We welcome the Select Committee’s report into shared ownership affordability. We agree fully with the Committee’s conclusion that shared ownership products can often become unaffordable over time as shared owners have to pay for 100% of repairs and maintenance costs despite only owning a proportion of the property. Clearly, this is unfair.
Shared owners were sold an “affordable home” as part of a flagship government-backed scheme managed by “charitable” housing providers. However, in practice, shared owners trapped in the building safety crisis face a triple whammy of above-inflation service charges and rent increases, an inability to remortgage, staircase or sell, and restrictive covenants that prevent them from covering costs when subletting their flat, when they are permitted to do so. Many shared owners are effectively prisoners in homes that no longer meet their needs and that they can no longer afford.
We are pleased to see that the Committee included some of our recommendations in their report, including asking the Government to take action to ensure housing providers are required to buy back shares from shared owners where they are trapped and unable to sell due to building remediation issues. But more – much more – has to be done.
The Committee report states that the Building Safety Act 2022 (BSA) protects shared owners. In fact, as stated in our written evidence submitted to the Committee, there is no protection from building safety costs for shared owners in buildings under 11m. While the Government continues to assert that those buildings are safe, some still fail assessments and require remediation. We are aware of sites where costs for remediation on such buildings were passed on to leaseholders and shared owners.
Even for buildings in scope of the BSA, the landscape remains complex as far as shared owners’ exposure to cladding and non-cladding costs is concerned; for example, some housing associations have informed their shared owners they will not pass non-cladding costs to them, while others have said that they reserve the right to do so. There are additional challenges for shared owners in blocks where the housing association is not the freeholder. For many shared owners, protection from building safety costs is effectively a lottery.
While we welcome the Secretary of State’s recent intervention to allow housing providers more flexibility in permitting shared owners to sublet, and in buying back shares, this has yet to make a difference on the ground. We are contacted regularly by shared owners facing incredibly difficult circumstances, including some who are about to lose their homes. We hope that the Committee’s report will be a wake-up call and force the Government, local government and housing providers to act.
Government and housing providers have failed to mitigate the impact of the building safety crisis on shared owners. 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.
We have been raising concerns about shared owners trapped in the building safety crisis with the Government, the London Mayor and housing providers for some time. Since the publication of our “Dereliction of Duty” report two years ago, we have heard warm words repeatedly, but very little has been done to act on our recommendations. It is high time for all levels of government to act, and for housing providers to deliver the service that innocent shared owners need and deserve.
The End Our Cladding Scandal campaign calls on the Government to lead an urgent, national effort to fix the building safety crisis.
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