Shared ownership is becoming a “problematic” form of housing in London, Greenwich & Woolwich’s MP Matt Pennycook has said.
The housing minister said he had seen issues in his own constituency with the tenure, which allows people to buy a share of their new home and pay regulated rent on the rest.
Shared ownership is considered “affordable” housing by the government, and buyers must not earn more than £90,000 nor already own a home.
London Assembly members have warned that shared ownership is becoming out of reach for many in the capital because of high interest rate mortgage payments and unregulated service charges.
Last year, the assembly’s own housing committee told the mayor, Sir Sadiq Khan, to include “designing down service charges” in his updated London Plan, the region’s planning bible. The mayor has begun to prioritise homes for social rent after 42,000 shared ownership homes were started between 2016 and 2023.
Greenwich Council has said that it would prefer developers offering discounted rent in the future because only 1,150 households in the borough can afford shared ownership, according to the draft Local Plan, its own planning guidance.
Pennycook, who has previously said there are “specific problems” with the scheme that need addressing, indicated that the issues are accentuated in London. “I think it’s a particular issue for London members and I face this in my own constituency,” he told MPs on the housing, communities and local government committee on Tuesday.
“We have seen across the country shared ownership working incredibly effectively and in some parts of the country, it being a more problematic tenure with shared owners facing different challenges.”
“There seems to me, on the basis of the evidence we’ve got and the departments collected, some real regional discrepancies in terms of the consumer experience.”
The capital has the highest proportion of leasehold homes in the country, meaning they are at the mercy of high service charges and in some cases, ground rent. There are thought to be around 60,000 shared ownership properties in London, compared with 190,000 in the rest of the country.
Pennycook said the “affordability pressures that shared owners face are, broadly, high staircasing and resale fees, and then high and rising service charges”.
He also noted that staircasing – where owners buy additional shares to increase their equity and reduce monthly rent – can be “complex and costly”.
Fewer than 2,000 households in London managed to own their properties outright, according to the Regulator for Social Housing.
“That is why we are reforming the shared ownership model to provide greater flexibility, including smaller staircasing increments,” Pennycook added. “We are thinking very carefully about what more can be done to improve the staircasing process and the wider customer experience.”
Zoë Garbett, chair of the London Assembly housing committee, told the Local Democracy Reporting Service: “Thousands of Londoners are living in shared ownership homes funded by the Mayor. However, many shared owners told us how current practice on service charges can undermine the very point of shared ownership – of being an affordable housing option.
“While service charges may appear affordable at the time of sale for some, large increases can undermine the affordability of shared ownership over time.
“Since the income range of those who qualify for shared ownership is wide, those at the lower end of this range experience the impact of these increases more acutely.
“Although it is not always possible to precisely predict service charge increases due to the complex and sometimes unexpected factors that influence them, shared owners deserve better information at the time of sale.”
A spokesperson for Khan said: “The mayor has taken steps within his power to support the affordability of shared ownership homes for Londoners, including using City Hall’s planning powers to ensure that housing costs for shared ownership should not exceed 40 per cent of a household’s net income.
“City Hall’s Service Charges Charter has been set up in collaboration with housing providers and leaseholders to ensure that service charges are fair, affordable and transparent, particularly for those in shared ownership properties.”
Kumail Jaffer is the Local Democracy Reporter covering London’s mayor and assembly. The Greenwich Wireis a partner in the Local Democracy Reporting Service, which is a BBC-funded initiative to ensure councils are covered properly in local media. Editing and additional reporting by Darryl Chamberlain. City Hall quote added at 5pm on Friday.
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