Shared ownership: ‘We can’t afford it. It makes a mockery of being in social housing’
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.”
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.
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.
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”
The Levelling 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.
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.”
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
Business
Council finances are becoming unsustainable and whole system overhaul is required, watchdog warns
From bin collections and parks to social care, it’s estimated local authorities in England provide more than 800 services for residents, touching on many different aspects of our lives all the way from childhood to elderly care.
A National Audit Office report found spending on services increased by £12.8bn – from £60bn to £72.8bn – between 2015-16 and 2023-24, a 21% increase in real terms.
Most of this increased spending – £10.3bn – has gone to adult and children’s social care, which represents councils’ biggest spend, increasing as a share of overall spending from 53% to 58% over the period.
Previous central funding cuts and an increasing population mean that spending power per person has largely stagnated, however, and remains 1% lower per person than in 2015/16, the report said.
This is a measure of the funding available to local authorities from central government grants, council tax and business rates. Though grant funding has increased in recent years, it has not yet made up for pre-2020 government cuts.
Complex needs
The population in England has increased by 5% over the period, accounting for some of this increased pressure, but it’s not the only driver.
In many areas, demand has outpaced population growth, as external events and the complexity of people’s needs has shifted over time.
The rapid increase in costs of temporary accommodation, for example, has been driven by the large increases in people facing homelessness because of inflationary pressures and housing shortages.
At the same time, demand for new adult social care plans has increased by 15%.
As life expectancies have increased, the length of time in people’s lives during which they suffer from health problems has also increased.
“We see that in adult social care that people have multiple conditions and need more and more support and often will be appearing as if they’re frailer at an earlier age. So that’s an important trend,” explained Melanie Williams, president of the Association of Directors of Adult Social Services.
“We’re constantly focusing on most urgent things at the expense of not doing the preventative work,” she added.
“When we’re just focusing on getting people home from hospital, we’re not doing that piece of work to enable them not to go there in the first place.”
Budget cliff edge over SEND spending
Meanwhile, demand for education, health and care (EHC) plans, for children with more complex special educational support needs has more than doubled, increasing by 140% to 576,000.
Budgets for special educational needs and disabilities (SEND) have not kept pace, meaning local authority spending has consistently outstripped government funding, leading to substantial deficits in council budgets.
Most authorities with responsibilities for SEND have overspent their budget as they have been allowed to until March 2026 on a temporary override, but they will need to draw on their own reserves to make these payments in a year.
One in three councils will have deficits that they can’t cover when the override ends.
Cuts to services
In the latest figures for 2023/24, the NAO found £3 in every £5 of services spending by English local authorities went towards social care and education, totalling £42.3bn.
This has left little headroom for other services, many of which have experienced real-terms financial cuts over the same time period, with councils forced to identify other services like libraries, parks and the arts to make savings.
But, Williams warned, cultural and environmental services like these can play a vital role in wellbeing and may actually exacerbate demand for social care.
“For us to be able to safeguard both adults and children – so people that need extra support – we do need that wider bit for councils to do,” said Williams, who also serves as corporate director of adult social care for Nottingham County Council.
“It’s no good me just providing care and support if somebody can’t go out and access a park, or go out and access leisure, or go out and have that wider support in the community.”
Commenting on the report, Cllr Tim Oliver, chairman of the County Councils Network, said: “As we have warned, councils have little choice but to spend more and more on the most demand-intensive services, at the expense of everything else – leaving them providing little more than care services.
“It is market-specific cost pressures, mainly in adult social care, children’s services, and special educational needs, that are driving councils’ costs rather than deprivation. Therefore government must recognise and address these pressures in its fair funding review, otherwise it will push many well-run councils to the brink.”
Fighting fires
The NAO report describes a vicious cycle where councils’ limited budgets have resulted in a focus on reactive care addressing the most urgent needs.
More efficient preventative care that could lower demand in the long term has fallen to the wayside.
In one example cited by the NAO, the Public Health Grant, which funds preventative health services, is expected to fall in real terms by £846m (20.1%) between 2015/16 and 2024/25.
Other areas have seen a switch in funding from prevention to late intervention.
Councils’ funding towards homelessness support services increased by £1.57bn between 2015/16 and 2013/24, while money for preventative and other housing services fell by £0.64bn.
Financing overhaul needed
Since 2018, seven councils have issued section 114 notices, which indicate that a council’s planned spending will breach the Local Government Finance Act when the local authority believes it’s become unable to balance its budget.
And 42 local authorities have received over £5bn of support through the Exceptional Financial Support (EFS) framework since its introduction in 2020.
According to a recent Local Government Association survey referenced in the NAO report, up to 44% of councils believe they’ll have to issue a section 114 notice within the next two years should the UK government cease providing exceptional financial support.
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Looking ahead to upcoming funding settlements, and the government’s planned reforms of local government, the NAO warns that short-term measures to address acute funding shortfalls have not addressed the systemic weaknesses in the funding model, with a whole system overhaul required.
Sir Geoffrey Clifton-Brown, chair of the Committee of Public Accounts, said: “Short-term support is a sticking plaster to the underlying pressures facing local authorities. Delays in local audits are further undermining public confidence in local government finances.
“There needs to be a cross-government approach to local government finance reform, which must deliver effective accountability and value for money for taxpayers.”
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.
Business
Victims of second Post Office scandal criticise ‘grinding wheels of bureaucracy’ as they try to get compensation
Victims of ‘Capture’, a second faulty Post Office accounting system, say their redress scheme may not be in place until the autumn.
Former sub-postmasters and their relatives met with government representatives for an update on compensation.
While lawyers describe “positive steps”, some victims have told Sky News that they are disappointed with the timescale and described coming up against the “grinding wheels of bureaucracy”.
Capture software was an accounting system rolled out in Post Office branches between 1992 and 1999 and was likely to have caused false shortfalls.
It was the predecessor to Horizon, which led to hundreds of sub-postmasters being wrongly convicted of stealing between 1999 and 2015.
Former sub-postmaster Lee Bowerman, who was never accused of stealing but had to sell his Post Office business after using Capture, said the meeting was a “damp squib” and criticised “the grinding wheels of bureaucracy”.
He agreed that the proposed redress scheme would be “quicker than Horizon” but added “you can’t use them as a yardstick because at the end of the day …people still haven’t been paid out”.
Mr Bowerman added: “So don’t compare us to them when those schemes aren’t even fit for purpose.”
Around 100 Capture victims so far could be eligible for redress.
The scheme, however, would not apply to anyone currently convicted.
The Criminal Cases Review Commission (CCRC) have confirmed that they are now reviewing 27 Capture convictions.
Victims were told the government is considering a separate “fast track” redress scheme for anyone who has their conviction overturned in the future.
Lee Bowerman had to sell his Post Office business after using Capture
Steve Marston’s case is among those being considered after he was convicted of stealing from his branch in 1996 following shortfalls of nearly £80,000.
“I don’t think it would be human nature not to be disappointed that [the redress scheme] is not being sorted out in the next couple of days even,” he said.
“But we are talking about the government, aren’t we? They’ve got to fill in a form in triplicate, get it rubber stamped three times and that’s for a box of paper clips,” he added.
“I mean it is what it is, we have got to roll with it, stick in there and keep pushing as much as we can”.
Clare Brennan, daughter of Peter Lloyd-Halt, who was a sub-postmaster accused of stealing whilst using Capture, said she and her mother Agnes found the meeting “positive”.
She went on to describe a “weight being lifted” after they were told that it had been officially recognised that Mr Lloyd-Halt had worked for the Post Office.
The family say all Mr Lloyd-Halt’s documents and evidence have been lost and it’s been a challenge to their case.
Lawyers for victims also described “positive steps” towards a new compensation scheme, following the government meeting.
Read more:
Sub-postmasters ‘still going through hell’
What is the Horizon Post Office scandal?
Agnes Lloyd-Holt and Clare Brennan
Neil Hudgell, of Hudgell Solicitors, said that they were “reassured by the Department for Business and Trade today that good progress is being made with learnings taken from previous Post Office compensation schemes to form this one”.
He added that “there is a clear willingness to do right by those who have suffered at the hands of the Post Office in relation to Capture”.
“We always appreciate that redress can never come quick enough for these victims and we push as much as we can to take things forward.”
A spokesperson from the Department for Business and Trade said: “Officials met with postmasters today as part of the government’s commitment to develop an effective and fair redress process that takes into account the circumstances of those affected by Capture.
“Ensuring postmasters are treated with dignity and respect is our absolute priority and we will continue to update on the development of the redress mechanism as it progresses.”
The next meeting with Capture victims is due in April.
The government has signalled that plans to bring a second runway at Gatwick into regular use will get the green light if environmental conditions are met.
Transport Secretary Heidi Alexander said she was “minded to approve” the airport’s plans but the deadline for a decision had now been pushed back until the end of October.
The main stumbling blocks facing Gatwick’s proposals are related to its provisions for noise prevention and public transport.
The Planning Inspectorate had made recommendations in those two areas after initially rejecting the scheme.
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The airport welcomed the government’s statement but did not say whether it saw a need to adjust its plans to meet the conditions.
Gatwick has until April 24 to respond to the new proposals.
The northern runway already exists at the airport parallel to the main one, but cannot be used at the same time as it is too close.
It is currently limited to being a taxiway and only used for take-offs and landings if the main one has to shut.
Gatwick wants to move it 12 metres further away to solve this problem.
The northern runway is currently only used for emergencies or where the main one is closed. Pic: PA
It says being able to run both at the same time would allow around 100,000 more flights per year and create 14,000 jobs.
Gatwick says the £2.2bn project would not need government money, would be 100% privately funded, and could be complete by the end of the decade.
The airport is already the second busiest in the UK, and the busiest single runway airport in Europe.
Campaigners argue the additional traffic would be catastrophic for the environment and the local community in particular.
Today’s update comes after the chancellor said last month the government also supported a third runway at Heathrow as part of its wider effort to bolster UK economic growth.
However, the formal planning process is still to take place.
Gatwick’s additional runway would be unlikely to open until the end of the decade, assuming any legal challenges were swiftly overcome.
A government source told Sky News: “The transport secretary has set out a path to approving the expansion of Gatwick today following the Planning Inspectorate’s recommendation to refuse the original application.
“This is an important step forward and demonstrates that this government will stop at nothing to deliver economic growth and new infrastructure as part of our Plan for Change.
“Expansion will bring huge benefits for business and represents a victory for holidaymakers. We want to deliver this opportunity in line with our legal, environmental and climate obligations.
“We look forward to Gatwick’s response as they have indicated planes could take off from a new runway before the end of this Parliament.”
Stewart Wingate, Gatwick’s chief executive, said: “We welcome today’s announcement that the Secretary of State for Transport is minded to approve our Northern Runway plans and has outlined a clear pathway to full approval later in the year.
“It is vital that any planning conditions attached to the final approval enable us to make a decision to invest £2.2bn in this project and realise the full benefits of bringing the Northern Runway into routine use.
“We will of course engage fully in the extended process for a final decision.”
He added: “We stand ready to deliver this project which will create 14,000 jobs and generate £1bn a year in economic benefits. By increasing resilience and capacity we can support the UK’s position as a leader in global connectivity and deliver substantial trade and economic growth in the South East and more broadly.
“We have also outlined to government how we plan to grow responsibly to meet increasing passenger demand, while minimising noise and environmental impacts.”
A spokesperson for campaign group Communities Against Gatwick Noise Emissions (Cagne) responded: “We welcome the extension by the secretary of state until October as she has obviously recognised the many holes in the Gatwick airport submissions during the planning hearings.
“Cagne do not believe Gatwick has been totally up front with their submissions, and the planning hearings left so many questions unanswered.”
Greenpeace UK’s policy director, Doug Parr, said of the process ahead: “By approving Gatwick’s expansion the government will hang a millstone the size of a 747 around the country’s neck.
“Such a decision would be one that smacks of desperation, completely ignoring the solid evidence that increasing air travel won’t drive economic growth. The only thing it’s set to boost is air pollution, noise, and climate emissions.”
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