Official figures for the year to March 2023 show 77% of the 17,507 shared ownership sales by large providers and local authorities were to first time buyers.

In the year to 2022, 6,051 shared ownership homes were ‘fully staircased’, so the majority of shared owners continue to remain liable for service charges.

A Court of Appeal ruling last year (Avon Ground Rents v Canary Gateway [2023] EWCA Civ 616) clarified that shared owners who have not yet staircased to 100% are entitled to have a say in management issues. They pay the service charges just as other leaseholders.

However, there is growing concern around the service charge issue. Many tenants are finding their providers/landlord have raised their service charges significantly – up to 300% in some reported cases.

In March 2024, the Levelling Up, Housing and Communities Committee published a report highlighting the issue. It observes that the “rising rents, uncapped service charges, liability for repairs and maintenance costs and complex leases make shared ownership an unbearable reality for many people seeking to become 100% homeowners”.

Model Lease

Shared ownership dates back to 1980. To summarise, the buyer purchases a share of their property on a long lease and pays rent to the registered provider (RP) – such as a housing association – who owns the remaining share of the property. The shared owner can then purchase further shares by ‘staircasing’ (up to 100% if they choose), with the rent payable on the RP’s share reducing proportionately.

Homes England stipulates a recommended lease format - the Model Lease (the latest version is the 2021 lease, containing ‘Fundamental Clauses) to be used in specific circumstances. Practitioners are reminded of minor changes made to the Shared Ownership Model Lease in June 2023, including minor revisions to Particulars and amendments/clarifications to the 1% Staircasing Schedule.

The model lease service charge clause provides for the payment of service charge. However, as the parliamentary report points out - shared owners are still liable for 100% of the repairs and maintenance costs of their property despite owning only a proportion of it.

Recommendations for change

The recent parliamentary report sets out recommendations for change and improvement to the shared ownership scheme, including how shared owners’ service charge liability can be restricted to repairs and maintenance costs proportionate to the size of share they actually own.

However, the report notes that the government had no plans to change the terms of shared ownership leases so that shared owners are liable only for repairs and maintenance proportionate to the share they own.

A wider issue is the potential complexity of shared ownership leases, which the Committee report said can often be confusing and frustrating for shared owners (a problem recognised by the Housing Ombudsman). It recommended that providers provide simple guidance with clear signposting to advice and guidance services.

At the time of writing, Labour is highly likely to be in power imminently. We will have to wait to see if the next housing minister takes action on these recommendations.

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