Government Housing Plans
Over the last few months, in the United Kingdom, we have heard about plans to build 1.5 million homes in 5 years and heard how home ownership is the hallmark of being British. What remains unaddressed in the conversation is the need to reform shared ownership. This topic holds significant importance as it impacts families, workers, and individuals aspiring to enter the property market. Reforming shared ownership can lead to greater protection for those who reside in a shared ownership property, build confidence in the program, and increase sustainability in housing and asset sharing. By exploring innovative approaches and strategies, we can create a more inclusive framework that benefits all parties involved. It’s essential to engage in discussions that focus on this reform, as it has the potential to reshape the landscape of shared ownership for the better.
Legal Black Hole
Owning a shared ownership property is like being a placement for an employment agency. If you work as a placement, you are neither an employee nor an independent contractor. Instead, as a placement, you sit in a legal vacuum where your rights are limited by your agreement with the agency and the limited protection you are given by employment law.
When you purchase a shared ownership property, you become a renter and an owner. This means you rent the part you don’t own and often need a mortgage to buy it. Plus, with many shared ownership properties, you will also pay a service charge and pay a portion of the building insurance. The total cost of ownership can mean you pay more than if you took out a mortgage to buy the property.
Based on my personal experience, shared ownership property locations typically fall into one of two categories. First are areas with crime that the council would like to revitalise. Second, these areas tend to be more rural or suburban in nature. These areas lack connectivity and offer limited amenities. For those who live in these areas and work in an office, it can mean a commute to work, driving distances for groceries, and school. So, if you do not drive, then a part of shared ownership is not open to you.
Reforming Purchaser Rights
In discussions about shared ownership, the rights of the property purchaser are often overlooked. It is essential to recognise that these rights play a crucial role in the overall dynamics of shared ownership arrangements. Buyers must be aware of their entitlements, including the right to access information about the property, influence over decisions related to its management, and the ability to sell or transfer their share under specified conditions. A comprehensive approach to shared ownership should prioritise these rights, fostering transparency and fairness for all parties involved. Did you know when you purchase a shared ownership property, you:
- can be evicted even though you may own a part of the property and, in some cases, own the majority of it.
- Regardless of the percentage you own, you are responsible for paying for all repairs.
- even though you own a part of the property, and in some cases you may be the majority owner. However, you might face restrictions on pet ownership in certain situations.
- The price for staircasing, or increasing your ownership percentage, is based on current market value rather than the purchase price. I feel this is quite punative since you increased the value of the property by maintaining it and improving it. You should, I believe, benefit by being able to increase your share based on the purchase price.
- You can make some improvements as long as they don’t affect the property’s structure.
- Selling can be a complicated process where the housing association may get first right to sell before you use an agent.
- Benefits, from my understanding, can pay for the rent portion on a shared ownership.
The previous government, right before its defeat, introduced limited leasehold reforms. These reforms focused on more transparency about service charges, the right to challenge, and length of time to extend a lease. However, these reforms did not address the disparity leaseholds create nor recognise the duality of being an ower and a leaseholder. Although the reform addressed some fundamental issues, it failed to address the core issue of recognising the ownership interests of leaseholders. I believe there are four fundamental reforms that were missed. Firstly, there should be greater protection against eviction. Secondly, residents should have more freedom to use the property as they see fit. Thirdly, the ability to climb the ladder is determined by the purchase price of the property. Fourth, rights in the property based on percentage owned. Specifically, it allows for increased flexibility in enhancing the property and accommodating pet ownership.
Reforming Planning
Also, I feel something else is being missed. I feel the process of how a property becomes designated as shared ownership gets missed. There is a great disparity between desirable locations, numbers available, and making shared ownership properties accessible. I found there were, at the time of my search, a large number available in less desirable areas but very few, if any, in more affluent or more desirable locations. While I cannot prove it, I do feel NIMBYism (Not In My Back Yard) that is directed towards those who use benefits to pay for their rent on a share ownership. This ultimately forces those who do not want a postcode associated with crime and or anti-social behaviour to either not purchase shared ownership or look for shared ownership far away.
Finally
In my opinion, if shared ownership is to survive, then shared ownership must be reformed. The reform has to include having shared ownership properties in all of the areas of the city, not just those with high crime or rural. Since shared owners undertake the full financial responsibility for the property, then they must be provided more protection from eviction, be given greater latitude to make changes without obtaining consent, and rights should increase as the percentage of ownership increases. Finally, staircasing and selling the property should be simplified to allow the transfer to be easier. Fundamentally, this means the government needs to view the shared property resident as the owner and not a tenant. Without reforming shared ownership, potential purchasers will avoid shared ownership because they will not want all of the responsibility of home ownership without the benefits of own it.