Josie Dom, 53, was thrilled when she moved into her new home in October.
She bought 30% of it through the shared ownership scheme as an affordable route to home ownership, even if it was only partial ownership.
The idea is to help people who would not be able to buy a home outright get on to the housing ladder earlier by buying a share of a property and paying subsidised rent on the rest – often to a non-profit housing association.
Without it, she says there was no way for her and her two children to stay in Colchester, where they love living and attend school and college.
But her enthusiasm started waning when after just six months, the housing association increased the building’s service charges by 138%, from £85 to £202 per month.
While she had anticipated small annual rises, this unexpectedly large jump was unaffordable.
“Obviously the idea of shared ownership is to help people like me that wouldn’t otherwise be able to afford their own home,” said Ms Dom.
“Then suddenly, again, we can’t afford it. It makes a mockery of being shared ownership and having social housing.”
Image: Josie Dom tells Sky News about her service charge increases at her new shared ownership home
The expanded scheme now makes up half of affordable homes funding.
Sky News has been approached by dozens of other shared owners facing soaring costs and other issues, including difficulty selling.
With rising mortgage costs this relatively cheaper option appears to be increasingly appealing to buyers.
Rightmove, the UK’s largest online property website, told Sky News shared ownership properties are taking 56 days to sell versus 65 days for all other properties on average, as of March 2024.
And interest has increased over time – they said demand is up 37% from a year ago for shared ownership properties.
Initially low costs can be misleading, however.
Barry Gardiner, Labour MP for Brent, was on the government’s shared ownership cross parliamentary report committee.
He told Sky News: “They don’t actually have the rights of control that full ownership ought to give because you are both a tenant and a share in the ownership – and you’re paying the full service charge on the property.
“People just find it a desperate trap.”
Record numbers are seeking legal advice
Data from The Leasehold Advisory Service (LEASE) shows the number of leaseholders seeking legal advice about service charges has increased in recent years.
The number of enquiries dealt with about the reasonableness of service charges has nearly doubled compared with 2021.
There were over 1,300 enquiries in the three months to March 2024, the highest number since records beginning in 2018.
LEASE joint CEOs Sally Frazer and Alice Bradley told Sky News they are concerned about the increase, “particularly over the last year”.
“More broadly we know there is still not enough awareness of the service and support our organisation can offer,” they added.
Feeling trapped
Affordability and freedom are typical selling points advertised to buyers, as well as the opportunity to “staircase” towards higher ownership shares while saving money on rent.
But for Alex, who bought 25% of his north London flat in 2019, the very opposite has been true. The dream of home ownership has become a nightmare, leaving him and many others in his building feeling trapped.
In February, residents were told by their property management company James Andrew Residential (JAR) that the service charge would be more than tripling, from £500 to £1,700 per month from April.
His rent and service charge are now over £2,900 per month, and the mortgage is an additional £800.
Image: Fitzgerald Court, where service charges have increased from £500 to £1,700 per month
“My partner and I just got engaged, but we can’t plan the wedding. All our money is going to keeping us in the flat, and now we’re using up our existing savings,” he told Sky News.
“In 2019 it seemed like a great affordable option, but now we would be better off if we were renting and are worried about being able to sell at all.”
In response to residents’ concerns, the property managers JAR told Sky News they were engaging with owners and investigating the matter to see if costs can be mitigated.
Islington and Shoreditch Housing Association, who own the other share of Alex’s flat, told Sky News the service charge increase is “outrageous and not justifiable”.
They said: “We firmly disagree with JAR’s assessment that the residents should bear such major maintenance costs for a six-year-old building”.
“We will be challenging the cost increase on behalf of our residents and will go to tribunal to fight it if we must.”
Leasehold reform is needed
The issue of leasehold charges is not unique to shared owners and has been recognised as a wider industry issue.
“The problem lies in the leasehold structure of the housing market and its application to shared ownership,” said Stanimara Milcheva, Professor in Real Estate Finance at University College London.
Service charges are often dictated by the management company which may also own the freehold.
Prof Milcheva added there should be more transparency, so shared ownership buyers have more access to relevant information about service charges in their region.
Image: Stanimara Milcheva, Professor in Real Estate Finance at University College London
The government introduced the Renters Reform Bill to parliament in 2023, a piece of legislation that aims to improve conditions for renters, but which has wider implications for the leasehold sector.
Its proposed measures to regulate service charges include greater transparency and breakdowns of costs, and the exclusion of insurance costs. But it is unclear when, or if, the currently delayed Bill will make it through Parliament in its present form.
These issues do have the potential to cause more financial stress to shared owners, who are typically earning lower incomes than those who buy their first home outright.
From preliminary research, Prof Milcheva and colleagues found that the gross income of the main first-time shared ownership buyer was on average 23% lower, at £42k compared to £55k for those buying outright, between 2015 and 2023.
The most affected region is London
Service charges do not affect all shared owners, as although most are leaseholders the majority live in houses.
Still, close to 94,000 (40%) of shared ownership households are in flats, based on the latest estimates from the 2021 Census.
Nearly half of these (43,000 households) are in London, while outside of London the proportion of those in flats falls to 27%.
“Service charges are more of a problem in London, where pretty much the entire stock of shared ownership are apartments,” said Prof Milcheva.
This has an impact on the relative costs of service charges, which are as much as triple the price in London relative to rent costs, at 30% of rent compared to 10%-13% in other areas, according to their research.
Shared ownership has now overtaken social rent
Shared ownership makes up a relatively small percentage of households overall, at around one in 100 according to the latest Census data – with slightly higher concentrations in some areas, mostly in the south of England.
However, it does now make up a half of new funding spent on affordable housing, overtaking social rent as the main type of publicly subsidised housebuilding under the current government.
The main types of affordable housing tenures are social rent, affordable rent (which is less subsidised than social rent, at up to 80% of market rates) and shared ownership.
There has been more incentive for developers – who often have a quota of affordable housing to meet set by local authorities – to build shared ownership or affordable rent properties.
The Affordable Homes Programme, which has been the primary funding source for new affordable homes since 2011, has also switched focus away from social rent towards shared ownership and affordable rent.
This trend continued in the latest funding commitment for 2021-2026, with 50% of the £11.5bn allocated for 162,000 new affordable homes earmarked for shared ownership, with the other 50% split between social rent and affordable rent.
As a result of the lack of incentive to build social rent properties, the number of new builds is at historically very low levels with less than 10,000 completed in 2022/23.
A DLUHC spokesperson said: “Through our long-term plan for housing, we are investing £11.5bn in the Affordable Homes Programme and remain on track to build one million over this Parliament.
“Shared ownership has a vital role to play in helping people onto the property ladder, and since 2010 we have delivered approximately 156,800 new shared ownership homes.”
They said they are taking action to ensure the shared ownership scheme provides the best value for owners, including proposals to give the right to extend leases by 990 years in the Leasehold and Freehold Reform Bill.
“I feel bad pushing the problems onto someone else, but I want to get out”
TheLevelling Up, Housing and Communities Committee‘s (LUHCC) cross-parliamentary report noted as well as the issues of rising rents and uncapped service charges, shared owners have “a disproportionate exposure to repair and maintenance costs”.
Despite improvements to shared ownership leases from 2021, with the introduction of a 10-year period for repairs, they say more can be done to make costs proportionate to the size of share owned, including proportional service charges as well maintenance costs.
“Then the housing association will have ‘skin in the game’ and might be incentivised to better scrutinise service charges and property management companies,” said Prof Milcheva.
Image: Shared ownership homes in Colchester
Meanwhile, owners of earlier contracts remain responsible for 100% of costs, regardless of if the property has changed hands.
This creates a “two tier” system, where older properties become unattractive and harder to sell, according to the report.
Will Eggleston, a 33-year-old metalworker bought 50% of his Southwest London flat in 2019.
His service charge has more than doubled since then, from £200 to over £400 a month, with most of the increase happening in the past year.
“There’s just no visible benefit and no explanation to it. The building is in worse condition than when I moved in. The garden has died, the hall is in a bad state,” he said.
His building is one of many high rises to have been impacted by cladding safety concerns and costs of remediation following the 2017 Grenfell Tower fire tragedy.
“L&Q – who are my head lease, hadn’t mentioned anything about cladding or anything when I was purchasing the flat,” said Mr. Eggleston.
This can be a particular issue for shared owners with covenants that prevent them subletting properties they can no longer afford to live in at market rates.
A spokesperson for L&Q said: “L&Q is a charitable housing association and does not make profits from service charges.”
Kinleigh Folkard & Hayward (KFH), the property managers at Mr Eggleston’s building, said that the doubled service charge is due to increases in general maintenance and cleaning, insurance, electricity, and reserve funds for future works.
They added that they would have made the resident aware of the facts known about cladding at the time he purchased his apartment.
Activist group End Our Cladding Scandal say the government and housing providers have failed to mitigate the impact of the building safety crisis on shared owners.
They said: “This has already led to repossessions and forced shared owners into distressed sales to cash buyers.
“Others have had to become “accidental landlords”, forced into loss-making subletting agreements while their neighbours, who are private leaseholders, can rent out their flats at whatever rate they choose.”
Meanwhile, the high service charges and ongoing cladding issues are getting in the way of Mr Eggleston’s hopes to sell and move out.
“I feel bad pushing the problems onto someone else. But on the other hand, I want to get out,” he said.
Calls for more transparency
Shared ownership can have a positive role for those who do not qualify for other government affordable homes schemes but cannot access full ownership, being on average cheaper than private renting, according to Prof Milcheva and colleagues’ research.
But there are some key data gaps, including on how common it is for people to staircase up to higher shares of ownership, which make it hard to assess the overall success of the scheme.
Rhys Moore, executive director of public impact at the National Housing Federation, said: “Shared ownership remains an important route to home ownership for many households and we support measures to improve residents’ experience through greater transparency around costs and improved access to information, as well as better government data on the product.”
Ann Santry, chair of Shared Ownership Council said: “We acknowledge the need for further reforms of the tenure to help shared ownership fulfil its potential as an affordable home ownership model.”
Image: Josie Dunn’s bill, including charges for non-existent services like CCTV
In Josie Dom’s case, after being contacted by Sky News her building’s Housing Association Peabody said it had made a mistake and would be issuing a correction letter to residents.
A spokesperson for Peabody said: “It’s important to us that service charges are accurate and reasonable. This was an error and we’re really sorry. No one has been overcharged and we’ve written to those affected.”
At the time of publication, the issue remains unresolved, and residents have not yet received this information.
Josie is in rent arrears. “It’s a crazy amount of stress to go through,” she said.
With additional reporting and production by Michelle Inez Simon, visual investigations producer, and Tom Cheshire, Data & Forensics correspondent
The Data and Forensics team is a multi-skilled unit dedicated to providing transparent journalism from Sky News. We gather, analyse and visualise data to tell data-driven stories. We combine traditional reporting skills with advanced analysis of satellite images, social media and other open source information. Through multimedia storytelling we aim to better explain the world while also showing how our journalism is done.
Major car manufacturers and two trade bodies are to pay a total of £461m for “colluding to restrict competition” over vehicle recycling, UK and European regulators have announced.
The UK’s Competition and Markets Authority (CMA) said they illegally agreed not to compete against one another when advertising what percentage of their cars can be recycled.
They also colluded to avoid paying third parties to recycle their customers’ scrap cars, the watchdog said.
It explained that those involved were BMW, Ford, Jaguar Land Rover, Peugeot Citroen, Mitsubishi, Nissan, Renault, Toyota, Vauxhall and Volkswagen.
Mercedes-Benz, was also party to the agreements, the CMA said, but it escaped a financial penalty because the German company alerted it to its participation.
The European Automobile Manufacturers’ Association (Acea) and the Society of Motor Manufacturers & Traders (SMMT) were also involved in the illegal agreements.
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The CMA imposed a combined penalty of almost £78m while the European Commission handed out fines totalling €458m (£382.7m).
The penalties were announced at a time of wider turmoil for Europe’s car industry.
Manufacturers across the continent are bracing for the threatened impact of tariffs on all their exports to the United States as part of Donald Trump’s trade war.
Within the combined fine settlements of £77.7m issued by the CMA, Ford was to pay £18.5m, VW £14.8m, BMW £11.1m and Jaguar Land Rover £4.6m.
Lucilia Falsarella Pereira, senior director of competition enforcement at the CMA, said: “Agreeing with competitors the prices you’ll pay for a service or colluding to restrict competition is illegal and this can extend to how you advertise your products.
“This kind of collusion can limit consumers’ ability to make informed choices and lower the incentive for companies to invest in new initiatives.
“We recognise that competing businesses may want to work together to help the environment, in those cases our door is open to help them do so.”
A household energy supplier has failed, weeks after it attracted attention from regulators.
Rebel Energy, which has around 80,000 domestic customers and 10,000 others, had been the subject of a provisional order last month related to compliance with rules around renewable energy obligations.
The company’s website said it was “ceasing to trade” but gave no reason.
Industry watchdog Ofgem said on Tuesday that those affected by Rebel’s demise did not need to take any action and would be “protected”.
Customers, Ofgem said, would soon be appointed a new provider under its supplier of last resort (SoLR) mechanism.
This was deployed widely in 2021 when dozens of energy suppliers collapsed while failing to get to grips with a spike in wholesale energy costs.
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0:55
Why is the energy price cap rising?
The last supplier to go under was in July 2022.
Ofgem said new rules governing supplier business practices since then had bolstered resilience.
These include minimum capital requirements and the ringfencing of customer credit balances.
The exit from the market by Bedford-based Rebel was announced on the same day that the energy price cap rose again to take account of soaring wholesale costs between December and January.
Tim Jarvis, director general for markets at Ofgem, said: “Rebel Energy customers do not need to worry, and I want to reassure them that they will not see any disruption to their energy supply, and any credit they may have on their accounts remains protected under Ofgem’s rules.
“We are working quickly to appoint new suppliers for all impacted customers. We’d advise customers not to try to switch supplier in the meantime, and a new supplier will be in touch in the coming weeks with further information.
“We have worked hard to improve the financial resilience of suppliers in recent years, implementing a series of rules to make sure they can weather unexpected shocks. But like any competitive market, some companies will still fail from time to time, and our priority is making sure consumers are protected if that happens.”
Harrods is urging lawyers acting for the largest group of survivors of abuse perpetrated by its former owner to reconsider plans to swallow a significant chunk of claimants’ compensation payouts in fees.
Sky News has learnt that KP Law, which is acting for hundreds of potential clients under the banner Justice for Harrods, is proposing to take up to 25% of compensation awards in exchange for handling their cases.
In many cases, that is likely to mean survivors foregoing sums worth of tens of thousands of pounds to KP Law, which says it is working for hundreds of people who suffered abuse committed by Mohamed al Fayed.
Under a redress scheme outlined by the London-based department store on Monday, which confirmed earlier reports by Sky News, claimants will be eligible for general damages awards of up to £200,000, depending upon whether they agree to a psychiatric assessment arranged by Harrods.
In addition, other payments could take the maximum award to an individual under the scheme to £385,000.
A document published online names several law firms which have agreed to represent Mr al Fayed’s victims without absorbing any of their compensation payments.
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KP Law is not among those firms.
Theoretically, if Justice for Harrods members are awarded compensation in excess of the sums proposed by the company, KP Law could stand to earn many millions of pounds from its share of the payouts.
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‘Many more’ likely abused by Fayed
A Harrods spokesperson told Sky News on Tuesday: “The purpose of the Harrods Redress Scheme is to offer financial and psychological support to those who choose to enter the scheme, rather than as a route to criminal justice.
“With a survivor-first approach, it has been designed by personal injury experts with the input of several legal firms currently representing survivors.
“Although Harrods tabled the scheme, control of the claim is in the hands of the survivors who can determine at any point to continue, challenge, opt out or seek alternative routes such as mediation or litigation.
“Our hope is that everyone receives 100% of the compensation awarded to them but we understand there is one exception among these law firms currently representing survivors who is proposing to take up to 25% of survivors’ compensation.
“We hope they will reconsider given we have already committed to paying reasonable legal costs.”
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5:14
Further claims against al Fayed
Responding to the publication of the scheme on Monday, KP Law criticised it as inadequate, saying it “does not go far enough to deliver the justice and accountability demanded by our clients”.
“This is not solely a question of compensation but about justice and exposing the systematic abuse and the many people who helped to operate it for the benefit of Mohamed al Fayed and others.”
Seeking to rebut the questions raised by Harrods about its fee structure, KP Law told Sky News: “KP Law is committed to supporting our clients through the litigation process to obtain justice first and foremost as well as recovering the maximum possible damages for them.
“This will cover all potential outcomes for the case.
“Despite the Harrods scheme seeking to narrow the potential issues, we believe that there are numerous potential defendants in a number of jurisdictions that are liable for what our clients went through, and we are committed to securing justice for our client group.
“KP Law is confident that it will recover more for its clients than what could be achieved through the redress scheme established by Harrods, which in our view is inadequate and does not go far enough to compensate victims of Mr al Fayed.”
The verbal battle between Harrods and KP Law underlines the fact that the battle for compensation and wider justice for survivors of Mr al Fayed remains far from complete.
The billionaire, who died in 2023, is thought to have sexually abused hundreds of women during a 25-year reign of terror at Harrods.
He also owned Fulham Football Club and Paris’s Ritz Hotel.
Harrods is now owned by a Qatari sovereign wealth fund controlled by the Gulf state’s ruling family.
The redress scheme commissioned by the department store is being coordinated by MPL Legal, an Essex-based law firm.
Last October, lawyers acting for victims of Mr al Fayed said they had received more than 420 enquiries about potential claims, although it is unclear how many more have come forward in the six months since.