rather than first-time buyers.
But the perceived shortcomings of shared ownership were recognised. The LCHO Taskforce
(2003) viewed shared ownership as complicated, poor value for money and involving two legal
relationships (with the housing association and mortgage lender) and it perceived that the risks
and responsibilities were weighted too far towards the tenant when they own only a partial
share of the property. Nonetheless, shared ownership was included in the Taskforce’s
recommendations because it supported lower-income households into ownership at a lower
cost than shared equity schemes. Terry (1999) questioned the need for shared ownership in the
low-inflation environment, seeing a role only in very high-cost areas such as London.
Concerns about mobility, resales and staircasing within the sector were raised as problematic
(Wallace, 2008; CCHPR, 2012). Studies show that, at this time, shared ownership had been
accessed by households on lower earnings than first-time buyers in the wider market (Cho et al,
2004; Wallace, 2008; Cho and Whitehead, 2010). However, some shared owners could have
accessed homeownership by other means, but in this way were able to buy bigger properties in
better locations than they could otherwise have afforded (Bramley et al, 2002; NAO, 2006;
Clarke, 2010). The security of buyers equity holdings, their access to equity accumulated in
their home (Bright and Hopkins, 2011) and the limited rights afforded to shared owners in
comparison to ordinary leaseholders were also noted (Wallace, 2012). There were also fewer
social housing tenants accessing shared ownership than in previous decades. Moreover,
concerns were flagged about investment in households that were otherwise satisfactorily
housed when greater homelessness and need for general needs social housing units were
required (Hughes, 2010; Monk and Whitehead, 2010).
The TSA (2009) found that shared owners had lower satisfaction than general needs tenants;
but, nonetheless, paradoxically shared owners would overwhelmingly recommend the product
to their friends,. To what extent shared ownership had achieved its potential in meeting
aspirations to homeownership was uncertain, although shared ownership has afforded buyers
the opportunity to become owners and all the cultural inflections that entails (Wallace, 2012).
Our key stakeholders identified other issues. First, the successive re-labelling of the product
over the past 10 or so years has led to confusion:
We found that lenders and consumers found the proliferation of brand names, taking into
account local and regional variations, confusing. The HCA has since the advent of the new
administration moved away from branding of shared ownership and reverted to ‘Shared
Exploring experiences of shared ownership housing 31
Ownership’ as the nomenclature for the housing product. To counter any perception of
confusion we arrived at the view that the part rent part buy housing product should be
known by its traditional name, which more accurately describes its function. (KS/10)
The whole mid market has been so dogged by a kind of plethora of different initiatives and
brand names that most people are thoroughly confused by it. (KS/11)
Secondly, attention was drawn to the complexity of the product itself. KS/12, in discussing the
kinds of complaints their organisation sees from shared owners themselves said:
[S]ometimes you know it’s hard to grasp some of these things at the best of times for your
ordinary lay person … but even for us. [laughs] So that seems to be a common theme.
Thirdly, a range of issues were presented regarding the location of shared ownership as social
housing. At this stage in our work, our attention was drawn to potential issues around the
stigma of social housing attaching to shared ownership; the potential for “poor doors” between
general needs and private housing on mixed tenure estates and within private developments;
different forms of management required for general needs and shared ownership; and a buyer
perspective that they were regarded as “fourth-class citizens” by their provider, being excluded
from various parts of an estate such as gyms and car parking.
Building on success?
The Coalition government’s programme for government was forthright: “We will promote
shared ownership schemes and help social tenants and others to own or part-own their home.
(HM Government, 2010: 12) One of our key stakeholders suggested that this bullet point had
been left in the programme by an editing mistake! However, at least publicly, it demonstrated a
powerful central government commitment to shared ownership at a time when private
housebuilders were developing their own use of it (Burgess et al, 2009).
A consensus has also emerged among some influential policy networks around support for
shared ownership to bridge the affordability gaps that preclude many younger cohorts from
owning their home because shared ownership reaches a wider range of households than the
other initiatives mentioned above (Hughes, 2010; Resolution Foundation, 2013; CIH/Orbit
Group, 2015; De Santos, 2013; Council of Mortgage Lenders (CML), 2015; Greater London
Authority (GLA), 2014). Suggestions to refine the offer include, in practice: rebalancing the
repairing obligations between landlords and shared owners; supporting movement within the
tenure; providing a consistent product and brand”; facilitating staircasing decisions with
minimal costs; developing consistent eligibility criteria; and introducing codes of good practice
in the sector (Wiles, 2014; CIH/Orbit Group, 2015). HM Treasury’s Autumn Statement also
committed the government to working on streamlining the resales process and the DCLG is
currently consulting on proposals for reform of that process (DCLG, 2015) and identifying
ways to lift barriers to the expansion of shared ownership (HM Treasury, 2014: paras 1.139
40). The Mayor of London (2014b) is looking for private investment to enable a doubling of
shared ownership completions in London, although the report cites the lack of repairing
obligations towards these properties as one of the benefits to investors, which could potentially
limit reform in this key area.
The Coalition government (DCLG, 2015b: para 4.3) promised that it would undertake a review
of shared ownership focusing on possible longer-term options for change, with a report to
Exploring experiences of shared ownership housing 32
ministers in summer 2015. Although the Conservative manifesto for the 2015 general election
did not specifically mention shared ownership as an option, it expressed itself as clearly
“… setting an ambition to double the number of first-time buyers compared to the last five years
helping one million more people to own their own home” (Conservative Party, 2015: 52). It is
unlikely that this will be achieved without making shared ownership part of the offer in a
housing market that has already been stretched in terms of affordability and supply. The
promised review is, therefore, both timely and of significance in the future delivery of the
shared ownership project.
Conclusion
The drive to homeownership evident during the twentieth century has slowed down and
has been in reverse, at least since the global financial crisis. The Coalition government has
developed a number of initiatives designed to enable households to access homeownership,
such as help to buy and greater incentives to exercise the right to buy.
Despite the relatively weak evidence base for the benefits of lower-income homeownership
in the UK, shared ownership remains a politically pragmatic policy approach to combat
rising entry thresholds to homeownership and weaknesses in other tenures.
Shared ownership has been particularly favoured over the last 25 years in public grant
funding to the social sector because of its perceived benefits and greater output for capital
investment than other general needs social housing.
A significant coalition of political parties, pressure groups and other non-government
organisations, including housing associations and tenants’ rights groups, have now publicly
endorsed the need for expansion of shared ownership. This is a necessary step to engage
lenders so as to make them sufficiently interested in the product to alter their systems and
improve the range of lending on the product.
As a result of this support, some weaknesses of shared ownership that require reform have
been identified. Those weaknesses have yet to be tackled. The government review will need
to address these weaknesses head on and produce action, which almost certainly should
result in a legislative programme for change.
Exploring experiences of shared ownership housing 33
3 The lease
The lease structures the legal relationship between provider, buyer and third-party managing
agent. It is also the legal document by which the buyer becomes an “owner” in law. As a result, it
is lengthy and complex. In this chapter we are concerned with the model lease that the investor
arm of the HCA promulgates. It relies for its efficacy not just on its own terms but centuries of
judicial interpretations of those terms as well as statutory overlays, and the fact of being read as
a “living” document (Hunter, forthcoming).
The HCA, in its investor function, has provided model leases since the early 1980s. The model
lease has led to a standardisation in the marketplace of the shared ownership product. Grant-
funded providers must, even if they do not use the model lease in its entirety, include certain
fundamental clauses which appear in the model lease. Although there have been changes, in
general, other than the 2009 redraft, these are at the level of tinkering with the drafting one
draftsperson’s predilection over another, perhaps or a technical change. What has been
remarkable in a sense has been the longevity of the lease itself.
Fundamental clauses
The fundamental clauses that must be in every shared ownership lease relate to:
rent reviews restricting any rent increase to retail price index (RPI) plus a percentage
amount (RPI + 0.5 per cent);
staircasing setting out the provisions (for example, about valuation and timings) under
which a buyer can purchase an increase in their share;
right of first refusal(also known as the right of pre-emption)
2
enabling the provider to have
a right of first refusal if the shared owner decides to sell the property within a set time;
restrictions on alienation requiring the buyer to sell the property through the provider
first, so that the new buyer will be in a priority group as opposed to being an open market
buyer: the clause also prevents subletting of the whole of the premises or of part of the
premises;
the MPC discussed below; and
where applicable, designated protected area staircasing provisions these restrict the
ability to staircase in certain areas or, where the buyer is entitled to staircase up to 100 per
cent, allows the provider a mandatory right to repurchase.
The majority of these terms are perhaps predictable considering the social housing context,
although the breadth of the alienation clause is counter-intuitive in the restrictions it imposes
upon an owner’s right to generate income from their asset. However, what is unusual is the
MPC. This clause provides additional protection to the mortgage lender over and above the
protections given to a conventional mortgage lender if it has to seek possession due to buyer
arrears, provided that the provider approved the mortgage prior to the grant. Under the clause,
2
From April 2015, the new leases no longer contain this right of pre-emption in relation to leases where
the buyer has staircased to 100 per cent, and other leases will be varied to remove the right: HCA, 2015:
para 5.3.24 et seq.
Exploring experiences of shared ownership housing 34
in such a circumstance, the lender is entitled to recover the following from the provider as
landlord: repayment of the loan; 18 months arrears of interest; and arrears of rent/service
charge; as well as the fees and costs in enforcing security. The added protection provided to a
mortgagee of a leaseholder of a shared ownership lease provides certainty for the lender, is
compensation for lending on a shared ownership basis and for giving up the frequent and
expensive requirement for leaseholders to purchase mortgage indemnity policies or similar
equivalents. The clause includes a right for the landlord to recover these monies from the
shared owner.
This is a most significant form of protection reducing the risks borne by lenders to an
extraordinary degree. As KS/15 put it:
What lenders [not involved in shared ownership] don’t appreciate is the negligible losses
on these cases £29k in 10 years. Had we not had the MPC, the losses would have been half
a million. You wouldn’t do it without the MPC.
Other core terms
The shared ownership lease is a “full repairing lease”. This means that the buyer is responsible
for 100 per cent of the repairs to their property, which is their responsibility, irrespective of the
share purchased or held. Purchasers have little difficulty accepting that they are responsible for
100 per cent of the internal repairs, although they do query paying administrative charges in
connection with these when the provider benefits. The requirement to pay 100 per cent of their
share of the costs of external repairs and repairs to the common parts is more problematic for
shared owners. They consider that they are subsidising costs which are more appropriately
borne by the provider. It also leads to resentment as time passes as it adds to the feeling that
shared ownership, unless you can staircase upwards rapidly, is a bad deal weighted towards the
provider.
The provider’s costs are reimbursed by the shared owner via service charges. Service charges
have long been contentious between landlords and tenants and there is voluminous legislation
regulating them. However, legislation does not cover initial apportionment and this can cause
tensions between shared owners and providers, particularly when shared owners live in blocks
with facilities shared with standard owners. These facilities can often be high quality and the
consequent level of service charges can be inconsistent with the notion of affordable housing.
This also poses a dilemma for providers. Should they provide separate and more basic facilities
for shared owners and risk the opprobrium of the poor door or should they provide the same
level of facilities and risk them being unaffordable and not what shared owners wish to pay for?
There are several applications before the Residential Property Tribunal considering the
reasonableness of service charge demands in such circumstances.
A further set of core terms are that, if the buyer wishes to improve the property, then they must
obtain the approval of the provider, who may charge a fee for such approval (both Greendale
and Fixham did charge a fee). This is designed so that the buyer takes the benefit of any such
improvement on staircasing or sale of the property (i.e. so that they do not pay for the same
thing twice). It also protects the provider from improvements that might affect the property
negatively. Of course, the distinction between repairs and improvements is one on which angels
may dance on a pinhead and on which lawyers regularly go to battle. Therefore, it is predictable
Exploring experiences of shared ownership housing 35
that shared owners are confused about what internal works they are required to obtain and pay
for approval of.
Audience
We would argue that the lease itself is the critical component of shared ownership. Rather than
focusing on the home about to be occupied, the building within which it is located or the interactive
relationships cemented over time, the lease itself is the product. This is borne out by providers’
insistence on the importance of the lease when discussing the relationship between them and their
shared owners and buyers’ puzzlement at the provider’s lack of interest in the building.
The critical audience for the lease is not the shared owners and the providers and others who
are parties to it, but the mortgage lender. As KS/14 pithily remarked: “The lease is recognised
by lenders as being the standard form and thus acceptable for ‘standard form’ lending. Shared
ownership, being a different and non-mainstream product, requires lender faith and
involvement, particularly because the type of buyer is likely to require a mortgage and be on the
margins of homeownership (as they are unable to afford an open market purchase). Thus, the
potential mortgagee is the key audience, otherwise the product becomes unsaleable:
And you know from my dealings with lenders, you know they like to deal in standard
processes, they like to understand … and the more straight forward you can make it for
them, the more likely they are going to be willing to lend on a product which is to them still
a sort of bit part player in the sort big general scheme of things. (KS/12)
However, the lender perspective was a little different. We were told: “Relative stability. HCA
doesn’t want to change them every year. Most of the time from a lenders’ perspective any
changes are immaterial. The only relevant clauses are the MPC and the forfeiture clause.
Anything else is more related to landlord-tenant.” (KS/4); and “the [leases] don’t cross my desk
that much and we don’t get queries that often” (KS/5).
Our key stakeholders were clear that there were issues for larger and smaller lenders with
shared ownership which potentially inhibited their involvement.
The first was that their information technology systems might not support the risk
management of the shared-owner marketplace.
The second were the Financial Conduct Authority (FCA) prudential lending
requirements, as expressed in the Building Society Sourcebook, which inhibited building
society and smaller lender involvement because shared ownership was regarded as
non-prime lending (despite their consistent lobbying of the FCA and its predecessors
about the less risky nature of shared ownership). As KS/5 put it: The MPC is a useful
protection internally for lenders, getting it through their committees, but at the same time
you’ve got this guidance, which restricts the lending. We did quite a lot of work a few years
ago on the MPC we spent quite a bit of time on legal advice to see if it could help mitigate
the restrictiveness of the sourcebook but not possible. I think it was surrounding it not
being a strong enough protection we pursued it as far as it could go but not possible.
Third, some lenders lend against the value of the property, others against the share
being bought, the latter obviously being more advantageous to the buyer in terms of
what can be afforded.
Exploring experiences of shared ownership housing 36
Fourth, some concern was expressed about post-sales arrears of rent and service charge.
Different lenders had different perceptions about the level of arrears in shared
ownership.
Fifth, there is large-scale ignorance about shared ownership which leads to it being
regarded as high risk.
Sixth, at least some lenders will not consider lending on a shared ownership property
unless the provider signs up to the lender’s service level agreement.
Seventh, the volume of transactions per annum is insufficient to attract the interest of
most mainstream lenders.
The 2009 redraft
In 2009, the model leases were redrafted. A range of our key stakeholder interviewees were
involved with this process. There were two elements to the redraft. The first was to shore up the
MPC, extending its range (from 12 to 18 months) so as to provide comfort to lenders. The
second was to seek to make the lease less abstract, clearer and more readable. A plain English
information sheet was provided to give a translation of the lease. As KS/14 put it: “… the point in
all that really was we recognise I think that you know lenders find it awkward and difficult, and
this was about you know trying to persuade them actually it’s not quite as scary as it might seem,
and there are good reasons to lend”.
The success of the 2009 redraft was framed by KS/3 as follows:
In April 2009 the NHF[National Housing Federation]/CML did a major piece of work to
reform the lease. Our lender partners wanted a standardised lease which protected them
through the mortgage protection clause; from the consumer angle, wanted to take out the
old-fashioned language. The former was achieved, the latter nowhere near. It still is mind-
boggling. I run over this with my own staff and sometimes it is difficult for them to
understand.
Legal constructions: Richardson
In Midland Heart v Richardson [2008] L&TR 31 Ch D, at the Birmingham Civil Justice Centre
Chancery Division, Jonathan Gaunt QC, sitting as a deputy judge, dismissed Ms Richardson’s
arguments and held that the shared ownership lease was, in law, an assured tenancy. Ms
Richardson had rent arrears on her shared ownership lease. They arose after she was forced to
move out of the property, following threats of violence from her ex-partner’s associates. She
moved to a refuge. Housing benefit was in payment on both properties (properly) for 52 weeks
but then stopped for the shared ownership property. Arrears began to build. Ms Richardson and
Midland Heart sought unsuccessfully to sell the property. Then Midland Heart sought
possession.
As an assured tenancy, the lease could be terminated by the usual grounds contained in the
Housing Act 1988, including the mandatory ground for rent arrears. This had the effect of
forfeiture, in the sense that Ms Richardson lost her entire capital stake. However, Midland Heart
did offer to recompense Ms Richardson for her original capital stake ex gratia. Jonathan Gaunt
QC said:
Exploring experiences of shared ownership housing 37
[23] That all said, I have found this case troubling. Miss Richardson has had a rough ride in
life and has now lost what is probably her only capital asset. Moreover, she lost it in
proceedings brought at a time when, to the knowledge of the housing association, she was
actively seeking to sell the house to pay off her debts and the housing association was itself
involved in that process. I must say that I find the stance taken by the housing association
strange in the circumstances and I have not received any adequate explanation. There
may, of course, be many facts and matters in the background that I know not of and so I do
not intend to be unduly critical. I simply comment on the timing.
[24] I am pleased to record, however, that the housing association have offered to repay
Miss Richardsons original premium, less rent arrears, costs and the cost of effecting
repairs out of any sale proceeds and counsel has confirmed to the court that the housing
association intend to stand by that offer. But that still means that Miss Richardson will
have lost any capital appreciation between 1995 and now, worth about £45,000, which
will represent, in turn, a windfall for the housing association.
Although this case caused considerable consternation among the legal establishment (see, for
example, Bright and Hopkins, 2009; Cowan, 2011), what was interesting was that our key
stakeholder interviewees either had not heard of the case or sought to marginalise its
significance.
We were told, for example, that Richardson was an unusual case because Ms Richardson did not
have a mortgage; in such cases, where there is a mortgagee, they will often pay off and capitalise
the arrears. As KS/11 put it: “I think it’s just her circumstances were very unusual in that she had
no mortgage and also she was living elsewhere so didn’t claim housing benefit.”; and KS/14 said:
My understanding of that particular case is that it was a set of circumstances that if you
dreamt up you could never replicate it just wouldn’t happen, I mean I feel sorry for the
woman in question, but you know clearly you know there was a very peculiar set of
circumstances were at play there.
Or, that it unfairly castigated the industry because they would never let a case reach the stage
where the buyer would lose their equity.
Or, that some lawyers had made too much of the issues:
The primary issue is around Richardson from the NL [Nearly Legal blog] guy a lot of
people think it is a techie point which doesn’t matter. That’s probably right while partners
are regulated; what that article missed was that Ms Richardson was offered a capital sum
and had wrecked the property. (KS/6)
There was also (surprisingly) a significant degree of ignorance about the case. As noted, some
had simply not heard of it; others had simply not understood it. For example, KS/12 said:
I mean we are aware of it as an issue, and then … I mean you look at sort of the issues
around forfeiture, and it’s a similar thing … we do know that on the … I think it’s ground 1,
if you don’t pay your rent, then there’s no discretion in the court to have to just say
repossess. Whereas on the grounds of Midland Heart as I understand it, it wasn’t a sort of
straightforward repossession case, there was discretion and the court decided to go with
the landlord because of what she’d done.
Exploring experiences of shared ownership housing 38
Legal responses: other
While Richardson has been the central frame for legal analysis and concern, shared ownership
has been considered in other contexts. A somewhat controversial reading of the leasehold
reform provisions has rendered the shared ownership lease to be a “long lease” for the purposes
of sections 75 and 76, Commonhold and Leasehold Reform Act 2002: Corscombe Close Block 8
RTM Co. Ltd v Roseleb Ltd [2013] UKUT 81 (LC); a finding following from Brick Farm
Management Ltd v Richmond Housing Partnership Ltd [2005] EWHC 1650 (concerning collective
enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993). This
means that shared owners have the same rights as long leaseholders, for example, to be
consulted about external works contracts and over a right to manage application (i.e. if the
leaseholders in a block decide to take over the management of the block themselves).
Conclusion
The shared ownership lease is the key document structuring the relationship between the
parties.
It is a lengthy, complex document which is not necessarily easy to translate because there
are many implicit elements of it as a result of case law interpretations of words and
statutory overlays.
The HCA investor arm requires providers to use certain fundamental terms in all grant-
funded properties.
The most significant such term is the MPC.
The audience for the lease is not necessarily the parties but the lender, which was a key
concern in the 2009 redraft.
Legal responses to the lease recognise its hybrid nature. It is on the one hand an assured
tenancy, with the security provided under the Housing Act 1988, as well as being a long
lease, for the purposes of other sets of statutory protections, and a contract, setting out the
legal relationship between the parties.
The potential problems with service charges, evident in all residential leases, is exacerbated
within shared ownership, both in terms of responsibilities for all repairs and in the
apportionment of charges.
Exploring experiences of shared ownership housing 39
4 Introducing the case study providers
The focus of our work and the rest of this document was on two large-scale social housing
providers of shared ownership. We have called them Greendale and Fixham. In this chapter,
we describe their management and organisation, not just as an essential backdrop to the buyer
data, but also because any purchase is interactive and the purchase of property on a long
leasehold is interactive over a lengthy period. Thus, it is important to describe carefully the
management ethos and practices of Greendale and Fixham.
Greendale
Greendale has around 4,000 shared ownership properties in a diverse portfolio of general needs
social housing, leasehold, intermediate ownership and market rental. It has been involved in
shared ownership since the early 1980s and was one of the first housing association providers.
Following a string of mergers and takeovers over the years, it now has a group structure with
offices in different locations. The organisation manages its shared ownership portfolio under a
subsidiary that dealt with all commercial undertakings, from local offices, but with certain
specialist functions (lease extensions, enfranchisement and staircasing) situated in one central
team. Each regional office has its own income collection team, service charge team, and
property managers. Although the organisational structure of the group is clear, its actual on-the-
ground organisation became easier to appreciate after our observation period.
The central office location is housed in an open office space with motivational messages, such as
Did you change something for the better today?”, or reiterating the group’s mission statement.
It was recognised that, although such statements can become like wallpaper, staff were clearly
aware of these organisational values.
Some elements of the computer system used by Greendale group appeared to be not
particularly geared towards shared ownership. It required manual cutting and pasting for
example, of service charge costs. It seems to have been designed for social rented properties
for example, some actions are based on weekly rent, whereas shared ownership is monthly rent
and its prompted actions do not necessarily correlate with what is required of shared owners.
Greendale has properties across England with concentrations of stock in certain areas. There
are noticeably different markets in these areas. In our research method, we selected two areas
in which stock was concentrated. One area (Area 1) was predominantly urban, with much new
build, and generally the stock was flats. Although this area was at the more expensive end of the
shared ownership market, it was understood that this market would be different to others
because of the significant employment opportunities available. The other area (Area 2) was
made up of a town in which property prices had been the subject of a local boom and
surrounding areas where there are more limited employment opportunities. The stock in this
area is predominantly houses. It was understood that there were more likely to be affordability
issues among shared owners in this area. Our sample is made up of 13 interviewees in Area 2
and 20 interviewees in Area 1.
The stock is also mixed in the sense that there are dispersed DIYSO properties, mono-tenure
blocks, section 106 units, and mixed tenure estates. Issues tend to arise on mixed tenure estates
Exploring experiences of shared ownership housing 40
because it was said that social tenants are less inclined to make sure the property and area are
well kept.
The management approach is to treat and regard shared owners in the same way as long
leaseholders are treated and regarded. There are some general points we were regularly told
that the onus is on the buyer and for them to be properly advised by their solicitor, but that it
was apparent from the enquiries received that any such advice is lacking. This is particularly the
case about repairing obligations. As a result, Greendale does provide prospective buyers with a
list of recommended conveyancers.
Greendale had a guide for shared owners which contained explanations about various aspects of
shared ownership for the uninitiated (the guide was being updated during our observation at
Greendale). However, this was not given to prospective buyers until they viewed a property. We
were told that, by this stage, many buyers were unlikely to take in the relevant information
because they were so enamoured by the property. At this stage, the sales team complete a one-
page tick-box sheet to say that they have provided the relevant information about the property
to the prospective buyer (although this sheet does not mention repairing obligations). The
marketing staff repeat information because buyers have a lot of information to take in; they
think that people are overwhelmed or enamoured by the shiny kitchens and loving the flat
rather than thinking through the detail.
Although not necessarily articulated as such, Greendale recognises that it operates at the
interface of the commercial and the social. So, for example, it regularly “soaks up” costs which it
does not feel appropriate to pass on to the shared owners. An improvement in software now
means that more costs were being passed on to the shared owners. However, it remained the
case that Greendale did not pass on all the costs suggested by its operating systems to shared
owners, due to knowledge of staff on the ground. Further, if a shared owner cannot afford to pay
the service charge bill within the required period (30 days), they are routinely allowed a longer
period to do so. Greendale will also intervene with third-party managing agents if its shared
owners are concerned that they are being overcharged.
Greendale does have a downward staircasing policy, although this is usually restricted in Area 1
and more available in Area 2. It routinely signposts shared owners in arrears to money advice
agencies. Greendale is also bulk-buying energy to pass savings on to its customers.
However, the organisation needs to act commercially regarding sales and ongoing buildings
maintenance. The decision to buy section 106 leases was described as a commercial decision:
“…there is little scope to subsidise [shared owners] should agent fees go up and there is a bit of
a conflict with being a social landlord”. Although the organisation seeks to work holistically so
that, for example, sales staff are involved at an early stage in developments there were
concerns expressed that the drive for sales might mean that sales staff were less inclined to
provide full information and/or point out the pitfalls to prospective buyers.
Considerable thought clearly went in to the promotional material produced by Greendale for new
schemes. Simple explanations of shared ownership (“part-buy, part rent”) might be combined with
aspirational messages about the area in which the development was situated, the types of
furnishings available and “mocked-up” pictures of the finished product. On any view, these were
impressive. Development names were designed to capture the essence of an area.
Exploring experiences of shared ownership housing 41
A number of quite complex issues arose where blocks were managed by third-party managing
agents, most commonly as a result of section 106 agreements. So, for example, a developer
would agree to offer a certain number of units in a block for social housing as a condition of
obtaining planning permission. These complex issues revolved around service charges, the
creation of a “poor doors” feeling and uncertainties over the lease.
This appears to be the sharp end of where the relationship between the commercial arm of
Greendale was in tension with the social ethos. It is a universal truth among officers that more
complaints arise from shared owners with external managing agents.
In essence, Greendale can only deal with the managing agent and not the freeholder; the shared
owner can only deal with Greendale and neither the managing agent nor the freeholder. The
managing agent and the freeholder are distant from issues that affect the shared owner’s home.
Not surprisingly, it was suggested that shared owners “certainly don’t” understand the
relationships, perhaps because their solicitors and the sales team had not explained the
relationships.
As regards service charges, Greendale had no control about the level of service charge, the
quality of service, nor the period over which the charge is levied (managing agents often
operate on different accounting periods). There are significant charges for items that are not
visible to the shared owner so they question what they are paying for. While service charges for
new schemes are often low (e.g. £50 per calendar month), some third-party managing agents
may increase costs fourfold. Greendale has to pay the full management costs and recover that
amount from its shared owners.
Many agents were said to use the full reach of the legislation so as not to provide accounts or
detailed specifications of costs incurred, leaving the Greendale managers without the resource
to explain the items to the shared owners. Occasionally, Greendale threatened to withhold
payment of the service charge in such instances, but the organisation recognises that, should the
matter proceed to a tribunal, it would be required to pay the amount.
As regards the “poor doors” feeling, the following example was used a number of times to
explain the issue to the researcher:
It can be a difficult relationship. We had a recent case where a shared ownership block, which
was managed by a third party, had a gym on site. Greendale opted out of the gym as
otherwise it would have made the service charges too expensive. …. The managing agents
would not even let shared owners use the services of the gym if they paid separately and had
a separate individual account. When a shared owner staircased to 100% he expected to be
free of [Greendale] but he is a 100% leaseholder of [Greendale] not of the freeholder, and
still can’t access the gym which is what he wanted. They don’t understand why they cannot
pay service charges etc. direct to managing agent now, so the legal relationship was not
made clear to him ever, until he staircased and did not get the result for which he hoped.
This example also demonstrates the issue with some leases in some blocks. That is, when the
shared owner staircases up to 100 per cent they remain in a leaseholder relationship with
Greendale. Not all such leasehold relationships are constructed in this way, but that does
happen where the Greendale leases are held en bloc, i.e. in a single headlease.
Exploring experiences of shared ownership housing 42
Greendale has been at the forefront of innovation in design in its new-build properties. It has
tended to balance innovation and energy efficiency, on the one hand, with practicality, including
ongoing costs, on the other hand. The organisation has particular issues with solar panels
because these require annual maintenance (their shelf-life is limited otherwise) and can be
expensive; many householders switch them off.
Fixham
Fixham has been involved in shared ownership since its early days. Some of its stock is
dispersed as a result of individual DIYSO purchases. However, it predominantly operates
geographically in two regions in England. It currently manages about 4,000 shared ownership
properties.
Fixham organises its housing management generically, so that response teams deal with all
tenures general needs rented housing, shared ownership and leasehold. We were told that one
rationale for this is that the business is about people, not tenure; as one person put it: Tenure
doesn’t really matter but what is important is how you deal with the problem. Further, and
relatedly, separate teams produced duplications and, thus, inefficiencies. It was also clear that
officers move between teams and, therefore, are aware of the systems, processes and
procedures across the whole organisation.
Teams are arranged over three floors of open-plan space in a central building that is both large
and modern; the exception is that the neighbourhood management teams are organised and
have offices on an area basis. Neighbourhood management officers deal with approximately
650750 properties. Motivational messages are part of the decoration of the main offices and
values were promoted both to staff and contractors.
The management of shared ownership properties is, however, different from the general needs
stock. Shared owners are “left to their own devices”, whereas general needs occupiers tend to
have more regular visits. This reflects the “hands-off” ethos towards shared ownership. There has
been discussion, however, of whether to translate the incentive scheme for general needs tenants
to shared owners, but the difficulties of doing so have meant that this has not yet been done.
Fixham’s stock tends to be pepperpotted on estates that it manages, DIYSO and in other
developments with third-party managing agents. The last of these are a source of tension as
they range in quality of management. We were told that managing agents have a different
approach, their staff follow the lease to the letter, there are no shades of grey. Staff are focused
on the asset, the estate or block.
Fixham seeks to ameliorate management issues in relation to third-party agents through
actively seeking relationships with them by “being strong and championing” shared owners.
Although it is a leaseholder, Fixham’s active approach is manifested in, for example, assisting
leaseholders remove and replace a managing agent, or in negotiating with the third-party agent
that Fixham conducts internal repairs to the fabric of the building and that the third party deals
with external matters. Further, it seeks to develop relationships with agents in advance of
development and the development team is warned away from entering relationships with third-
party agents, which are negatively regarded.
Exploring experiences of shared ownership housing 43
However, Fixham is concerned about its shared ownership satisfaction rate which, we were
told, was high when specific teams dealt with it, but was now at a mid-level. Different
explanations were given to us by staff for this, but the most common was that the complexity of
the different types of tenure means that neighbourhood officers “don’t have the ability to
manage shared owners’ expectations” because of their “social work” role and the different sort
of complaints from shared owners. The more specific, but related, explanation given was that, as
neighbourhood officers are often unavailable as they are frequently out of the office, the
expectations of shared owners are not always able to be met. Further, we were told that the
current computer system tended to prioritise process that is, dealing with an issue swiftly
over substantive resolution of issues.
Fixham has sought to manage shared-owner expectations through a new customer care team,
which is responsible for explaining various matters such as defects periods, repairing
obligations, use of white goods etc. to new shared owners. However, it is clear that Fixham’s
staff also perceive shared owners to have higher expectations than general needs tenants. So,
for example, in a more flippant moment, shared owners were described as “seeing themselves
as superior”, that they “forget they rent themselves”, there was “snobbishness among some
people” and that managing mixed tenure can be difficult.
The customer service and communication skills were said to be different. We were regularly
told that Fixham will not hold the hands of shared owners but that it operates a kind of social
work role with general needs tenants. Fixham’s dominant management ethic is that it operates
as a “social business” and recognises that tensions, which can be productive, are likely to arise
as it navigates between these poles. As one officer put it: We have to be in the commercial
world to achieve our social goals. We have a commercial head and a social heart but it is a real
balancing act. Key values are painted on the walls of the reception area. Fixham is also seeking
to ensure its contractors meet these values.
In general, the social mission was satisfied by recognising that Fixham’s shared ownership “sits
in the middle ground” between social and private markets. The social mission was also
recognised to have a particular impact on individual cases, in which it might be said to be an
“orientation” when dealing with “hard cases”. Thus, staff justified more lenient discretionary
decisions by reference to the social value. More generally, certain practices might be said to be
less commercial so, for example, once a reservation fee is paid on a new plot, Fixham honours
the original purchase price even where there are substantial delays and the housing market
value has increased; or, service charge payments may be made monthly for affordability as
opposed to six-monthly in advance, without interest; or, Fixham’s income maximisation
approach, where it assists with post-application issues with housing benefit, spans both general
needs and shared ownership. Fixham can also do downward staircasing, although the funding
criteria are strict.
Fixham has a rent arrears management system for shared ownership which is acknowledged to be
best practice. In particular, the organisation has worked to support shared owners in terms of
informing them about the availability of benefits, which can also cover service charge payments. If
the shared owner is in arrears after service of a notice seeking possession, Fixham will, like
Greendale, often inform the lender, which can capitalise the arrears. Fixham also operates a
flexible tenure scheme but the criteria, which the regulator sets, are tight due to concerns about
moral hazard. Fixham’s assistance to occupiers tends to be enhanced where the officer has some
kind of relationship with the lender’s officer, so that co-ordinated action can be taken.
Exploring experiences of shared ownership housing 44
Usually, Fixham’s experience is that, if the buyer is not in mortgage arrears, the lender will capitalise
any arrears a number of times, although there is a limit to lenders’ forebearance. The “catch-22” that
arises, though, is that the lender may not inform Fixham that it has done this a situation may arise
where the lender has paid arrears leading to the owner being in negative equity.
In that situation, the MPC in the lease protects the lender but not Fixham or the occupier. Where
the borrower is in mortgage arrears, experience suggests that rent arrears will “push the lender
over the edge”. If staff have to contact lenders, this can cause frustration when there is no
specific contact person provided and staff are told that Fixham officers do not have permission
to speak to lenders, even though it’s all in the MPC.
Shared ownership properties may be purchased through new-build first sales, resales of
previously purchased property and by purchase of repossessed resale property. All sales are
handled by different staff with different degrees of “handholding” through the process, and
different documentation issued to prospective buyers. Down the line all staff members have to
be confident that buyers were given all the necessary information at the outset of their
purchase, but there is a recognised potential for inconsistencies in quality of information
imparted during the sale.
Conclusion
Both case study providers Greendale and Fixham have provided shared ownership for a
lengthy period.
Both have a tenure neutral approach to shared ownership management, although Greendale
aligns shared ownership with leaseholders, and Fixham more broadly.
Both might be described as entrepreneurial organisations working at the interface between
socialcommercial practices. Both can evidence considerable attempts to alleviate issues
among their shared owners, including downward staircasing.
Both have issues with third-party managing agents and have strategies to deal with them,
albeit recognising that many of the problems are beyond their control.
During the observation phase of this work, slightly different tensions became apparent in
the management of the shared ownership stock. For Greendale, there were emerging issues
about repairs. For Fixham, there were emerging issues about shared-owner satisfaction.
Exploring experiences of shared ownership housing 45
5 Understanding the shared ownership product
Introduction
A common theme across the fieldwork phases was that there was a gulf of knowledge and
appreciation about the product between buyers and the registered providers. Our key
stakeholders raised this problem at the outset of our fieldwork:
... one of the difficulties is I think that people don’t understand the leases. You know the
staff haven’t read the lease ... the leaseholders don’t read the lease, shared owners haven’t
got the faintest idea what it is they’ve bought, they really don’t. (KS/16)
probably 3 ½ to 4 years ago there was a massive, really extensive piece of work on the
[model] lease to … transform it from a pretty inaccessible legal document into something
that was relatively sort of legible and stuff … and I think there was an attempt to sort of
put it in as plain English as possible. And … have to an extent made it slightly more
accessible and transparent to a shared owner. But I think, as we all know, people don’t
always tend to read these things as thoroughly as perhaps we’d like. (KS/8)
Quite often, this gulf of understanding was at the root of any negativity expressed about the
providers. Some shared-owner buyers felt they understood the terms of the lease well. But on,
the whole, it was a common refrain that shared owners do not understand the lease and this
was one of the first things Greendale and Fixham staff wanted to impart to the researcher.
The gulf of understanding was exposed over a number of different issues, but was particularly
prominent about repairs, improvements and service charges. We found that the sense of
grievance felt by shared owners changes over the time in which they are in their home. Most
commonly, in the early days, they tend to be either oblivious to, or accepting of, the obligations;
however, the longer they remained in the tenure, the more questioning they became about the
nature of the obligations imposed on them and that they had taken on.
This chapter outlines how this gulf of understanding is manifest and examines staff and shared-
owner experiences of how the different actors in the purchasing process the shared owners,
the registered providers and the solicitors attempt to understand or communicate critical
information about the shared ownership product. The chapter concludes by considering where
the responsibility lies for ensuring buyers understand what they are buying and what steps
might be taken to overcome this information or comprehension deficit.
Staff responses
Staff in both case study organisations, across many operational teams, routinely cited the failure
of shared owners to understand their lease as a major problem with managing their
expectations and responding effectively to queries raised. Consistent staff effort was expended
explaining the lease to shared owners in a number of different scenarios. Examples include: the
repairing obligations; variable service charges; the relationship between themselves, the
registered providers and third-party freeholders and/or managing agents; or what the rent
covers. That shared owners were felt not to understand the lease was a central theme to emerge
from the case study fieldwork. Staff explained this phenomenon by reference to the shared
Exploring experiences of shared ownership housing 46
owners undertaking insufficient research and solicitors underperforming, but also conceding
that registered providers could perhaps do more to clarify the terms and conditions of the
scheme.
Most of the problems arise from people not understanding that they own 10 per cent of
property but they’re responsible for 100 per cent repairs. They report that their boiler has
gone and we say well get on with the repair then and they say What!? You own 80 per
cent of the property, you should share this.” It’s the solicitors at the time of the sale but they
don’t explain the lease to them, they don’t explain the service charges to them. It could be
us, maybe we don’t explain enough either. People are keen to get the new keys and not
listening or realising what’s being said. Some don’t realise they pay ground rent, but that
depends on the lease. But the service charges, the 100 per cent repairs we think they
should’ve known that. It’s less common with leaseholders but shared owners think it should
be shared. (Greendale staff from field notes)
They explain to shared owners it’s a self-repairing lease, a lot say they were not told, but
they might not have been listening, or their solicitor was crap, most people accept it once
explained. Once a colleague had a shared owner have a massive hissy fit over a self-
repairing lease on the demonstration visit on the day of completion, not too happy but they
still bought. It’s no different to private, might not understand all the ins and outs but they
can ask questions if they don’t understand at that point, they have enough opportunities to
ask us and can always phone up. (Fixham staff member from field notes)
Staff members acknowledged that much of the language of the leases is often arcane and can be
difficult to understand as there are a variety of leases in operation. However, they felt that it is
the buyers responsibility to take time to understand their purchase.
They have to read the lease, their solicitors should explain and they are given a handbook.
But generally they’re first-time buyers and they’ve seen bright and swanky properties and
don’t have to worry about the roof There’s a massive under-education of shared owners.
(Greendale staff member from field notes)
One staff member highlighted a potential for a conflict of interest in the sales team as providers
are keen to sell and so they have to make the product attractive, implying that full information
of the key terms of shared ownership would jeopardise sales, and the staff member was,
therefore, not confident that all important issues were highlighted: “Shared owners ‘certainly
don’t’ understand the relationships and the solicitors do not appear to have explained it and the
sales team don’t go out of their way to emphasise it.” (Staff member from field notes)
Several staff members of both case study providers suggested, however, that buyers were
expected to digest a lot of information during the purchase process; but that buyers may be
distracted by immediate practicalities of sorting out finance and conveyancing and by the
excitement of the prospect of a, frequently brand new, home, where repairs and other issues
seem a distant concern. As the stock matures and owners live as shared owners over the long
term, however, such issues may further increase in importance.
They were bought 5/6/7 years ago so now things are beginning to go wrong on their
estate or in their home, but they’re not fully aware of their obligations or what they’ve
Exploring experiences of shared ownership housing 47
signed up for. Possibly not told enough when they were sold, but solicitors don’t point it
out. We get queries and I say speak with your solicitor as it should have informed you what
it is. People get cheap solicitors who don’t point out certain things, expecting the
provider to replace their heating system for them. (Staff member from field notes)
Many staff members were explicit that it was incumbent on shared ownership buyers to take
responsibility for their purchase and to read the lease prior to the completion of the sale. But
how do different actors in the purchasing process fulfil their duties to understand and/or
impart information about the shared ownership product?
Shared owners’ own research
Participants found out about shared ownership through contacts (friends and family), word of
mouth, newspapers and other media and advertising. A significant minority of shared owners
had been professionally aware of the product because they worked in public or private housing
or associated industries. Internet searching of public media, various local and national housing
organisations and government agencies was also important, but it was not always easy for
shared owners to find the information they required. Mortgage brokers were also an important
source of information about the operation of shared ownership.
Shared owners differed in their ability or propensity to seek out information for themselves, to
undertake independent research or to ask probing questions, possibly no different to other
first-time buyers and/or other leaseholders, although it was apparent that a minority had
formerly been homeowners prior to a relationship breakdown. A minority of buyers suggested
they had extensively researched shared ownership products, or held professional knowledge of
the sector, and thus were aware of the structure of shared ownership leases.
You can also access the site of the government housing agency, so I found that, which has
got even more in-depth information, and has got sample leases and so on and so forth on
there, so I had a look at that. Also I looked at other peoples experiences Just blogs, just
people asking questions, shared ownership. You pick up bits from Mumsnet and that, and
all over the place, you can put little bits on about shared ownership and so on I spoke a
lot with the sales team at Fixham, the lady that was doing the sales, so any questions I had
I asked, which was quite easy by email. It was really helpful. (Fixham/20)
Yes, because obviously working in estate agents, like I did, I understood freehold from
leasehold, and the restrictions and everything, and going through it, I know theres always
little issues with leasehold, but to me they were trivial. In comparison what I was gaining,
those little bits were like trivial. (Greendale/32)
Generally people understand the basic premise of shared ownership but less so the detail.
However, the common characterisation of part own, part rent may not accord with the legal
status, so it may be unsurprising that confusion exists. Online information was not considered to
be sufficiently comprehensive to enable a deeper appreciation of the product.
Not really. I mean, I probably could have found out, but it was all quite vague, to be honest.
I knew the basic idea of it was that it was shared, that you would buy a portion, you would
rent on the other proportion and then you could buy back at a later date. With regards to
Exploring experiences of shared ownership housing 48
the terms and conditions, I probably could have found out, but it wasnt obvious.
(Fixham/10)
Staff members highlighted that shared owners were not the most knowledgeable buyers. Buyers
also acknowledged their sense of naivety when buying a shared ownership property for the first
time. That some shared owners lacked a grasp of detailed information about shared ownership
was not a deterrent, however, either because people were in precarious housing situations or
felt they had few other opportunities to own something.
[Fixham did provide information], but accepting that I was somewhat desperate at the
time probably a lot of it went in one ear and out the other, because all I wanted to do was
get in, because my bed and breakfast was quite expensive. (Fixham/12)
I didnt feel that I had kind of full information, but I knew that it was what I wanted to do.
Realistically I knew it was the only way I was going to get on the property ladder.
(Greendale/19)
There was a sense, therefore, that some shared owners were savvy buyers, utilising a range of
resources and balancing the information obtained to inform their decisions; but, conversely, a
portion of shared owners who were less concerned with detail focused upon completion and
moving in due to a lack of perspicacity, or indeed pressing housing need. It is plausible that this
mirrors first-time buyer and leaseholder experiences in the open market, although there is an
additional player involved in the sale in the case of shared ownership. Does the provider have a
greater obligation to offer support and guidance?
Registered providers as a source of advice and information
Some shared owners were perfectly content with the level of support and information they
received at the point of purchase, describing a surprisingly easy process albeit with perhaps
some legal or lending delays and praised the sales staff.
I was in contact with someone quite a lot from the housing association, and she was quite
helpful and she was quite knowledgeable about the sales process. She was good about all
the things, every time I had a problem. (Fixham/5)
Other buyers felt the responsibilities and terms of the lease were not clear until after they
moved in. The schemes were understood in principle but it was not until something happened,
often after discussions with the providers, that the precise details and terms became apparent.
I think the government website certainly helped the most. You cant find much out until
youre in, I guess, with someone like [Fixham]. Until youre in, you dont get that much
information. (Fixham/2, resale).
The providers did make efforts to impart knowledge about shared ownership at various points
during the sale process, although there were inconsistencies and the imperatives of the sales
process were, of necessity, the priority at various points. On visiting the marketing suite of a
new development of apartments for open sale, shared ownership and rent undertaken by one of
the case study organisations, staff demonstrated their processes when showing the properties,
emphasising that they provide information, repeat that information during various points of
contact and go through a checklist of information to ensure all important points are covered,
Exploring experiences of shared ownership housing 49
such as details of the MPC, improvements and staircasing. At development launches, prospective
buyers were said to vary in their knowledge of shared ownership; many do not know too much
about it, but the staff in the show suite reported that people do ask questions about the details.
The 100 per cent repairing obligations are apparently quite readily accepted at this stage, albeit
that the buyers are standing in a brand new show flat, but staff do ask buyers to sign to say they
have had all the information because, invariably, by the time they have bought and they call the
leasehold team, it sounds as if the team had just driven past and chucked the keys out the
window and told them to get on with it. (Sales staff from field notes)
Marketing material for new homes across both organisations prioritises selling the potential of
the place, the property and the lifestyle over highlighting the key facts about shared ownership.
So, for example, Fixham produced a brochure for a new build which had a family portrait on the
front, all dressed in tweed in a wood with their dogs in front. It suggested an aspirational,
middle-class tenure. The information booklet that Greendale staff ask buyers to sign does
provide more detailed information about shared ownership, although it does not make clear the
repairing responsibilities instead it says ‘refer to the lease’. This document is only provided
during the purchase process and not by the staff handling initial inquiries, so people are already
further down the line, and perhaps emotionally committed, before they receive more detailed
information.
Three teams sell properties at Fixham repossessions, resales, new build and two teams deal
with sales at Greendale resales and new-build sales teams. All teams within the organisations
operate differently; they provide similar but differing sets of information in different formats
and at different points during the enquiry and sales process through to completion and shortly
beyond. All teams have checklists but, as staff elsewhere in the organisation noted, there are
ramifications for other teams in the organisation if information is not delivered in the best
format at the best time and if other intermediaries are inadequately fulfilling their part in the
process. One of the organisations was seeking to harmonise the information provided across the
different teams.
For example, the researcher observed a member of Greendale staff going through the
information checklist on the telephone with a person approved to purchase a resale property. In
a dense 10 to 15-minute telephone call, the staff member politely talked through all the points
that need to be shared with the buyer. The conversation was one-sided and included a lot of
complex information to take in and the staff member used rehearsed phrases to get the points
over succinctly, potentially leading to ambiguous descriptions of some key points. In respect of
repairs the phrase “You’re responsible for the internal repairs and we’re responsible for the
external repairs provided the “rule of thumb”; and perhaps did not convey as clearly that, in a
flat, the provider, or management company, will organise and undertake the external repairs on
the leaseholders’ behalf and recharge the leaseholders in the block for the costs of the work.
Although there were many shared owners pleased with the progress of their resale purchase, it
is apparent that buyers of repossessions and resales on the open market have fewer
opportunities to receive information from the provider, ask questions and receive support when
compared to the extensive guidance and information provided for buyers of new homes.
Fixham had instituted an additional contact stage with buyers of new builds to cover the defects
period, help them understand the length of time the developers would be held responsible for
faults in the property, and to ensure they understood that the shared owner would be
Exploring experiences of shared ownership housing 50
responsible after this period expired. At this point any other queries about the property or lease
can be answered. Another form is obtained and signed by the shared owner to emphasise that
they understand. The team had not long been constituted in this way so staff could not
determine the effectiveness of this new approach at the time the fieldwork was undertaken.
New sales staff in the other provider handled this transitional period by being the first point of
contact for queries for a month after completion.
Solicitors as a source of advice and information
Both case study providers had a panel of solicitors with whom they had developed working
relationships. The idea of the panel was that it was comprised solicitors who knew about shared
ownership and were familiar with the providers’ processes and needs for fast completions.
Shared owners frequently used these recommended solicitors but also used their own, sourced
through family, locally and chosen on costs, or because another company of solicitors was
already handling other aspects of their lives, such as their divorce.
Some shared owners were positive about these recommended solicitors and several staff
members highlighted the merit in using panel solicitors who knew the details of shared
ownership and the registered provider to smooth the conveyancing and purchase process.
Some buyers shopped around among the panel solicitors and discovered considerable
differences in price. Others had difficulty finding other solicitors who would take on the
conveyancing for a shared ownership property. In some cases, buyers felt that they had been
coerced into using a panel solicitor or that the solicitor was influenced by their work for the
providers. Furthermore, staff raised the issue of changing practices within the conveyancing
sector that may also impact upon the quality of solicitors’ work:
Conveyancing is the lower echelons of law, they make profits by taking on bulk cases and
having a fast turn over, when you contact them likely to reach paralegal not solicitor, so
moves like Tesco law etc. are a concern. It’s a concern about the legal profession may
impact upon vulnerable or lower-income people who are trying to enter the property
ladder. (Staff member from field notes)
Solicitors were afforded a critical role in the purchase of shared ownership housing, and staff in
the providers placed great emphasis on solicitors explaining the terms of the lease and
providing information about the shared ownership scheme to prospective buyers. In fact,
buyers often obtain only limited information or explanation. A shared owner (Greendale/2), for
example, showed us their correspondence with their solicitor the latter had simply put two
post-it notes in the lease alongside the standard customer care letter. The general view
whether buyers used the providers’ recommended solicitors or not was that solicitors
provided very limited information. This might have been because the buyer was desperate and,
therefore, did not take in the information, or was so looking forward to completing the purchase
that they ignored what they were told. Solicitors might give “tips” to buyers – a kind of insider
knowledge but the detail of the lease was rarely spelt out. More savvy buyers tended to seek
out solicitors with experience of shared ownership, not necessarily to obtain more information
about the product or the lease, but because those solicitors were assumed to be able to spot
issues.
Exploring experiences of shared ownership housing 51
The impression that I got, and this may be fair or it may not be, was that a small group of
lawyers who specialize in this know theyre going to get a pool of work and so the service
was pretty shoddy. So you know this guy who was based over in Ealing and I mean it was
really a crap service they kind of give in terms of calls that kind of stuff, too impatient to
make calls. (Greendale/18)
Online conveyancing methods appeared to have been used in a number of cases. The data
generally spoke to a limited translation of the lease by the conveyancer to the buyer, the onus
being on the buyer to ask specific questions:
I wanted to know about staircasing. I dont remember anyone going through the lease in
any fine detail. As far as responsibility for things such as repairs were concerned, it was
never spelt out to me, but I understood later on that internally is the residents
responsibility and the external structure, any faults or repairs, are down to Fixham.
(Fixham/19)
They sent out, they had like sort of a pamphlet with all the information in it. On the
internet really. Not a lot of people that I know have got shared ownership properties. …
There wasn’t a great amount of information out there really. Obviously when I went to see
the conveyancer she had like all this sort of bumf for me, which was quite daunting, quite
overwhelming, especially as I was going through divorce as well. So it was loads of legal
stuff there. So I would say I kind of probably understand it but probably not as fully as I
should do, if that makes sense? (Greendale/21)
However, when buyers complained about solicitors in our interviews, they tended to focus on
the length of time the conveyancing process took rather the quality of the guidance received.
When owners did get the information from the solicitor, it was often because they pushed to
understand the lease comprehensively, were attuned to the different terms and processes
involved in shared ownership and wanted to understand how these issues might affect them in
practice. Such accounts were exceptional, however.
I sat and read through the lease documents and things like that to see if theres anything
because I was particularly interested about, well, whats your exit strategy if you ever need
to get out of it or staircasing all of that. So, I tried to understand a lot of that and I did go
back to the solicitors with questions to say just to make sure that I understood a lot of that
kind of stuff. I did try and engage with all of that because my worry was there are
restrictions obviously, there have to be, about method of sale and exit, all of that.
(Greendale/3)
Although staff in both case study providers emphasised the need for shared owners to take
responsibility to understand the lease, staff at Greendale reinforced the importance of the
solicitor in the transaction and the weaknesses in the process, although they did concede that
providers could contribute more towards the transparency of the lease.
But in respect of the sale there is a thing in British sales caveat emptor, buyer beware. We
provide a pre-sale pack with all the leasehold plans, the covenants, service charges, outline
obligations. But it’s not our responsibility to go through all this, they must go through an
independent solicitor, but we are powerless to ensure solicitors are giving them the
information. It’s evident in all the little things that arise later. But having said that, the
Exploring experiences of shared ownership housing 52
rent explanation in the HCA lease is not sufficient in his opinion. We should provide more
information and transparency on service charges and curb any ambiguity. But it is solely
the solicitors responsibility as it always says in the sales negotiations do not form part of
the contract. It is the lease they are buying and they need to understand it, the lease and
the lease plan, the ultimate responsibility lives with the solicitor. (Staff member from field
notes)
Disagreement with the lease
Some buyers told us that they would report broken cooker hoods and other internal
maintenance problems to the provider and clearly had not taken on board that they were
responsible for such repairs. Many others, however, were perfectly clear about the demarcation
of responsibilities, albeit that internal window and door handles and other grey areas were
apparent. So some misunderstandings of the lease were evident.
However, it was critically clear that among a portion of shared owners there was less of a
misunderstanding of the lease but an emerging sense of disagreement with the lease, which went
some way to explaining the repeated calls on staff time to get the providers to show some
commitment to the property in which they owned a share. After time, the balance of
responsibilities between the buyer and the provider became more apparent and discontent with
the lease emerged. Notably, and unsurprisingly, the balance of repairing obligations was the
most prominent issue over which disquiet arose. This was particularly acute for people in older
DIYSO properties where a number of components of the properties were failing, involving costly
repairs.
This sense of unfairness was not helped when staff routinely referred shared owners back to the
lease, sometimes before hearing the full extent of the problem. Whether that be a communal
fault, a latent defect or a disrepair, the emphasis on the buyers’ repairing obligations towards
the property took priority over providing advice and support about how that person might go
about rectifying the problem raised.
I think they could help more with problems. Not just say, you know, The rest is up to you.
Youve purchased this property. Thats all in black and white; they make it quite clear. But
after you dont think of that when youve got a new property, but after five years, or three
years, when things start going wrong, you think, If I was renting a property, the landlord
would be responsible for all these things that are going wrong. So Id stick to my guns
and think they could help a bit more. (Greendale/14)
Several staff members noted that the product is named inappropriately as ‘shared’ ownership as
the responsibilities are not shared; but, among a number of shared owners, the fact that they
understood the product to be shared also contributed to their disquiet about the lack of
support from the registered providers. After time, shared owners were comprehensively aware
that the provider would not help with the repairs, but they had formulated expectations based
on the provider and themselves both having a stake in the property and the fact that the
providers were social housing providers. We return to this point in chapter 8 below.
Exploring experiences of shared ownership housing 53
Consequences of misunderstanding the lease
The consequences for shared owners of misunderstanding their lease and/or the terms of
shared ownership arrangements ranged in seriousness. As suggested above, the repairing
obligations were the most frequently cited area of disagreement between many shared owners
and the providers but there were other issues that arose.
By way of examples,
One buyer had not understood they were purchasing a lease with a low number of years left
on it. She had not appreciated the impacts on its resale value and the necessary processes
she needed to follow, and funds that were required, to buy a lease extension. She was
committed to the flat as her home and reckoned that she would have bought it anyway.
However, she was annoyed that nobody neither the provider nor solicitor had explained
the position about the leasehold term to her.
Service charge staff also reported that buyers did not always understand the service charge
or governance arrangements relating to their property. Where there were third-party
managing agents (see below), they did not appreciate that the registered provider was not
the freeholder and had limited influence over the managing agent, including the costs and
charges. Staff were unsure to what extent the third-party management arrangements are
made clear to people when they purchase: “They say ‘you’re telling me you have no say!?’
But then leases are written so cryptically. (Service charge team member)
Estate management staff reported that some shared owners understood the split of
responsibilities in principle but not how it translated in practice, which they thought could
make for a difficult relationship. A recent case in Fixham involved a shared ownership block
managed by a third party that had a gym on site. The registered provider had opted out of
the gym to limit the impact on the service charges for affordable homes, which were already
being subsidised by the developer as the service charges were high. The managing agents
would not let shared owners use the services of the gym, even if the shared owners paid
separately. When a shared owner staircased to 100 per cent he expected to be free of the
housing association but he was a 100 per cent leaseholder of the provider still and not of the
freeholder and, therefore, still could not access the gym which is what he had wanted to
achieve. Staff reported that the legal relationships and governance arrangements in these
blocks were opaque to the shared owners.
As regards Richardson, very few staff members and only one shared owner raised this as an
issue indicating that it is not necessarily widely understood. Similarly, in the case of rent
arrears, shared owners did not understand that the provider should contact the lender
when their loan is in jeopardy.
Conclusion
Shared ownership arrangements can be complex and confusing, and prospective shared
owners are not necessarily best placed to understand the obligations and their extent.
Both providers went to some lengths to communicate the nature and extent of the
obligations to buyers.
Exploring experiences of shared ownership housing 54
Open market buyers may not, however, receive the same level of information.
Both providers had panels of legal advisers who had experience of shared ownership
transactions.
Both providers assumed that buyers would be given information about the lease and
information about the nature and extent of their obligations by their conveyancers.
Modern conveyancing practice does not necessarily support that assumption and few
buyers were provided with much in the way of advice.
While some owners clearly did not appreciate the detail of their lease, what was also
apparent was that over time the position came to be one of disagreement with the lease.
Claims to the provider were therefore also based on appeals to reason and for advice and
support rather than wilful misinterpretation. Providers’ reaffirming the synergies between
the responsibilities of shared owners and full homeowners in the wider market frequently
served to emphasise the imbalance in the relationship and the misnomer of the ‘shared’
epithet.
Exploring experiences of shared ownership housing 55
6 Property and estate management
This chapter is concerned with the provider’s management of properties and estates, as well as
the buyers’ experiences of that management. At the outset, the reader should remember that the
two case study providers adopted contrasting organisational arrangements to oversee the shared
ownership stock: Greendale incorporating the management of shared ownership and other
leasehold and intermediate tenures in a commercial subsidiary, while Fixham adopted a largely
generic tenure neutral approach to management of its stock. The tensions arising in the shared
ownership product, and reflected in these organisational structures, are discussed in chapter 8.
Property management
New build: quality issues
A major issue that arose, particularly in the Greendale buyer sample, was the quality of new-
build properties and the providers’ responses to undertaking repairs. Problems with defects can
be anticipated and some shared owners had few issues. Others experienced frustratingly
protracted negotiations with the provider, with ongoing issues beyond the expiry of the defects
period but relating to the same issues.
Even the day we moved in, what is my daughters bedroom had all mould and stuff in it,
and, you know, this is a brand new flat, and you look forward to moving into a brand new
property, and the very first thing that happens when you move in, the first time we came
up to actually get the keys to the front door, walked into the – you know, big smell of
damp and theres all mould in the bedroom. (Greendale/10)
We havent really had any problems with the defects. We only had really minor things.
(Fixham/23)
Yes, Ive had a bit of a rollercoaster; some good, some not so good with the defects. I think
you assume when you buy a new property that its going to be problem-free, or defects-free,
but its not the case, and I think people need to understand that, youre going to have bits
and pieces. (Fixham/20)
There was considerable heartache expressed about the build quality. Water ingress was the
main concern amongst this group in Greendale. Some buyers felt that providers’ oversight of
their contractors was poor, which caused the poor build quality, but, more generally, there was
a degree of cynicism expressed about cost-cutting or just poor quality workmanship or the
contractor seeking to avoid responsibility for the problem.
Some issues may be attributable to a property not being sold immediately on completion, so
buyers could occasionally experience mould and condensation that had accumulated during
unventilated drying-out periods. While other issues related to the building contractors
lackadaisical approach and included slashed kitchen unit doors (when blades had been used to
remove plastic packaging), plastic packaging left in sanitary ware causing blockage and damage
to several flats, and builders’ rubbish swept underneath units. Many shared owners had
experienced serious water leaks from various joints on apartment block and house roofs, or
through poorly sealed window units. There was a range of experiences in respect of the
Exploring experiences of shared ownership housing 56
providers being able to resolve these problems, some of which were dealt with swiftly, but some
persisted beyond the defect period and became the owners’ responsibility if the provider did
not accept it was a latent defect.
The length of time remaining on some defect periods was shorter than originally offered by the
developer as some properties were not bought immediately on handover of the building work,
which disappointed a number of shared owners. One person bought a show flat and had no
defects period at all because the period had run from the time when the property had been
handed over to the provider: “Which I thought was utterly absurd. If you buy something in a
shop it doesnt matter how long theyve had it on the shelf, you still have a period when you can
check it out.” (Fixham/22).
These concerns about defects may reflect similar issues experienced by other new-build buyers
in the wider market, but in the case of shared owners there was the additional frustration of
going through a third party to rectify problems. Indeed, in some blocks acquired by providers
through section 106 agreements, shared owners can occasionally report directly to the
management company, which owners found convenient; but on other developments other
managing agents will not talk to shared owners at all, so to get repairs or defects undertaken
requires the owner going through another, fourth, party.
Staff at Fixham reported defects as an area where the most long-standing complaints lay and
had set up a new team to manage this stage of the shared owners’ residence as well as a fund to
expedite the rectification of some long-standing defects, rather than continually chasing the
developer for them. Greendale’s marketing staff retained contact with buyers for the first month
after completion for continuity in the early stages of residence. Shared owners were frustrated
about having their repairing responsibilities emphasised when what they were reporting new-
build problems and not general maintenance issues: “Whereas a little bit of common sense to
say, Oh right, okay, let me listen to what youre saying first.” (Fixham/25)
Improvements
The principal issue with improvements were the requirement for providers to approve the
work to be done and, in particular, the fees providers charged. Most buyers appreciated that, if
they gave notice to the provider of the improvements, then there would be notional discount on
a subsequent valuation to reflect the cost of the improvement itself. However, not all buyers
appreciated the rationality of the administration fee and so decided not to register their
improvement. Even when a buyer did appreciate the rationale, they might not register their
improvement because of an internal feeling that the property is not “theirs” – in this sense, it
was tied in to that sense of ownership or a sense that they were being dictated to without any
obligation by the provider to assist with payment. Furthermore, Fixham noted a clause in the
lease requiring owners to keep the property in good repair. If on resale or staircasing the
property was found to be in poor repair, then a notional uplift in the value of the property to
reflect the price it might have achieved if the property had been maintained would be imposed
and calculations on shares between the provider and shared owner made accordingly. No
shared owners who mentioned their reticence to undertake work due to their perception that
the provider would benefit disproportionately were aware of this provision in the lease.
Exploring experiences of shared ownership housing 57
Third-party managing agents
When we introduced Greendale and Fixham, we highlighted the particular issues they faced
when dealing with third-party managing agents. In particular, it was said in Greendale (and was
also true in Fixham) that it was a universal truth that many of the problems found with shared
ownership are due to these arrangements which are both complex and difficult to manage. The
management charges were often high, the governance arrangements opaque and shared
owners’ involvement or opportunity to participate in the structures of management of their
home often limited: I pay mine and the house thats private next door pays theirs. They made a
Residents Association and didnt invite us. The managing agents didn’t think to invite any of us.”
Staff members from both providers struggled to obtain relevant accounts and information from
some third-party management companies and often had little power themselves to intervene to
secure adequate billing information to pass on to shared owners. Third-party management
companies were reported to use loopholes in the law regularly, if not routinely, to repeatedly
withhold the production of annual accounts. But the issue was also reflected in other ways.
Buyers often, perhaps understandably but unfairly, blamed the provider for many of the
problems. They tended to feel that providers could exercise greater power because of their size
and influence:
If you want to get out of your managing agent, you have to have some sort of committee
and have the whole estate put together and have a majority vote and everything, meet in
the village hall and take over which isnt going to happen. Whereas I feel that weve got
Fixham; they should be on our side and they should be advocating. They should say, Im
not handing over a portion of your rent to a company that does nothing or that charges
what they like when its disproportionate to the work they do. (Fixham/34)
I work as self-employed on a very, very low income so its very, very difficult as you see just
getting further and further financially screwed, it made me quite angry and upset that not
only was this happening but that I from my personal financial point of view and we as a
couple theres nothing we could do about it. I felt particularly that because wed been
accepted onto the scheme which at the time with the shared ownership it made it look as if
it was helping us in our financially difficult position, had actually said actually no, were
just going to screw you over later. So I felt quite sort of deceived and let down. (Fixham/7)
In this tripartite relationship of buyerprovidermanaging agent, a number of our participants
felt that they were treated like they were the “third party”. This feeling was experienced in
different ways and here the interviewee’s narratives are themselves significant. For Fixham/5,
the narrative concerned her complaint over the management of car parking. She was asked who
managed her estate and the car parking on it. Her response is revealing in the sense of an
absence of knowledge that the relationship transcended her everyday experiences; she
grounded her response by reference to the organisation with which she had a financial
relationship (Fixham), but also there was a sense in which that legal nexus was intangible:
Theres a managing agent, but I dont know who the managing agent is, because I pay my
service charge to Fixham, I dont pay it to anyone else, but theyll [make] the link between
them, Im the third party and then they just step aside when theres problems and say its
between you and whoever. … this is where it’s quite legal isnt it, and I dont know all about
how that works? (Fixham/5)
Exploring experiences of shared ownership housing 58
Service charges and estate management
Service charges represented a perennial ‘bugbear’ of many shared owners. Most buyers did not
appreciate how they were calculated and complained about the level of information they were
given. Part of the issue over rent and service charge lay with the buyer’s lack of understanding
of the product they had purchased and the variable nature of the service charge. This was
particularly acute in relation to the service charge where the block was managed by a third-
party management company. Staff from both providers noted that shared owners were more
financially challenged than other leaseholders, who were often landlords and so were more
accustomed to property management and possibly more affluent, and so shared owners had a
greater tendency to query any bills and charges they received.
Four themes were particularly apparent in our data. When buyers felt that they had been
“short-changed” in any of these ways, they also tended to feel that providers had been slow to
resolve matters.
First, some buyers felt that service charges were miscalculated, due to repair bills or other
charges being misapportioned or misallocated. There were several instances reported to the
research team where they had been charged for maintenance to grounds or part of the
building inappropriately. Service charge staff recognised that these issues occasionally
occurred as they were desk bound and unfamiliar with the properties and relied on estate
staff and their systems to inform them of estate arrangements or the demise of pieces of
land, for example, and were at pains to reduce such errors. The allocation of charges to their
accounts relating to issues that shared owners felt were wholly due to the negligence or
poor behaviour of general needs tenants were also considered problematic. Staff members
of both providers acknowledged this occurred and was in line with the lease, but highlighted
that general needs tenants were not alone in their responsibility for damage to communal
areas or rubbish dumping and that other general needs tenants were also upset.
Secondly, some buyers felt that they were being charged for services that were not being
provided, or the quality of the work was poor. Some buyers felt that they had to check the
“small print” on their service charge bills only to discover that they were paying for things
that they did not need or that were not being provided, or there were disputes about the
demise of certain parcels of land and who should take responsibility. Moreover, shared
owners, especially those in single isolated properties where there are no estate charges
relating to the upkeep of the grounds, did not understand why they paid rent as well as a
management charge and could not understand why the management charge was not
included in the rent: My service charge, apparently, is for the leaflet or the newsletter that I
get three times a year, which Id rather not have, because it doesnt actually help me in the
slightest ...” (Greendale/1). Greendale staff emphasised that the rent serviced the loan the
provider used to purchase the property, although other landlords make leveraged
purchases without additional charges on the rent.
The third theme arising from shared owners’ sentiments towards service charges, possibly a
concern shared by leaseholders, was the lack of control felt. Several buyers queried the cost
of building insurance and considered that they could get better deals through their contents’
providers. Staff considered their large comprehensive block insurance policies highly
competitive and that it would be extremely unlikely that individual owners would be able to
obtain lower quotes for building insurance.
Exploring experiences of shared ownership housing 59
The last point was that the information received from both providers occasionally lacked
clarity in respect of how service charges were calculated and apportioned across a scheme,
with shared owners showing the researchers letters and invoices that lacked plain English
explanations. Both case study organisations provided guides that included explanations of
codes, for example, but did not always clarify matters.
Fixham was undertaking a review of all developments and identifying the demise of properties,
the responsibilities between all parties towards the estate, setting out the governance
arrangements and whether they include shared owners as qualifying residents, for example. It
had also begun to explore the support offered to leaseholders and shared owners in rectifying
problems with management companies, supporting claims relating to the right to manage in
certain developments, and requesting that development staff ask builders not to enter into
arrangements with certain management companies to avoid problems for their residents
further down the line.
Rent and rent arrears
The rent element of the shared ownership arrangement attracted mixed responses from buyers.
The rationale for rent provided by key stakeholders was that it is designed to meet the loan debt
of the construction costs. However, it was recognised, particularly by KS10, that the grant
needed to help providers to develop properties for shared ownership is “hidden” from buyers,
who are left unclear about what “rent” actually covers. Three key stakeholders who have public-
facing roles explained that buyers expressed dissatisfaction about rent levels.
Our buyer data, however, did not particularly reflect that dissatisfaction, although some buyers
reflected the lack of clarity about what constitutes rent by saying that they received no clear
services for their rent, unlike in other tenures. For some shared owners, the distinction between
rent and service charges was not clear, perhaps because they might make one payment per
month to their provider or managing agent, so interviewees tended to talk about their “rent” to
encompass both:
It comes like once a month, so Im not sure how they split it between themselves, I can see
on my bank statement every month, like £460 something, its just one amount, I dont know
the distribution within that. (Fixham/12).
Changes in service charges as well as above-inflation rent increases combined to fuel to some
shared owners’ sense of injustice that they were responsible for 100 per cent of the repairs
despite paying a rent.
Several shared owners commented on the fact that the annual rent increase exceeds inflation.
They recognised that the longer they stayed in the property, the higher the rent. This might
create affordability issues (“The rent was affordable but over the years it has risen quite
dramatically.”: Greendale/15). However, some were fatalistic about rent rises (“Well, the rent
has gone up; perhaps you would expect that, like everything goes up.”: Fixham/17). In general,
though, buyers tended to compare rents with previous tenure which, for most of our sample,
was the private rented sector. This vignette from Greendale/15 illustrates this way of thinking:
Exploring experiences of shared ownership housing 60
I: What sort of rent do you pay now?
Its about £285 a month.
I: Is that a lot more than it was when you
Yes, I think when we started it was about £140 a month, so that was 20 years ago. Its gone
up twice as much. It’s probably going to go up and up and up.
I: Does that cause you concern?
It does really yes. Its a lot of money. But then in comparison to private renting its still
quite cheap, …
Few buyers interviewed had missed rent payments, or admitted to doing so in our interviews.
When they said that they had, they had resolved the issues with the provider swiftly. However, a
significant minority of interviewees were paying large proportions of their take-home pay on
housing costs and some were struggling with payments. This may be similar to the wider
market but in a context when the product should be a safer, more affordable option. Some of the
pressures were exerted from owners having reduced incomes during the recession or a change
of circumstances, such as young families, but some recent owners were paying 40/45/50 per
cent of their take-home pay in housing charges, in excess of commonly assumed affordability
thresholds of 30/35 per cent or the HCA threshold of 40 per cent. At the time of writing the
threat of higher bank base rates forcing mortgage costs upwards has apparently abated for now,
but some shared owners felt higher mortgage costs would be difficult to manage. That said, very
new buyers felt they could absorb higher mortgage interest rates as the mortgage company had
already stress-tested their affordability for the loan. In respect of affordability it is noted that
rising and uncertain variable service charges are not always adequately accommodated into
lenders affordability calculations as staff reported that first year bills are often
unrepresentative of future obligations, although one team had tried to use a fairer
representation of estimated service charge costs for more recent sales.
The two case studies adopted slightly different approaches to rent arrears management,
possibly due to the contrasting organisational arrangements whereby shared ownership was
managed by a commercial subsidiary at Greendale and by generic teams dealing with both
general needs tenants as well as leaseholders that included shared owners at Fixham. In
Greendale, staff were free to use both mandatory and discretionary grounds for possession
under the assured tenancy, and frequently used both so they could opt for the discretionary
ground if faced with the duty solicitor; whereas, at Fixham, staff wanted to follow what they felt
was good practice for all residents and used only the discretionary grounds for possession.
Fixham’s values as a social landlord were emphasised here.
At Fixham, there were good working relationships with financial inclusion officers in close
proximity who provided additional support to shared owners and undertook personal visits to
resolve issues if the person could not do this for themselves. Greendale staff signposted them to
the Citizens Advice and similar services, but noted that, although eligible, shared owners are
usually reticent about claiming housing benefits.
Both organisations notified lenders of serious rent arrears and found that some lenders were
more responsive than others, with some lenders requiring the providers’ own litigation process
to be more advanced than those of others. If shared owners did not respond to providers’ letters
Exploring experiences of shared ownership housing 61
prompting them to rectify their account, lenders might ultimately clear the arrears to ensure the
security against which the loan was held was not jeopardised. However, there were downside
risks to asking lenders to clear the rent accounts routinely. A Fixham staff member found a
historic case where the lender had paid the rent arrears 15 times before the property was
repossessed when the borrower had reached the lenders maximum lending limits; and, as also
noted by Greendale staff, this cause of action can produce negative equity and therefore a
potential liability for the provider under the MPC, not least as the borrowers debts increased in
an unsustainable situation. Following the Mortgage Market Review, the Fixham staff member
suggested that lenders may be less willing or able to indiscriminately increase a borrowers’
mortgage debt without any prospects of the borrower being able to repay these sums, which
could alter the routine use of lenders to repay rent debt.
Communication
Both providers issued periodic newsletters and publicity material about their services to shared
owners but, being aimed at general needs tenants, these publications rarely addressed the
issues shared owners faced. Although staff reported that shared owners occasionally made use
of financial inclusion officers or back-to-work schemes offered by the providers, rarely do
shared owners appreciate being sent such communications.
Firstly, shared owners were reluctant to be associated with general needs tenants.
But, secondly, highlighting the services offered to general needs tenants also served to
reinforce negative perceptions that some shared owners held in respect of the lack of
services or commitment from the providers in exchange for their rental payments.
A small minority of shared owners objected to quarterly rent statements because, as their
rent was paid by direct debit, they would already be aware if the payment had not gone
through and so the statements were unnecessary. Again they associated these statements
with being applicable only to general needs tenants.
A further issue was the costs incurred in sending these communications, which were
perceived as being poorly targeted.
Lastly, there were mixed responses from shared owners about whether they would
appreciate any information from providers, but there were indications that a sub-group
would have appreciated dedicated communications, as there were several
misunderstandings about the product and the support that could be offered in terms of
facilitating mobility, organising finances to fund repairs, advice on staircasing, or new rules
on stamp duty, for example.
Other customer service communication was frequently found wanting in one organisation, but
the second provider was not immune from shared owners experiencing a failure of staff to call
people back when promised. Common to both were issues about staff closing down
conversations by way of reference to the lease obligations without actively listening to what
was being said or finding out how they might be able to support or advise the person to resolve
the issue at hand.
Some long-standing shared owners both valued the independence a lack of communication or
involvement from the provider permitted, but at the same time found the lack of interest of the
provider in the property, of which the provider frequently held a major if not majority
Exploring experiences of shared ownership housing 62
proportion, somewhat baffling. Shared owners’ expectations of the rent-owner relationship are
explored further in chapter 8.
Conclusion
There were particular concerns about the quality of new-build properties in one of the case
studies but the other case study was not immune from such complaints;
Those concerns were exacerbated by problematic communications between the relevant
parties and the defects guarantee period running out.
Buyers did not appreciate having to pay an administration charge to register improvements
to the property and as a result some decided not to register the improvements at all.
There were particular and egregious concerns about third-party managing agents as
regards their quality and costs.
Buyers tended to blame the provider (as well as the managing agent) for the problems, even
though providers felt similarly powerless and out of control.
Buyers often expressed themselves as feeling as if they were the third party and, therefore,
out of the picture.
Service charges remain the most significant area of concern for shared owners the
problems ranging across: miscalculation; being charged for services not in fact provided; the
lack of control they had over the service charges; and understanding their apportionment.
Few buyer participants admitted to missing a payment of rent, service charge or mortgage,
but both providers had well-oiled mechanisms for assisting buyers and notifying lenders.
There was some concern at the high proportion of salary being used to pay housing costs
and future mortgage base rate increases may have significant effects.
Both providers had communication issues with their buyers, and buyers commonly felt that
they were being treated like general needs tenants in the way that the provider
communicated with them.
Exploring experiences of shared ownership housing 63
7 Managing the share: selling on and buying up
Introduction
This chapter is concerned with the day-to-day management practices related to aspects of
managing the shares acquired by buyers. The first issue is concerned with resale, the second is
with staircasing.
Resales
The DCLG consulted (2015a) on reforming this part of the shared ownership lease, considering
the merit in allowing shared ownership properties to be sold on the open market rather than
letting the registered provider attempt to sell them on and retain them in the shared ownership
sector. In March 2015, it announced (2015b) that the right to pre-emption would be removed in
future leases where the buyer has staircased to 100 per cent and that guidance would be
amended to recommend that existing leases should also have that right removed in the same
circumstance.
The nascent market in shared ownership properties is difficult terrain (Wallace, 2008; CCHPR,
2012). There is a balance between retaining opportunities for shared ownership, even in tight
markets, while also ensuring that the system works for the shared owners as well.
It is notable that the consultation document provided no statistics regarding the resale market
the extent of this market is unclear. We have commented above that one issue here lies in the
fact that less information is given to open market resale buyers, which suggests a particular
issue with this proposal. In this section, we consider other practices and processes.
A total of 25 of our buyer sample had purchased a resale property. Buyers of resale properties
valued the less stringent criteria attached to them, in contrast to new-build properties, and
found they were able to access homes in another borough or local authority area, for example.
There was often some uncertainty among buyers of resales, as they commonly perceived that
the provider was selling the share, where in reality the providers were largely acting only as an
agent for the original shared owner. This throws up some tensions between what buyers and
sellers expect of the provider. Among shared owners there was frequently an in-principle
support for the provider ensuring the share was sold on to retain a shared ownership
opportunity for others, but in practice this raised some issues that included: confusion about
who was selling the property; the charges levied by the housing association for finding a new
buyer; setting the sale price; and the quality of the property purchased.
Resales generally go quite smoothly, they get the odd complaints, when chains involved is
one. People don’t appreciate that our role is as an administrator, we’re not responsible for
their buyers, can’t make them complete. SHO [shared ownership] place an unnecessary
burden on of responsibility on us, we remind them they’re selling their equity and we are
not selling anything. They don’t understand we’re not selling too, we’re retaining it so it’s
their responsibility. (Greendale field notes)
Buyers of resale properties sometimes found themselves requiring electrical and other repairs,
which the cheaper form of surveys might not pick up. More generally, buyers of resale
Exploring experiences of shared ownership housing 64
properties are subject to the exigencies of the market and, in particular, the principle of caveat
emptor. Fixham/14 found this out the hard way having bought a resale property with a survey
conducted on behalf of their mortgagee, which, as far as Fixham/14 was concerned, had been
incorrectly completed:
Well, the surveyor said there was no damp, which there was, and they said there was all
new electrical fittings and the house was up-to-date, which it wasnt, and actually the back
end, which is an extension, was completely illegal, it was put in by cowboys, basically. The
old line was 1950s, 1960s, which was what they call a twin, twin wires, so it doesnt have
an earth, but the back did, but it obviously went nowhere, so if something did have a
problem with it, it would just make the whole back end of the house live …
Shared owners also raised concerns about the fees levied for selling the share on. In Greendale,
the fee to sell the property was 1 per cent of the value of the share being sold; and in Fixham the
fees for reselling shares had a greater range in the magnitude of £400 to 1.5 per cent of the full
market value of the whole property depending on the date the lease was created. All of [w]hich
seems a little bit unfair when youre only selling 50 per cent; why do you have to pay 1 per cent
of the full value of it?” (Greendale/22). The fees for selling can therefore be comparable to estate
agent fees, but the service less so, as the providers are not responsible for progressing the sale
as an estate agent often does. Fewer resources appear to be expended in selling resale
properties as for new-build homes. The seller provides the photos at Greendale and the
surveyor is asked for photos at Fixham, although sellers could also supply photos. The
presentation of resales was often of a much poorer quality than new build and even other open
market purchases. One staff member conceded that shared owners and surveyors do not always
supply the best photos, although some properties do present well. In contrast many estate
agents employ more professional photographers.
As mentioned in the previous chapter, there were differences in the amount of attention and
information buyers of resales obtained from providers in comparison to buyers of new-build
shared ownership homes. “With resales the responsibility is left much more on them and the
solicitors as we don’t do a viewing in the same way.” (Greendale field notes, but same in
Fixham) Fixham supplied comprehensive packs of information, which were supplied to buyers
of resales’ solicitors, to answer all the commonly requested questions solicitors raise during
conveyancing, but staff were unsure how much of that information was passed on to the buyer
or, if it is passed on, whether it is read and digested by the buyer.
Previous research indicated that the Royal Institution of Chartered Surveyors (RICS) valuation
was used to fix the sale price (Wallace, 2008), as it was in Greendale, but in Fixham there was
some scope for the seller to push the ceiling price of the property and test the market. This
caused consternation for one Fixham buyer who discovered the valuers original figure and
considered they had paid over the odds. Indeed, shared owners often reported that they
expected the providers to assume a lower selling price than they could achieve in the open
market, citing estate agents market appraisals of the property’s value as evidence. Thus, there
was considerable scepticism about sales handled by the providers.
In respect of selling repossessed property, there were contrasting approaches between the two
case study providers. Greendale left disposing of repossessed shared ownership properties to
the lender, using the lenders usual asset management approaches where homes are sold on the
Exploring experiences of shared ownership housing 65
open market or at auction. Fixham was actively involved in what happened to these properties
to minimise the impact of repossession for both the shared owner and the registered provider,
and retain the property in the shared ownership sector. The staff member at Fixham had been
successful in reducing significant cash losses to shared owners in difficult financial
circumstances, as well as reducing the providers’ liabilities under the MPC and limiting the loss
of properties to the open market. This staff member recognised that repossessions often achieve
below their potential market value and so sought four weeks grace from the lender to sell the
property on as shared ownership. Occasionally, Fixham invested funds to undertake basic
repairs or improvements to increase the property’s saleability and, even by investing modest
sums, had achieved higher values than the lenders were offering and, in 11 of 24 cases in the
last year, had retained the properties as shared ownership.
Fixham had developed close working relationships with some smaller lenders, but staff in the
large lenders were said not to understand shared ownership and were reluctant to let the
provider sell the properties. As lenders have a legal obligation to get the best price for the
borrower, the Fixham staff member confirmed to the borrower in writing that the lender had
been offered this opportunity to secure a better sale price and also confirmed if they had
declined. “Breaching Treating Customers Fairly is a big deal for lenders so she feels it is a good
leverage on them.(Field notes Fixham) She offers the lenders the same asset management
service as the lenders outsource to other companies and it is cost effective for her to do this.
Fixham’s new approach had been prompted when one lender informed it that the lender was
selling a repossessed property for £132,000, when it had been originally sold for £210,000.
Large shortfall losses were anticipated, but the staff member was able to take the property and
achieve a sale price of £185,000. This staff member also checked lenders claims made under the
MPC and has been able to secure lower payments to them.
The quality of resales was an issue for some buyers and several had found expensive and
unanticipated repairs to be made at the outset. Neither provider undertook inspections of the
resales when they were being marketed, again as they were facilitating one shared owner
selling their share on to another, and the provider was not selling anything; but not all buyers
understood this distinction, wondering why a social landlord would not check the condition of
the property or would try and exceed the sale price quoted by the valuer. Fixham now requests
that electrical and gas safety certificates are obtained to ensure that the condition of the basics
is understood. First-time buyers may experience similar naivety in the wider market, by not
organising adequate pre-sale surveys or appreciating what the surveyors report said, but the
involvement of the provider in the sale changed a portion of buyers’ expectations.
A minority of owners felt limited in their move-on opportunities as they could still not afford the
open market, or even private renting in some cases. Although some were aware that they could
move within shared ownership, others were deterred by criteria stipulating that opportunities
are not open to people who are already homeowners. Although providers will consult with local
authorities and obtain approval if previous owners actually need to move, rather than merely
having a desire to move, not all shared owners were aware of this.
Staircasing
Out of the 71 shared owners interviewed, 10 owners had partially staircased and a small
number of others were actively considering doing so, although a similar portion had considered
Exploring experiences of shared ownership housing 66
the option but had not proceeded.
3
Two buyers had discussed downwards staircasing but had
not proceeded. The main reasons given for deciding not to staircase were: the increase in value
since the property had been initially purchased; the oncosts of purchasing a further share;
general affordability issues; and the limit on the number of times one can staircase.
Shared owners were concerned about property prices indeed, while they may not have been
knowledgeable about some aspects of shared ownership, shared owners tended to be quite
savvy about staircasing, although were possibly unrealistic about their prospects of being able
to do so. The feasibility of staircasing was doubtful for some as, in some markets, house prices
had continued to rise while earnings had not. The ability to staircase was something staff
emphasised during the sales process, on which a significant proportion of shared owners picked
up, as the promise or potential to be a full homeowner was an important feature of the product.
Most believed that they could only staircase a limited number of times, which was discussed as
a potential barrier. Greendale staff reported examples of shared owners wishing to purchase
smaller shares than permitted by the lease, despite the additional transaction costs that would
be incurred. Market knowledge also extended to recognising that selling on a larger share might
be more difficult.
So I looked at staircasing and its just affordability. Its not just affordability. I also spoke
with an estate agent and his view was that unless I could buy the property outright, so go
on a 100 per cent mortgage, in his opinion it wasnt worthwhile, staircasing wasnt
worthwhile, and he quoted me some of the people hed worked with who were trying to sell
properties at maybe 75/80 per cent. His view was that, because its a shared ownership
property, you pay an additional, a premium for it and that you would never recoup that
money. (Fixham/19)
Transaction costs and other upfront costs were prohibitive for some considering staircasing:
... its a question of the expense. Youre looking at, with solicitors and what have you, youre
looking at £600, I guess, just to staircase. When youre only going to do sort of £10,000, for £600
what does £10,000 or £20,000 actually get you?” (Fixham/14) And for those who had
staircased, there were hidden costs, such as a double valuation for the provider’s as well as the
lender’s purposes. Another obstacle was that both providers required upfront fees for the
valuation. Shared owners were reticent to invest significant sums “the family holiday money”
without knowing the impact on their mortgage and/or rental payments in advance and risk
losing the valuation fee should they not be able to afford to proceed. In Fixham, the valuation
fees negotiated with a panel of suppliers were of the magnitude of £180. In Greendale, £240
including VAT. Neither provider explicitly offered advice or support to provide estimates of
what purchasing further shares could do to the mortgage or rent payments. One provider said
they can usually provide such information if requested, but neither advertised this fact and
shared owners remained unaware.
Staff at Fixham noted that RICS valuations are obtained to determine the value of additional
shares being purchased, but, if lenders have provided a higher figure, then that is used. Shared
3
The qualitative sample was not designed to be representative of all shared owners and this should not
be taken as the incidence of staircasing in the sector.
Exploring experiences of shared ownership housing 67
owners commonly want lower figures for staircasing and higher figures when selling their
properties.
The depth of information available about staircasing varied between the providers, ranging
from guidance in the shared ownership handbooks, to specific booklets on the subject and a
basic letter outlining the process. Fees charged to facilitate additional borrowing or staircasing
were contested by owners who were unsure what the fee was for.
I am in a position where I would like to buy at least another quarter of the house, at the
moment, and be the 75 per cent owner. I looked into this a couple of years ago, and the
only thing stopping me from doing it was, in the first instance they wanted a letter, to be
paid for by me, just for them to be able to write back to say why I want my mortgage
changed i.e., that if I wanted to go to a mortgage company and change the mortgage
details on the finances, that I had to pay [Greendale] £75 for them to produce a letter for
me. (Greendale/1)
Changes in the mortgage market since they purchased have meant that some shared owners
were not confident that they would be able to remortgage to secure additional shares. On
reflection, several owners wished they had bought greater shares at the outset as they now
cannot envisage doing so, but had been cautious about overstretching themselves at the
beginning. One staff member in Greendale made a distinction between those selling and those
staircasing, with staircasers having good finances and people selling their shared ownership
homes frequently being in financial difficulties.
Other shared owners were content to remain shared owners considering it not cost effective to
increase their shares after a long period.
There is also a lack of guidance and tested experience in this market about whether it is
beneficial to pay down mortgage debt to increase equity or to purchase additional shares and
also in respect of the timing of purchasing additional shares. Being a shared owner and wishing
to staircase continually demands complex calculations, about the mortgage and housing
markets and salary prospects, until you achieve 100 per cent ownership.
Conclusion
The HCA has changed the leases, following the DCLG consultation exercises (2015a; 2015b), so
that the right of pre-emption has been removed from future leases where the buyer has
staircased to 100 per cent and recommended that it is removed from current leases in the same
circumstance. In chapter 4, we noted how open market buyers were less likely to have been
made aware about the product. Other specific issues highlighted about resales are as follows.
In some respects, it appeared that resales were regarded as an afterthought or not part of
the provider’s core business.
Models of dealing with resales of property about to be repossessed differed between the
organisations. Fixham took a proactive approach and “saved” a number of properties to the
tenure.
Exploring experiences of shared ownership housing 68
Staircasing is a selling point for the tenure. That is, the ability so staircase upwards was of
particular interest to our buyer sample.
Buyers were savvy about staircasing. They recognised that they would find a larger share
harder to sell, if they decided to do so.
There were disagreements and concerns over valuing practices and costs of staircasing and
resales.
Exploring experiences of shared ownership housing 69
8 Reconciling tensions in shared ownership:
social or private?
Introduction
Previous chapters have addressed the practical consequences of the shared ownership
relationships and the way they were experienced by our case study providers and their buyers.
In this chapter, we address what is traditionally conceived as being two binaries, between
social/private and owner/renter. In fact, what shared ownership does is disrupt those binaries
so that they operate as heuristic devices across a continuum, with a complex interaction
between them.
Social/private
Owner/renter
Social ↔ private
Owner ↔ renter
These competing experiences of the tenure have been articulated theoretically, in so far as the
bundle of attributes that shared ownership represents between renting and owning is widely
recognised (Cole and Robinson, 2000; Blandy and Robinson, 2001). How these issues routinely
play out for the parties concerned has been less apparent. The fieldwork with providers and the
interviews with shared owners provided a unique opportunity to explore these issues.
In this chapter, we are concerned with the social/private interaction. In the next chapter, we are
concerned with the owner/renter interaction. The separation between the chapters is partly for
convenience as the poles are clearly related but there is also a conceptual distinction made in
the literature between tenure and the provider.
Do policy makers or providers see shared ownership as social or as market
housing?
Social landlords have sought alternative funding streams since grant funding has become less
available and/or the conditions attached to funding have become less palatable. Consequently,
development for open market sale increased by 36 per cent between 2012 and 2014 compared
to general needs outputs, which rose only 2 per cent, and ‘social lease’ homes that include
shared ownership, which rose 5 per cent during the same period (DCLG, 2014a). Commercial
development has become increasingly significant to social landlords whose ‘quasi-market’ or
‘social business’ operations have become more pronounced as a result.
Social landlords, therefore, also now manage tenures other than social rented homes and are
responsible for managing mixed tenure estates and developments. Largely as a legacy of their
local authority acquisitions, they manage leasehold properties and former council homes sold
under the right to buy. Original purchasing tenants may still occupy these leasehold properties;
or, perhaps more frequently, the homes are occupied by resident owners who bought the
properties on the open market; or private landlords have bought and let the homes themselves.
Providers also let intermediate rented or market rented accommodation.
Exploring experiences of shared ownership housing 70
Who and what is shared ownership for?
Here tensions were apparent between local authorities and registered providers over who
made up the target audience for shared ownership products. Local housing markets were
critical in determining the costs of entry to shared ownership and there were regional
differences in the shared owners drawn from both case study providers. Markets within London
differ markedly in affordability but, perhaps unsurprisingly, shared owners interviewed in
London were often, but not exclusively, young early career professionals compared to lower-
income workers in regions outside of London. In many areas of London, middle to higher
incomes are required to access shared ownership; a tension arises about the public subsidy
afforded to households otherwise adequately housed. This was reflected in some of our
interviewees’ quizzical expressions as to why they were eligible for shared ownership in the
first place:
… they’re at great pains to make sure that you understand youre part of some sort of
social programme. Which is why I said Im not a typical shared ownership, because Im not
a key worker, and Im not a vulnerable person, Im not a pensioner, most of the categories
that that comes in. Im not a single mother, you know, all those, Im not a recovering
alcoholic, substance abuser, any of things that seem to go along with social housing. I
mean, thats a tiny, tiny proportion of the people who must live but they get an inordinate
amount of the attention, perhaps because theyre part of the problem. (Greendale/27)
I dont class my circumstances as social housing because I guess for me I thought the social
housing referred to either council subsidised tenants or owners, or keyworkers, and I didnt
fall into that category. As I said, I work in the private sector. Thats why I was initially
surprised I could do it in the first place. (Fixham/37)
Key stakeholders offered mixed views of this situation. While policy makers noted that housing
markets crossed local authority boundaries, some boroughs’ insistence on targeting households
on lower incomes undermined the viability of providing shared ownership in certain areas
because greater subsidy would be required to keep costs affordable. One stakeholder noted:
I feel strongly about it, it’s a mid-market product, helping people below the market but
related to the market ... Reduces incentive to staircase and makes it a product that needs
more subsidy than social rent. (KS6)
Another stakeholder was more ambivalent:
It’s becoming increasingly irrelevant because it caters for people on higher incomes,
doesn’t cater for housing need. But does help people like me with a daughter who is paying
through the nose in the PRS [private rented sector] where she would have more security of
tenure in shared ownership. Lovely that the state would subsidise that but I’m not sure
that’s what it is about. (KS1).
This disparity over targeting of shared ownership also creates multiple uses of the product. Is it
a transitionary tenure for middle or higher earners or a permanent tenure for low to middle
income households? The business model of shared ownership is built on it being a transitionary
tenure, the proverbial “stepping stone” to homeownership, in which buyers rapidly staircase,
releasing further assets for the provider to be used to subsidise other activities. Fixham noted
that the model could be undermined in high-cost areas if shared owners are unable to staircase
Exploring experiences of shared ownership housing 71
in the future. Although there are some indications that staircasing had not tailed off in high-cost
locations (Wiles, 2014), both case study providers remained concerned. This lack of data
concerning staircasing and the destinations of onward movers means that there is only a partial
understanding of the pathways through shared ownership and any transitionary role.
Staircasing was also important to attracting institutional investment and ensuring a good
return. However, other stakeholders considered the ability of social landlords to downward
staircase a valuable additional feature of the current product, which may be further limited by
institutional or secondary private investment. Evidence also suggests that a pool of shared
owners is remaining as such over the long term and not staircasing out of the tenure (Wallace,
2008; CCHPR, 2012).
Management
As discussed, providers manage their commercial activities differently, as witnessed in the
management of shared ownership and leasehold properties in our case study organisations.
Greendale’s commercial activities were undertaken in a subsidiary, whereas Fixham retained
management in (largely) generic teams of social rented general needs, leasehold and shared
ownership properties.
These operational differences were also apparent in the case study providers’ approaches to
managing shared ownership stock. Fixham was clearly more conflicted about what offering a
good service to shared owners means, in the context of its operations being based in generic
teams often concerned with issues arising in general needs stock. A stakeholder from another
provider emphasised that the organisation was very hands-off in terms of how we manage our
portfolio” of shared owners, offering support if they needed it but otherwise remaining quite
distant and agreed that the two client groups required different management approaches.
We always aim to offer outstanding service to all regardless of tenure but you
communicate differently. Neighbourhood officers are dealing with domestic violence and
anti-social behaviour and rightly so, but if someone in a £300K house is complaining about
a bush, its hard to offer them the same level of service as it requires different skills. One
person has almost social work skills and the other requires outstanding customer service
as a private letting. (Fixham from field notes).
In discussing Fixham and Greendale, we outlined the tensions between the social and
commercial ambitions of the organisations, but also the ways in which these were recognised
and were potentially productive tensions in their everyday housing management practices.
Both teams undertook regular satisfaction surveys among residents and both noted
methodological challenges in capturing the nebulous concept of satisfaction and both found
shared owners satisfaction to be below that of general needs tenants, as reflected in previous
national surveys (TSA, 2009). Internal quantitative research in Fixham had identified that
repairs and maintenance, contrary to popular perception, was not associated with lower
satisfaction, but this left the possibility that repairs not actually undertaken may make a
contribution. Greendale recorded the reasons for dissatisfaction in open fields on its survey
form and found repair issues were the highest reason for dissatisfaction (26%), then service
charges (23%), unhelpfulness (19%), general issues (13%) and anti-social behaviour (6%).
Greendale did, however, measure all leaseholders, thus including shared owners with original
right-to-buy buyers, ordinary resident leaseholders purchased open the open market and buy-
Exploring experiences of shared ownership housing 72
to-let landlords, which are clearly quite different constituencies. At the time of our research,
Greendale was experiencing some delays with its repairs service, which could explain that
result, but there is scope for both providers’ own investigations to point towards the repairing
responsibilities as a major cause of disquiet among shared owners.
Both providers were concerned about what sat behind these persistent findings, Fixham
particularly so. Both organisations had toyed with the idea of providing shared owners with a
repairs service, perhaps on an emergency basis, or as an insurance-based policy, but this was
not being pursued by either provider. Providers were cautious as making such an offer might be
unaffordable to them or the shared owners, and might in practice lead to further conflicts over
the lease, as it could shift responsibility for repairs, at least in shared owners minds, back onto
the provider.
However, our research data suggests that customer satisfaction surveys should be read with
considerable caution. Our rich textual data suggests that the complex feelings people express
are likely to be difficult to reduce to quantitative data collection mechanisms. In other words,
buyers’ narratives are complex and contradictory they do not admit of simple “satisfaction” or
“dissatisfaction”, but are woven around their understandings of themselves which, almost
inevitably, alter over time and range across the tenantowner, socialprivate continuum. So, for
example, as one of our buyers put it, their feelings (in this case about tenant-owner) depend on
what their particular focus is at any particular time:
It depends which bill comes through the post. I feel like an owner because, I mean I say its
mine, you know, the housing association largely keep out of our way; but I feel like a tenant
when all the things that get frustrating turn up and our inability to control our own
destiny in certain things like, you know, water pumps breaking and you cant just call a
plumber and get him to fix the water pump. We have to phone somebody up. So, we had no
water for a bank holiday weekend once because we couldn’t get somebody to come and fix
a water pump. (Greendale/19)
Another tension about how to approach the management of different tenure was about how to
exert control over resident behaviour. Fixham has a tenant reward scheme used to incentivise
good behaviour or penalise poor behaviour, by enhancing or reducing the level of service to
general needs tenants. For example, engaging with association activities and meeting rent
payments would attract an enhanced repairs or improvements service, while breaking
agreements to repay rent arrears or being responsible for anti-social behaviour would mean
improvements were delayed. Fixham staff found this scheme highly effective and were
considering how a similar system could work for shared owners, but acknowledged that, as they
provide few services, they also held few carrots. This exposes one difference between owners
and tenants about providers desires to control the behaviour of poorer people: providers have
fewer levers with which to exercise control in homeownership situations. It also prompts
questions about how shared ownership would then sit within wider homeownership, where
community engagement is not sought or rewarded, and non-payment of service charges
penalised in ways other than stipulated in the lease.
Marketing
Housing providers’ content in respect of shared ownership ranges from aspirational marketing
material to more prosaic information about the structure of the schemes and the process used
Exploring experiences of shared ownership housing 73
to secure a shared ownership home. The content is largely delivered by way of downloadable
brochures, webpages, development specific micro-sites and Youtube videos. It addresses either
the promotion of shared ownership or the promotion of the development and properties; rarely
do these two types of content combine.
Looking across a range of marketing material of many registered providers, not just Fixham and
Greendale, it is clear that the content is designed to promote shared ownership as a
homeownership option to the “generation rent cohort, explicitly so in some cases, but
occasionally to families and people who have experienced relationship breakdown. Powerful
case studies are frequently deployed, emphasising the delight of buyers moving on from
insecure private rented to what is clearly experienced as homeownership. Providers often use
identical phrases and online content to affirm that the lease “is a legal document that proves you
own part of your home” and makes you an owner-occupier not a part tenant”. Several quotes
from providers judiciously use words to qualify their statements ‘essentially’, implying usually
but perhaps not always. One quote “The scheme is sometimes referred to as a ‘part own-part
rent’ because you literally own part of the property…” reflects how the contemporary
(over)use of the word literally” might well be substituted with figuratively.
Shared ownership tenure
Stakeholders involved in the revision of the shared ownership lease in 2009 a joint enterprise
between the HCA, DCLG, CML and the National Federation of Housing Associations said that
there had been proposals for key information sheets to be given out emphasising that the
shared owners were in fact tenants and clarifying their legal status: “You don’t have a share, you
have a tenancy. (KS6) It was not evident that this explicit exposition of the tenure had entered
current marketing material across the sector or was communicated to prospective buyers by
either case study housing provider.
Familiar tropes of the property ladder are used extensively in marketing (and across all our
data sources, whether that be key stakeholder descriptions or self-descriptions by buyers) to
position shared ownership as the first rung, implying that a state of progression through the
housing market will naturally follow the initial purchase. The use of the stepping stone to
homeownership metaphor was slightly less evident among contemporary online accounts of
shared ownership than in 2009, when the researchers last appraised the marketing material,
although it was present. One site specifically said that individuals can remain as shared owners
for as long as they wish, but most reflected the assumption that income will rise sufficiently
over time and conceptualise shared ownership as a transitional housing tenure.
Within the website content about the tenure, potential buyers are advised that they must be
registered with the provider, the local help-to-buy agent and/or the local council. So, while the
properties are promoted akin to market housing, they cannot escape the bureaucratic allocation
and eligibility criteria attached to shared ownership. However, shared owners viewed this as a
necessary irritation rather than an obstacle to purchase.
Marketing material designed to promote specific development sites and properties emulated
that of private developers, selling the location, the lifestyle and aspirational qualities of the
properties being sold, while downplaying the involvement of any social housing provider. This
was often the case in both case study providers. That a social landlord was the lead developer
was frequently downplayed with little reference to the organisation in brochures or on micro-
Exploring experiences of shared ownership housing 74
sites dedicated to specific developments. No doubt to disassociate the new homes from social
housing, this lack of branding of the open market sales and shared ownership homes runs
counter to private developers approaches to marketing where their name becomes associated
with a particular kind of site, quality or space, for example. This may explain why Greendale
adopted a subsidiary with a separate name to the parent organisation, although it shares a
similar corporate identity in terms of graphics.
Do shared owners see themselves as social or private housing?
There was a sense in which, while some buyers might regard themselves as being in social
housing, our shared owners wanted to see themselves as a cut above the social tenant, as being
different. On new developments, staff reported that prospective buyers of shared ownership
properties regularly ask “Where’s the social?, wishing to distance themselves from general
needs tenants on site, although the staff members went on to note that defining the socialis
difficult in respect of shared ownership itself with its dual identity.
Occasionally, other managers quipped that shared owners see themselves as superior”, forget
they rent themselves” or said that they had found snobbishness among some people. However,
most frontline staff did not report that shared owners generally presented themselves in this
manner on a day-to-day basis, even after prompting, which reinforces the view that as managers
they are only likely to see the more problematic cases.
Interviews with shared owners, however, did indicate that shared owners wished to
differentiate themselves from general needs tenants in a number of ways, in terms of education,
employment, or behaviour and, accordingly, expected a different approach to service delivery.
While many shared owners were supportive of social housing provision, some felt staff treated
them in a poor or disrespectful way and associated this with the service being geared towards
tenants, when they largely saw themselves or wanted to see themselves as homeowners. In
essence, they did not want to feel the stigma of being in social housing.
As Greendale/13 put it: This is the really annoying thing, because I think sometimes when
youre on social housing people assume youre ill-educated and ill-informed, and Im actually
very well-educated.” This became a particular issue when Fixham began benchmarking his
service charge:
They wouldnt show me the benchmarking figures, and they sent me a big letter explaining
what benchmarking was. Its like I speak five languages, Ive got a degree and masters, I
know what benchmarking means. I said, Well, just show me where in my lease, what
things in my lease are you referring to? but it lets you say you can benchmark it and
increase my charges.
Another occupier felt that her neighbour treated her as if she had the mark of Cain because she
was in social housing:
My neighbour, shes 93, shes lived here since, I dont know nineteen ... Since the war
finished I think basically and seen all the people that have gone through. I think there was
a couple here and I think that they died, or the last one of those, the house was handed to
the daughter or something. She wanted a quick sale, so they were all very angry and she
still digs at me … The fact that it’s not proper ownership and the fact that its so I think
Exploring experiences of shared ownership housing 75
shes sort of lost it now because she knows me well now. Theres still this thing, they tried to
fight it, the fact that it was going to social housing, whether thats the right term for it. Its
an interesting thought. (Fixham/3)
Similarly, Greendale/17 felt like she was treated “like an idiot”, which created stigma. In the
example she provided of her boiler losing pressure, she presented herself as having relevant
information and Greendale and its operatives as simply not listening to her until she was able to
prove her point.
As discussed previously, much ire was reserved for newsletters and communications.
Greendale/3 felt patronised by the information provided by Greendale, although similar
information and sentiment was expressed by shared owners associated with Fixham:
They do send us newsletters and things on a kind of I think quarterly or something basis
which is a lot of stuff that feels more geared to a traditional social housing demographic.
So, it feels a bit patronising to someone thats its all about how to get into work and
come to our CV workshop and its like, well, I have a job and all that.
I get the perception that theyre quite a bloated organisation because theyve got a lot of
time and money to be sending letters all the time, so I think well, is it my rent and is it my
service charge that are all going to an efficient organisation? (Fixham/37)
Another owner felt similarly stigmatised” because a staff member associated her with general
needs housing and because his attitude towards general needs tenants was negative:
This man knocked on the door and he looked me up and down and went, Not another one
in bed [The shared owner works part-time and was in her jogging gear]. I said, I beg
your pardon? Yes, just been next door; I got him up. I was like, The gentleman next door
works nights. I was like, Excuse me but who are you? … and I don’t feel like Im any
different to the people who are housing association who arent shared ownership.
(Fixham/34).
To an extent, these tenure differences can be emphasised by the property construction: with
buyers recognising that their décor was not the same as that of open market owners but better
than the renters in a mixed tenure block; having separate entrances depending on tenure; or
private owners having access to resources, like a gym or car parking, which were not available
to the buyer. Greendale/5 discussed the layout of her property. There was a physical barrier
between the shared ownership properties and the privately owned properties. She said that the
shared owners were not allowed in the independently owned part. She went on:
Yes, thats the bit that like people own 100 per cent. So they, when they built those I think
theyre this is according to someone the guy that does some work for me. He said hes
been over there and he said its much higher spec. Theyve used better quality materials to
build it. I dont think theyre going to have any problem with their water just suddenly
stopping, or their lift breaking. I think this ones slightly cheaper materials. So I think the
fact that its shared ownership.
Those kinds of physical barriers between the general needs social rented housing and the
shared ownership stock could, however, be broken down. In Greendale/28, the social tenant
neighbour accused the buyer, who was a housing key worker, of throwing cigarette butts on to
Exploring experiences of shared ownership housing 76
his garden. The shouting match that followed clearly upset the buyer. His partner calmed him
down but, as he said, it had taken some of the sheen off his purchase.
Such a physical barrier was by no means the only way in which general needs social housing
was differentiated from shared ownership. It was as much a state of mind as being physically
separated:
Mostly the council renters who obviously didnt have quite the same pride of ownership as,
particularly the shared owners I think. Because were all so like, oh my God weve finally
bought somewhere, you know you really want to take care of it and some of the renters
werent. (Fixham/31)
Well, its the children. Its all sweet wrappers, the kids up this end of the road. They all come
out and go to the sweet shop on the way home from school, and its nearly all sweet
wrappers. An ice cream van comes every day in the summer and every weekend. He was
over last weekend, so they just drop the wrappers in the street. Again, the social housing
end of the street, you get that all the time. You dont get it the rest of the road. Just the way
the wind blows unfortunately. … I get little whirlpools of wind outside my door, so – I mean
I had to go out there this morning before you came. I thought I dont want him to see all
these sweet wrappers. (Fixham/32)
However, the co-location of tenures, particularly the mix of shared ownership and social
renters, gave rise to some preconceptions about types of social tenants, which were then
translated into shared ownership issues, such as over service charges. Greendale/2 reports a
typical situation and sentiment reported across the case studies:
Weve had a couple of incidents with people in the social housing side that have been fly-
tipping and causing a lot of rubbish. There was a Roma family over there but there were
others as well that they have since been kicked out. But during that time and I
complained about this a few years back to the housing association shared ownership
people and I presume the private, our service charge goes up because its the general
maintenance. Our proportion goes up and it went up by something like £100 each a year
for an issue that is nothing to do with us. I remember going to we had a residents forum
and I was saying, Why is our service charge coming up because were not doing anything
wrong, but other people are? Everyone else was there; it was only me from the shared
ownership side. Everyone else was saying, Oh, were really happy that our rent has gone
down. Although Im shared ownership and affordable housing, I know its probably
unavoidable but we do feel that were subsidising other parts when actually we cant really
afford to do that.
That shared owners often felt they subsidised general needs tenants ran through the interviews.
Shared owners also complained that general needs tenants got all the services for less expense
than shared owners, while shared owners were paying more and, although they were part
tenants, got little by way of services in comparison, by which they primarily mean repairs and
particularly improvements. While shared owners wanted to be distinct from renters, they were
not only annoyed that apportionment of some service charges, such as rubbish removal, fell on
them when they felt the problems originated from the general needs tenants, but were also
conflicted as they had expectations of greater involvement from the provider. This echoes
complaints of early homeowners in the 1930s or of right-to-buy buyers in the 1980s, both of
Exploring experiences of shared ownership housing 77
whom reportedly still sought services from developers and landlords. But this transfer of risk
and costs to individuals from the state and providers to individuals is one of the achievements
of homeownership.
Conclusions
Shared ownership is a hybrid tenure which challenges existing binary characterisations
between social and private housing.
Although shared ownership is meant to provide a tenure home for a particular set of
households, largely unable to access general needs social housing or wishing to move from
it, and having a low income, some of our buyers were unclear as to why they were selected.
Further, it is also the case that shared ownership properties in certain locations are pricing
out low-income households.
The management of shared ownership housing tends to be different from the management
of general needs social housing, with a more “hands-off” approach in respect of shared
owners.
Simple satisfaction surveys do not necessarily capture the complexity of the relationship
between the buyer, the property and the provider, and one should be wary of ascribing too
much influence to them.
Shared ownership is marketed very much as a private, aspirational tenure to particular
cohorts as the first rung on the property ladder.
Shared owners are clear, in general terms, that they are distinguishable from general needs
social housing and do not see themselves as being part of social housing at all. They resent
being treated as if they are.
Exploring experiences of shared ownership housing 78
9 Reconciling tensions in shared ownership:
owner or tenant?
In the previous chapter, we drew attention to the way in which our data suggests that matters
which have traditionally been conceptualised as binary breakdown actually operate along a
continuum as a heuristic device. In the previous chapter, we went on to consider the social
private interaction. In this chapter, we consider the ownerrenter interaction.
A significant question
Whether what we have termed shared owners perceive themselves to be owners or renters is
more than a semantic query. As we saw in the last chapter and more generally in this report, the
product relies heavily on being sold as homeownership but the occupier’s legal status is as a
tenant or at least uncertain. There is no shared ownership status known in law. Marketing
homes as ownership may be problematic as one stakeholder noted: “We don’t define what that
ownership is.” (KS3)
As a stakeholder mentioned above, shared owners are tenants in law. A legal stakeholder
explained:
I mean the one thing that Midland Heart does establish is that, you know, they are short
tenancies, I mean that’s a good thing, that we put to bed this argument that people were
still doing forfeiture and certainly s146 notices [as for leaseholders] certainly from that
perspective they look more like renters, don’t they I mean its part, you know, it is part
rented, part owned but the courts will treat it as though it’s effectively rented. (KS/7).
As part of the work to reform the model shared ownership lease, one stakeholder involved in
the project noted that a key information sheet was produced to make the legal status of the
purchase explicit, with the intention that it be provided to prospective buyers alongside the
lease. It was not at all apparent that this was supplied to buyers by either case study provider
and was not mentioned by staff.
The other thing we did when we produced the model lease was to do a front page to be
given to buyers April 2010 but it doesn’t appear on the current model leases. Key
information sheet was our attempt at a public facing document to explain how this works
to buyers and explains that you don’t have a share, you have a tenancy. It is there for 2013
providers have to provide that to buyers along with the lease. This should be explained to
buyers by their solicitors but I don’t know what they tell them. (KS/6).
Only one or two shared owners were aware of Midland Heart and its implications, not
surprisingly, and few staff were aware of the case when mentioned. One stakeholder (KS6)
acknowledged that most industry people downplay the significance of the case, not least
because, as opposed to Richardson, most shared owners have a mortgage and so, if rent arrears
accrue, a lender becomes involved and repays the arrears to maintain the security of the loan, as
outlined previously. However, he noted that as the sector matures, and also perhaps because of
the proportion of older people who entered the sector after relationship breakdowns, there will
be a greater number of people who have repaid mortgages in the future, making the existing
lack of protection afforded to shared owners’ equity more prominent. The case has salient for all
Exploring experiences of shared ownership housing 79
shared owners, however, as the actual ownership of an equity stake is at the core of what
shared owners value about the tenure.
Shared owner perceptions
Critically, however, buyers of shared ownership properties overwhelmingly perceived
themselves to be owners and not renters. The legal basis of their occupation rarely informed
buyers’ thinking, but the feeling of control and responsibility over their home, particularly in
terms of home decoration, and the lack of interference by the registered provider, which was
largely seen as a distant silent partner. As most of our interviews were conducted in shared
owners’ properties, we could see the real sense of pride they had in their homes, from feature
walls through to extensions through to asking us to excuse the untidiness (which, it would be
fair to say, we had not noticed). It was noticeable that this key question, which was asked at the
end of the interview, produced responses which were not necessarily in tune with what had
been discussed before, where issues had arisen in which they had not been in control. In other
words, the interviews were again contradictory on this point and the contradictions were
often clear both to us as the interviewer as well as to the buyer.
A classic of this genre was this statement about “ownership”, which succeeded a discussion of
the problems this person had with their new build property, in which they had been “out of
control”:
Well, I think it is that fact well, number one, that I pay a mortgage every single month
and, you know, ever so ever so gradually, each passing month, I own a teeny bit more. And
that, yes, that is yes, the first time I ever experienced that, and probably the only way I
was going to experience that, given the other circumstances of my life and the relationship
that I was in. So it was the only way I was going to do that, and so, yes, I feel like it because
I get a mortgage statement every year and I get to pay the mortgage every month, and, yes,
fundamentally it is my space to do what I want. And mostly the housing association doesnt
interfere and doesnt bother us, and you can sort of ignore them, as well. (Greendale/10)
Several buyers made reference to box-ticking on official forms where they were asked to
indicate their tenure. Several were unsure of how to respond, feeling they were both renter and
owner, and occasionally checked with the company for fear of misrepresenting their position.
However, almost all shared owners who mentioned that form-filling was the only other occasion
when they were forced to reflect on their position, ticked the homeowner boxes even if they
owned minority shares as they had at least some stake in their home, which was seen to be
key in reflecting their status or responsibility in opposition to being a tenant.
Many shared owners qualified their sense of ownership, providing caveats to their overall sense
of being a homeowner, and a smaller minority perceived themselves as tenants. It was apparent
that in many respects buyers felt like owners on a day-to-day basis, but in some respects their
perceptions were challenged when they realised they had little control and their actions were
constrained.
I think in a way we feel more like a renter in a sense because were leaseholders technically
and we do feel like leaseholders. Its not even as though we own a 99 year old lease,
because we only own a quarter of it anyway. We will only own a quarter when weve paid it
Exploring experiences of shared ownership housing 80
all off and we have another £30,000 odd to pay. So yes, you dont feel quite an owner in the
full sense and you dont feel quite as easy of doing things as you like. (Fixham/11)
I dont know what I am. I dont know what they think I am. I think Im the owner, but Im
also partly a tenant, but Im a tenant that they dont really care about. But theyll look after
their real their tenants, who dont own their properties. Theyll go and do everything for
them. I dont get anything. (Fixham/1)
Id probably see it as 5050. I think when you actually look at the figures its 4060; Im 40
per cent owner and theyre 60 per cent owners. I always say its half and half. It definitely
feels different from just renting a flat, definitely feels different from that, and I would
always say its mine. I dont say Im renting it. So I probably feel 75 per cent owner and 25
per cent tenant, if you had to put a number on it, even though thats not the actual split. In
my case its less stressful to feel that Im not owning the whole place, that Im not liable for
damage to the outside and things like that. Its less stressful. (Greendale/32)
Staff from both case studies tended to characterise shared owners as picking and choosing
when they wanted to be an owner or tenant, in terms of obtaining support with repairs for
example. However, some concerns arose from shared owners’ legal status. A lot of shared
owners’ issues arose from the limitations of leasehold arrangements in blocks rather than
shared ownership per se, with resentment at paying for a diminishing asset that ultimately they
will not own unless they extend the lease, or more commonly, feeling a significant lack of
control and influence over the level or organisation of repairs and service charges to their
development.
I think both, really. Youre an owner when it comes to the bills, and youre a tenant when
I think Greendale can unilaterally decide something and then youre, in a way, kind of go
along with it, I suppose. (Greendale/13)
The inability to select their own buildings insurance was repeatedly mentioned by shared
owners, who often considered that they might get a better deal elsewhere, but staff of both case
study providers who organised the block insurance felt this was unlikely. It was not necessarily
the price that was the issue but the lack of control over an important aspect of their finances:
[It’s] dis-enabling because it takes away so much of your power and choice. I cant choose
my contents insurance, I cant; I have to trust Fixham. I cant deal with that third party; I
have to get Fixham to do it. (Fixham/33)
This issue with buildings insurance would be the same for leaseholders of apartments but not
houses, which are more commonly, but not exclusively, freehold in the wider market. While
shared owners have fewer rights than 100 per cent leaseholders, there were some examples
where the shared ownership arrangement came to the fore in buyers’ concerns. One owner
sought greater flexibility from the provider as he was unable to remortgage and access some of
the equity stored in the home, where others recognised that unless they staircased, and not all
anticipated doing so, the home would not be theirs, although they also recognised the trade-off.
Yes, I do [feel like an owner] Yes, I do. I feel quite responsible for my property. But its not
my property Basically all the work Ive put into it is never going to be mine. Which is
thats life, I suppose, isnt it?
Exploring experiences of shared ownership housing 81
I mean it’s not ideal, we would have liked to have owned a property but we just didn’t have
enough money. So thats probably the next best way. (Greendale/15)
Having a mortgage was also cited as a reason they felt like owners by several shared owners,
and some gained satisfaction from this, not because of their debt, but because it signified a
normal practice of people of a certain age. They derived comfort in characterising their
acquisition as homeownership as to be otherwise is often stigmatised. Several owners defined
themselves as homeowners in opposition to the general needs tenants, who were often around
them, but also felt stigma themselves from acquaintances or neighbours, and occasionally from
staff of the registered providers. Several shared owners emphasised their previous status as full
homeowners in previous circumstances and occasionally felt a loss of status in becoming a
shared owner, although others acknowledged that shared ownership had been important in a
turbulent part of their life:
Well, we invited everybody [on the estate to a meeting] and no one came except our
Fixham [shared owners], but none of the private people came. We all pay our service
charge to the same company. I pay mine and the house thats private next door pays theirs.
They made a Residents Association and didnt invite us. The managing agents didnt think
to invite any of us. (Fixham/4)
While shared owners associated with both case study providers welcomed the hands-off
approach to the management of shared ownership, long-standing shared owners expressed
some resentment about the lack of provider involvement, however minimal. While the absence
of the providers in their daily lives helped foster the feelings of ownership and was welcomed,
after some time shared owners complained that their provider had not shown any interest in
them or the property since the purchase. These contradictory sentiments were fuelled by the
providers being social landlords, which attracted some expectations that there would be some
element of social safety net, in providing advice or support in later life (which was not borne out
from older shared owners’ experiences); but also because they were shared owners and
therefore it was expected that the provider would be interested in the bricks and mortar.
I thought that Fixham would have a bit more involvement, been a bit more nosey, but no,
theyve been spot on really, just stayed out the way. (Fixham/10: bought 2012)
Weve never had any inquiry on the state of the property either written or verbal or
telephone, or email, any such kind of how we are doing as tenants, hows the state of the
building, if they wanted to view the building to see how we have looked after it. I am
absolutely astonished in 12 years as tenants theyve never, ever sent a representative in
person or sent documentation.
I: Would you want people to come?
Frankly no, but as it is their investment as well Im astounded that theyve not sent a
representative to look, just to see how were actually living at the property, you know
primarily what state the property is in, but how were actually doing as a family in this
community. I find it ironic. (Fixham/18)
Exploring experiences of shared ownership housing 82
Conclusion
Shared ownership is a hybrid tenure, so that rather than there being a binary divide
between owning and renting, it operates along a continuum.
This is a significant question because shared ownership is successful because it is regarded
as, and marketed as, “ownership”.
Most buyers saw themselves as being owners because they were in control of their homes
and because they would mark themselves as owners when completing forms.
However, this feeling of being in control was often out of synch with the rest of our
interviews in which the buyers had described themselves as being out of control, as
discussed in the previous chapters.
These contradictory feelings were particularly clearly expressed over the buyers’ lack of
contact with the provider. Buyers were quizzical about this, suggesting that they believed
providers would or should have taken an active interest in their capital asset; however, they
were also pleased that the provider did not take such an interest.
Exploring experiences of shared ownership housing 83
10 Conclusions and policy recommendations
Locating shared ownership
In the past, UK housing policy held a stable ambition of a decent home for all at a price they
could afford, a notably tenure neutral goal. While successive governments have attempted to
bolster homeownership since the 1960s, with the power to sell followed by the right to buy
having the greatest impact, a series of other piecemeal interventions have periodically been
tested. Shared ownership housing has developed out of these secondary interventions. It
remains marginal to the wider housing market at present, but with the potential to grow
exponentially together with considerable policy force behind that potential.
Nonetheless, the public discourse around housing primarily addresses those locked out of
homeownership. Political reactions to that dilemma foster a fresh round of limited and
piecemeal ideas including more rent-to-buy schemes and homeownership ISAs to support
the falling rate of UK homeownership. These schemes prompt reflections on why public
agencies might want to intervene in the housing market. Is it to create the conditions to support
those in the greatest housing need or to target effective demand, as the homeownership
schemes are designed to do? What outcomes are desired from promoting homeownership? And
what evidence is there that these outcomes are actually achieved? The social policy goals of
housing interventions have become uncertain. Previously, articulated ambitions for shared
ownership centred on asset accumulation and a range of factors that reduced public
expenditure elsewhere, rather than specific outcomes for buyers. What might a new set of
ambitions be for a reformed sector? Many voices call for a reform and scaling-up of the shared
ownership offer on the basis that it is satisfying latent aspirations to homeownership. But is that
sufficient and a good basis for policymaking?
Buying a home has long been a normative activity in the UK and shared ownership provided
buyers with an opportunity to have a stake in a property, which many felt was a major
achievement that attracted additional status. One of the major achievements of shared
ownership for the shared owners interviewed who were formerly private renters was an
opportunity to obtain quality accommodation with long-term security of tenure at a price
comparable to, or often less than, their previous accommodation a “no brainer” as a couple of
shared owners described their decision. The actual or perceived insecurity, lack of control, the
constant churning of tenancies and disrepair in the private rented sector were important factors
for many to access shared ownership.
These were also important attributes for others, but social renters had some of them in their
previous accommodation. They found that shared ownership offered greater control, choice
and/or quality of neighbourhood than their previous home, or what could be obtained by
undertaking a mutual exchange or transfer. After relationship breakdown, shared ownership
offered former homeowners a stake that retained all or a fraction of their former status and
provided the desired stability in middle age felt to be incompatible with the private rented
sector. For people who had been working abroad, shared ownership offered the only way back
into the UK’s overheated property market.
Exploring experiences of shared ownership housing 84
The asset motive was less prevalent among the shared owners than may be expected, but, as the
financialisation of home has become more prominent, this proved to be a decisive factor for
some (even though their capacity to draw down modest equity gains in many areas outside
London other than as a bequest appeared limited). A minority of owners explicitly sought an
investment in their home and assumed that the capital value would rise; some considered the
potential for asset accumulation as a happy accident; while others were content that, by paying
down their mortgage, a proportion of the property would be their own. Shared owners in
buoyant markets held greater opportunities to move to less expensive areas should they wish to
buy outright and move on from shared ownership, and included such moves in their strategies
to become homeowners an opportunity available to many in the London area. Shared owners
in less buoyant housing markets had made less extensive gains and lower-cost markets to move
to where they could have a chance of buying outright were limited.
A small minority of owners implied that they could have bought without shared ownership but
would not have obtained the quality of property or location achieved with shared ownership.
More crucially for some of these, the distance to their friends, family and workplace would have
meant long commutes and, understandably therefore, was not an option they were willing to
take.
Clearly, the normative values of homeownership were prevalent and the ability to be part of
that culture was critical, but these ideas were enmeshed with motivations that pointed to faults
in other housing tenure, indicating alternative ways of resolving weaknesses in the current
housing market.
Discriminating shared ownership
While enjoying the freedom from landlords, parents or former partners, for those taking it on
shared ownership was not unproblematic. Several issues were apparent that qualified the
interviewees’ sense of ownership. Discerning the problems of leasehold, as a form of housing
tenure, to those issues specific to shared ownership, as a more explicitly hybrid tenure, was
important. In London, and other places, shared ownership opportunities are frequently in large
blocks, sometimes obtained under section 106 arrangements and therefore managed by third
parties, where neither the housing association nor especially the shared owner is able to exert
influence or control over those third parties. Fixham was reviewing the governance
arrangements of these third-party managed blocks with the intention of strengthening the
position of shared owners and advocating more formerly on their behalf.
Leasehold difficulties that curtailed shared owners sense of ownership related to an inability
to: control service charges and estate services; organise repairs and their costs; and, in respect
of health and safety features, most notably manage the installation of fire safety measures.
These issues occupied a large proportion of those raised with the researchers. These ranged
from serious repair issues to mostly minor irritations, but what is key here is that until shared
owners achieve 100 per cent leaseholding and end their shared ownership lease, the buyers
have fewer legal rights and opportunities to rectify serious problems. However, exercising
rights under leasehold law is a challenging process on which few leaseholders embark. In that
sense, the shared owners may not be disadvantaged in comparison to the providers other
leaseholders, but may be more so if the development is managed by a third party, where the
provider may also carry little weight or influence with the management company. It was often
Exploring experiences of shared ownership housing 85
the case that charges here more frequently lacked transparency and were high, occupying a
greater proportion of housing costs than in other provider-controlled developments. There was
a sense that these issues more greatly affected shared owners due to planning requirements.
Unsurprisingly, after tackling the above service issues, specific shared ownership issues centred
around the imbalance of repairing responsibilities between the shared owner and the registered
provider. While the interviews partly confirmed staff members’ perceptions that not all shared
owners read or understood their leases, it was also apparent that the information received from
the providers and, reportedly, the solicitors was incomplete and/or lacked the necessary clarity.
Objection to the repairing responsibilities also grew over time as permanent shared owners
wished to see greater support offered to maintain the home. Such objections arose from the
shared epithet, which shared owners felt to be not borne out in practice. Suggesting, as
providers do, that the rent covers the loan obtained to purchase the association’s proportion of
the property offers an insufficient explanation of services provided in exchange for a rental
charge.
Conflicts between common marketing material for shared ownership and the actual or
emerging legal status of shared owners is apparent, with little acknowledgement of the tenant
status of shared owners, and leaving unresolved insecurities at the core of the product in terms
of the equity apportioned to the buyers’ “share. To what extent is it sustainable to leave people
with the cultural sense of ownership when such a fissure in the legal foundation of the product
exists? Not least because, as the sector matures further, a greater proportion of unmortgaged
shared owners will become apparent.
A strong sense of shared owners being more price sensitive than other leaseholders was
apparent and some recent shared owners were paying large portions (in excess of 30/35 per
cent) of their income in housing costs, over which they had little control. The impact of any
mortgage interest rate rises could be difficult for some recent buyers to manage, although
following the Mortgage Market Review, new entrants had already had their finances stress-
tested. The price sensitivities of shared owners, in comparison to other leaseholders, drove
their greater scrutiny and challenge towards additional costs and services provided.
Strategies to remain a shared owner or move on in time were mixed. Unless some owners,
predominantly those outside of London, received unanticipated lump sums, from inheritance or
similar, then opportunities to staircase were less obvious than for career-salaried young
professionals in London. The latter could always relocate to a lower-cost housing market,
although occasionally people were tied to a particular borough or location through schools and
limited opportunities for the same kind of work outside of the capital. While many shared
owners were content or at least resigned to remaining a shared owner, staircasing
opportunities were an important component of the shared ownership offer, but some owners
held unrealistic estimates of their ability to buy out the provider.
Not all shared owners considered the social landlord status of the provider as important, as they
had not heard of the association prior to their purchase and had no expectations of it for being a
social landlord. While marketing for specific development sites distances them from
associations with social landlords, other shared owners expected greater ethical standards from
their social landlord provider. For example, several shared owners thought the provider would
buy back their home if they encountered payment problems, would offer support in later life or
Exploring experiences of shared ownership housing 86
would buy shares back none of which are rights generally afforded to shared owners. There
was a sense expressed by some buyers that the social mission of providers was being lost in the
shared ownership offer; at least, some scepticism was expressed about that social role.
Shared ownership provides opportunities for households marginal to homeownership in their
local housing market not necessarily low-income households to gain access to a form of
occupation that lends itself to offering some of the social benefits of full occupation, such as
status, as well as material gains, especially when compared to the high costs and insecurity in
the private rented sector. It does so with a range of caveats and qualifications. Some of these are
bound up with well-known weaknesses with leasehold tenure, but also with a series of
constraints placed on buyers by the shared ownership lease. These constraints impinge on
shared owners’ sense of control over their home, environment and costs, attributes that they
associate with homeownership and this therefore prompted widely perceived imbalances in the
structure of risk and responsibilities between buyers and providers. There was a trade-off
between the cultural importance of homeownership and the constraints associated with having
a third-party relationship involved in the home that most shared owners accepted in part, but
the seeming injustice of the disparity between provider and buyer responsibilities grew over
time.
Interviews with stakeholders displayed mixed ambitions for the sector in terms of the retention
of different income groups in high or low-cost markets, whether shared ownership was a
permanent or transitional tenure, and who it is for, and whether there were any problems with
the understanding of the product or offer at all. Prior to reforming the sector with the intention
of scaling up the offer for intermediate housing, there is merit in revisiting the desired policy
outcomes, although that carries the implication that the product could be substantially revised
or that more new products could be introduced to a crowded and muddled sector, which many
stakeholders are likely to find unpalatable and which runs the risk of increasing the opacity of
intermediate products in the public’s mind.
Characterising shared ownership
The last words are left to the buyer interviewees.
Towards the end of most interviews, shared owners were asked if they could identify five words
that characterised their experience of shared ownership. Around half of the shared owners
highlighted some key words, and this became a useful prompt to summarise, explore some
feelings more closely, or reveal new thoughts about the product. Other participants found
articulating their experiences of shared ownership in such a succinct manner difficult and could
not offer any words. Some words were often caveated in discussion, so ‘affordable’ was
frequently cited because shared ownership allowed access to ownership, but buyers still noted
rising monthly costs or issues around staircasing, for example, that they found challenging.
The study is qualitative so the common frequency of key words may not be representative of all
shared owners, but overall the tempered satisfaction accompanied by some more serious
disquiet about the shared ownership experience is fairly reflected in the word cloud below.
Shared ownership was seen as a welcome product but was simultaneously a frequent source of
frustration and annoyance.
Exploring experiences of shared ownership housing 87
Figure 3: Word cloud characterising research participants’ experiences of shared
ownership
Policy recommendations
Shared ownership has slowly expanded since the first shared owners took the keys to their
property in 1975. As a favoured vehicle for affordable homeownership at a time when
traditional homeownership seems unachievable, it is likely that its expansion will accelerate.
There is political and policy consensus that shared ownership is an asset to the sector and
pressure groups which previously opposed its use are now supporting it. Government grant and
private equity flows into the sector and many buyers are pleased with the opportunity it offers.
Yet our research suggests that there are problems with the product that lead to lower
satisfaction levels than exist across social housing more generally. While our qualitative
approach has highlighted that that “satisfaction” is more complex than simple surveys and
questionnaires might suggest, and understandings about the tenure are contradictory (partly
because the tenure itself is contradictory), we do not see lower satisfaction as inevitable. We
propose a package of policy, legislative and organisational changes which we consider respond
appropriately to the problems we have identified and which should, at the least, form part of
the government review of shared ownership.
Exploring experiences of shared ownership housing 88
We recommend the following changes.
1. Clear, consistent marketing of shared ownership
We recognise that there are plenty of variations on the theme of shared ownership and
different types of interventions by providers, which are part of the distinctive and often
entrepreneurial spirit of the housing association movement. However, at heart, they are all
“part-rent, part-buy”, as is emphasised by the model lease and its fundamental terms. There
is evidence of confusion about the product which clear, consistent marketing would help to
remedy.
Clear, consistent marketing must reflect the reality and lived experience of shared owners
so that the gap between what buyers’ expect and that reality is closed. In so doing, this
should increase buyers’ satisfaction. For example, to describe the shared ownership product
in marketing materials as “literally shared ownership” creates expectations which the
product may fail to live up to. One way of closing that gap is to explain the product to buyers
prior to them viewing any property. Another example is that shared ownership is nearly
always described as a step on the path to full homeownership. Marketing material could be
more explicit in explaining that for some people full homeownership may be unattainable
but nonetheless shared ownership offers value in terms of security, stability and the
acquisition of a valuable asset.
Clear, consistent marketing should be provided by way of a key facts document which sets
out nationally agreed explanations of the offer, any distinctiveness about the particular
product on offer and the product’s legal status. The current document, provided at the time
of the redraft in 2009/10, is not used in practice and events as well as our understandings of
the lease have moved on since then.
A clear, consistent explanation of relevant eligibility criteria including any scheme-specific
eligibility criteria would assist with the development of the tenure, so that individuals can
easily understand whether or not they can access shared ownership. This is the role of both
help-to-buy agents and the provider.
2. The “social business”
The providers in this study would both describe themselves as social businesses, a phrase
which implies certain productive tensions for them. Buyers’ expectations can be raised and
dashed by a failure to appreciate the modern role of social housing providers. Buyers should
be made aware about the strengths of the social housing movement as well as its limits. For
example, one strength of shared ownership is that buyers were made to feel like owners by
virtue of the lack of contact between themselves and their providers. However, sometimes,
they would like their provider to appear to be taking an interest in its share of the property.
This is, again, a communication issue.
Providers should decide what their offer to buyers is and make that offer clear and
transparent. The issues here are around the extent to which they will act as a social safety
net and the offer to shared owners over their life course in the tenure. Therefore the
Exploring experiences of shared ownership housing 89
circumstances in which, for instance, they will make service charge reductions or provide
payment schemes or enable downward staircasing should be made explicit. There is a need
for such explicit statements to go beyond a once-and-for-all publication or a website, but to
be publicised more often.
3. Expectations: conveyancers
Many shared ownership providers have panels of conveyancers which are recommended to
buyers. Some assumptions can be made both by buyers and providers about those
conveyancers. Buyers may see them as being “part of” the provider and not acting for the
buyer; providers believe that the conveyancers, who have already been involved in shared
ownership transactions, will provide better quality information to buyers. There is no
evidence that either is the case.
Modern conveyancing practice is not equipped to provide information to buyers about the
specifics of shared ownership leases. Less reliance should, therefore, be placed on
conveyancers as information providers. It should not be assumed that conveyancers will
explain to buyers their obligations beyond providing them with a copy of the lease.
That increases the onus on providers to provide relevant, simple and clear information to
buyers. The rationale for the provision of that information is that buyers tend to have less
experience and knowledge about housing markets and the sales process than other first-
time buyers because of the eligibility criteria for the scheme and because shared ownership
and leasehold are not straightforward products.
4. Leasehold reform
Although the twin-track nature of the lease (being a long lease for certain purposes and an
assured tenancy) may have advantages to different sections at different times, it is
confusing, lacks logic and is difficult to explain to a lay audience.
It is clear from our data that certain aspects of the full repairing lease are (or become over
time) problematic to buyers and appear to be weighted in favour of providers and/or
lenders. If we are serious about shared ownership becoming the fourth tenure, then we
need to have a lease that is robust and sensible for all the actors. This is particularly true if
we accept that not all shared owners will become full homeowners.
A body like the Law Commission for England and Wales should be asked to recommend
changes to the law, taking account of the interests of all of the actors.
Exploring experiences of shared ownership housing 90
5. Lenderprovider communication
Lenderprovider communication is a crucial element of the shared ownership relationship
but one which is lacking, despite updated guidance and good practice. The use of service
level agreements can be valuable. However, most often, this value is personality-based and
the mobility of personnel has potential to damage ongoing relationships. Social housing
providers have wide experience and knowledge of how this can be rectified through, for
example, other partnership arrangements. That knowledge and experience can be used to
counteract this issue.
Named points of contact, which are kept updated, or generic email addresses can be
valuable tools (the latter were used successfully with the mortgage rescue scheme).
When lenders capitalise rent or service charge arrears, this can provide an immediate
solution to an issue for all parties. However, providers and buyers should be aware that it
can be a false economy because lenders will recoup that outlay subsequently. If there is a
lender resale of the property, the MPC will enable the lender to recoup that outlay. Better
communication and appreciation of the commercial realities at the initial stage, when
arrears arise in the first place, would lead to better communication between lender and
provider.
We also recommend that the Civil Procedure Rules Committee, the Civil Justice Council,
consider amending the recently updated Pre-Action Protocol for Possession Claims based on
Mortgage or Home Purchase Plan Arrears. If a clause was introduced requiring a lender to
have pre-action contact with the shared ownership provider, this would make a substantial
contribution to resolving this issue.
6. Practical changes: staircasing
Staircasing can be daunting and off-putting, particularly when there are extra costs
involved. Our data clearly indicates that most buyers intend to staircase when they access
shared ownership but various factors beyond life-cycle factors prove problematic. The
growing disconnect between earnings and house prices increases the difficulties in
staircasing. We suggest that there should be online and printed advice about points to
consider when thinking about staircasing (housing market, salary, future earnings potential
etc.).
Providers can better facilitate staircasing by removing or reducing upfront costs and/or
providing an online calculator that can show new housing costs as the buyer’s percentage
share changes.
Exploring experiences of shared ownership housing 91
7. Practical changes: third-party managing agents
Our research has identified some significant issues where third-party managing agents are
involved with the management of properties which include shared ownership units. These
problems are generally inherent in the leasehold relationship. However, our research
findings are that providers are often blamed for these issues, which are mostly outside their
control. This damages both the provider’s reputation as well as the shared ownership
product itself.
Providers should be proactive in: (a) explaining the management structure of shared
ownership units; (b) regularly updating shared owners about their interactions and
activities with the managing agents; (c) assisting shared owners, should they seek to
exercise their right to manage, participate in leaseholder/resident meetings, or set up
resident associations. The Residential Property Tribunal should always enable shared
owners to be represented in leasehold disputes even if they are not direct parties to the
lease.
8. Practical changes: service charges
Service charges are problematic in leasehold tenure generally. They feature regularly at the
Residential Property Tribunal. There are a number of statutory remedies but the
landlord/tenant relationship remains potentially antagonistic. Indeed, the tensions have
become more complex since the introduction of right to manage and collective
enfranchisement and the increasing number of lessees who are Buy-to-Let landlords.
Until there is reform that responds to the changing landscape of leasehold tenure, the best
method of managing the landlord/tenant relationship is to provide good quality information
upfront to occupiers and throughout the relationship. In particular, incomprehensible
service charge documents unnecessarily create mistrust. All parts of the organisation should
“own” this communication – as all parts of the organisation bear the brunt of inadequate
communication so as to ensure that such communications are personal, understandable,
clear and transparent, as well as providing adequate explanations for costs incurred. Being
able to provide this information annually with clear and transparent service charge
statements would ameliorate some of the ongoing problems and contribute to increased
satisfaction in the sector
9. Practical changes: administration charges
We recommend that providers review their administration charges to check whether they
are necessary and proportionate. In particular, shared owners find charges for making
improvements frustrating as they feel they are bearing the cost for work from which the
provider will ultimately benefit (even if that is not the case), and yet they are charged when
they inform the provider of the work. Clauses that require shared owners to return the
property to its original decoration when they sell are also potentially counterproductive and
reflect an old-fashioned attitude to shared owners rather than understanding them as
players within a housing marketplace.
Exploring experiences of shared ownership housing 92
10. Practical changes: organisations
What became clear to us during this research project is that provider organisations are
complex. Different elements within those organisations have different pressure points and
different working practices.
A whole organisation response to shared ownership would undoubtedly improve buyers’
experiences and contribute to increased satisfaction responses.
11. Resale
The government has been consulting on the resale process. The right of the provider to
nominate a subsequent purchaser has been regarded as a barrier to resales by householders
and lenders. The government is seeking to streamline the process and has made a variety of
different suggestions for reform, including removing the ability of the provider to nominate
a purchaser of a property where the former shared owner has staircased up to 100 per cent
or where the shared owner has yet to staircase up, or reducing the nomination period.
Our data from buyers supports a streamlining of the resale process. Buyers were concerned
about the level of fee charged by providers for marketing, a poor resales service offered by
providers and, in particular, the valuation process (believing generally that they would be
better served by the private market). The provider data does not necessarily accord with
those views, and recognises that buyers’ perceptions of the market may be skewed.
The loss of shared ownership stock to social housing is a political question. In our opinion,
to the extent that the resale market is streamlined, this raises questions as to the original
eligibility threshold for accessing shared ownership. If resale buyers do not have to cross an
eligibility threshold, why should original buyers? Therefore, our opinion on this issue is that
it is not a marginal question but absolutely centre-stage to the very underpinning of the
shared ownership offer.
As a result, we believe that a pragmatic compromise should be that buyers should be
entitled to sell their shares on the open market at any time but any purchaser from that
buyer should have to be approved by the provider.
12. Newsletters.
Newsletters are undoubtedly useful. They are useful marketing devices as well as
communication and information provision. They can also be problematic and generate
dissatisfaction, however good the motive behind them.
Generic newsletters for all occupiers are unsuited to shared ownership or long leasehold.
More targeted information is undoubtedly the way forward including paperless
communication. That way forward is less frequent, but more targeted, communication
providing advice on specific shared ownership matters, updated policies or services
(including reminders about staircasing and mobility packages), services provided to buyers
struggling with their mortgages, rent or service charges.
Exploring experiences of shared ownership housing 93
13. Information and data collection
We live in a cost-cutting age in which national statistical databases are rigorously tested for
their utility. There are opportunities with shared ownership for additional data collection.
These opportunities will affect targeting, information provision and understandings about
the tenure, including supporting movement within and beyond the tenure.
The following data collection would appear to be important: identify moving destinations of
shared owners to understand housing pathways, for example, through the use of exit
surveys; and scrutinising lenders’ sale of properties and uses of the MPC to ensure that
providers and borrowers are not left with large debts.
In particular, such data collection would likely prove to be an encouragement to lenders to
enter this market, whose systems do not sufficiently differentiate between tenure types.
Therefore, the actual risks of repossession of shared-owner properties are largely an
unknown. A database of staircasing activity would also assist providers’ modelling and
business planning (although there is a database used by one group for benchmarking).
Exploring experiences of shared ownership housing 94
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