‘It is absolutely vital for consumers to see the resale data of shared ownership flats on the Land Registry. As a restricted tenure, it is not recorded at present. If it were recorded the retirement shared ownership offer would very likely look bleak,’ Sebastian O’Kelly, of LKP, tells MPs.
On Monday MPs in the APPG heard of issues around shared ownership … and yesterday the Advertising Standards Authority has found L&Q housing association wrong to have used “Black Friday” time limited offers to attract shared ownership buyers.
L&Q, which owns or manages more than 108,000 homes across England, was told its London Tube and social media Black Friday advert could lead consumers to feel rushed into making the “serious, complex financial decision” of buying a home.
“Black Friday, The Shared Ownership Way” prompted a complaint from shared ownership campaigner Sue Phillips, of Share Ownership Resources.
“To promote homebuying – one of the most risky and expensive purchases most people will ever make – by hijacking a marketing slogan associated with TVs, mobile phones, kitchen appliances, beauty products and the like, trivialises the decision,” she said.
“The ASA ruling demonstrates that housing associations don’t necessarily give people considering shared ownership the facts they need to make informed decisions, or the time to undertake meaningful due diligence.”
The ASA ruling is here: https://www.asa.org.uk/rulings/london-and-quadrant-housing-trust-a22-1176010-london-and-quadrant-housing-trust.html
The advert read: “Further text stated, “Brand new and ready-to-move-into homes available from £57,500 for a 25% share. Reserve between 16-30 November for only £99 and receive a £500 John Lewis voucher, plus more exclusive offers!* Find out more lqhomes.com/offers”. At the bottom of the poster, very small text stated, “Prices correct at time of print, based on a 25% of the full market value of £230,000. Terms and conditions apply,
Presentation to APPG by Sue Phillips, Shared Ownership Resources
Some of you might be wondering why I’m here to talk about shared ownership reform. After all, the Government recently introduced a new model for shared ownership.
However, although some aspects of the new model are welcome – for example, longer leases – there are 2 issues:
1. The reforms fail to address a number of key problems
2. Reforms are not retrospective, so do not help existing shared owners
So, what exactly are the problems with shared ownership?
Newspaper headlines over the past few months give us some clues.
Evening Standard – Alarm sounded over affordability as few Londoners “staircased” to full ownership last year
The iPaper – ‘I spent £16k in fees’: The homeowners forced to pay thousands to extend their lease
The Times – Shared ownership: what’s the risk of negative equity?
The iPaper – ‘Powerless’ housing association leaseholders hit with unexplained £3,000 service charge.
The Times – Paying rent as well as a mortgage? Get ready for a double whammy
Inside Housing – Financial watchdog warns landlords against providing pensions and loans advice to prospective shared owners
The iPaper – The perils and pitfalls of shared ownership schemes
The Lead – The next housing crisis: shared ownership?
HOWEVER it’s not just the media who are casting a critical eye over SO
The advertising watchdog, the ASA, ruled in Sept last year that the national shared ownership marketing campaign – created by the National Housing Federation – was misleading in significant respects: specifically, in the use of ‘part buy, part rent’ terminology, and in omitting costs of lease extension.
UNFORTUNATELY – the ASA ruling appears to have gone unremarked and largely ignored by the housing sector.
Who else is casting a critical eye over shared ownership?
Many of you will be aware that the LUHC Committee recently launched an inquiry into SO. Reassuringly for me, the Committee’s terms of reference align closely with key themes of my report Shared Ownership: The Consumer Perspective. Specifically, as regards –
• Affordability and ongoing financial sustainability
• Viability of full home ownership (whether SO is a pathway or destination?)
• Value for money
• Adequacy of monitoring data
SO what are the KEY MESSAGES of my report?
1. Affordability and VFM are not maintained over time.
2. There is no robust evidence that SO works as a pathway to full home ownership for a majority of entrants to the scheme. Some may end up trapped in a home that is increasingly unaffordable and unsuitable – with no viable exit route.
3. Satisfaction is lower than other tenures and declines over time. Many aspects of the scheme are perceived as unfair.
4. When it comes to consumer protection, shared owners are excluded from rights and protections available to other homebuyers.
5. The new model, and the new RtSO not only fail to address the most pressing concerns, but expose more financially vulnerable households to risk.
6. SO is extremely complex from both a financial and legal perspective. Increasingly, this is exacerbated by complex ownership and management structures.
SO FAR, I’ve outlined problems with shared ownership. But I’m not here to be unremittingly negative. My report makes 18 recommendations to address problems with the scheme, with a focus on:
• Design and delivery