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David LevensonAdvertising watchdog’s decision is a wake-up call for shared ownership providers
Housing associations need to act swiftly and clearly to get their messaging right with both existing and new lessees, writes David Levenson
Last week, Inside Housing reported that Notting Hill Genesis had been censured by the Advertising Standards Authority (ASA) for making a misleading claim that a shared ownership lease constitutes ownership of a home.
I suspect that many people in housing were taken by surprise by the ASA’s ruling. I certainly was.
Having worked for more than 25 years as a finance director for three London housing associations which have developed homes for shared ownership, it was always my understanding that what we were doing was helping people to get a foothold on the property ownership ladder.
In November, Inside Housing reported that shared ownership, once regarded as a niche market, is now maturing as a mainstream housing product.
However in January, Inside Housing’s Peter Apps wrote about his first-hand experience as a shared ownership buyer, warning that housing associations need to sharpen up their approach to marketing and servicing of shared ownership, including a more accurate description of the tenure as “part rent, part buy”.
“Are housing associations selling a long-term leasehold interest in a home or a form of assured tenancy that provides an option to acquire a leasehold interest?”
Highlighting issues around service charge increases and lease extensions at resale, Mr Apps called for providers who were representing the product as ‘homeownership’ to treat buyers accordingly.
Since the ASA’s ruling on 20 February, questions have been raised online about what shared ownership means.
Are housing associations selling a long-term leasehold interest in a home or a form of assured tenancy that provides an option to acquire a leasehold interest?
A High Court case in 2008 established that a shared ownership lease is no more than an assured tenancy for a certain term.
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This means that upon forfeiture, the lessee has no entitlement to a share of premium upon resale of the lease.
The decision on the Notting Hill Genesis’ advert has coincided with an escalation by campaigners for the abolition of leasehold tenures, which they describe as a feudal system maintained for the benefit of exploitative landlords.
The government has already moved to prevent house builders from creating new ground rents.
The Times reported on 23 February that leading house builder Persimmon may lose its rights to sell homes under the Help to Buy scheme because of poor-quality service and punitive hidden charges in their leases.
Does this matter to social housing providers? Make no mistake, what is happening in the wider leaseholder market is rubbing off on shared ownership as well.
Using the hashtag #leaseholdscandal, lessees are now reporting instances of sharp practice by housing associations. These include a case where a housing association is alleged to have threatened forfeiture against all lessees in a block who challenged a £6,000 invoice for gardening, even though the gardeners hadn’t appeared for 12 weeks.
“Either shared ownership is a homeownership product or it isn’t, in which case don’t pretend otherwise”
Those who are leading the campaign to abolish leasehold are choosing not to discriminate shared ownership from the house builder market, directing their fire at both.
Housing association shared ownership has been a successful form of tenure for 40 years, despite attempts by governments of all colours to tinker with or even replace it.
By and large it has retained the confidence of the mortgage market throughout this period. However, the advertising watchdog’s decision is a wake-up call for providers who need to act swiftly and to clearly get their messaging right with both existing and new lessees. Either shared ownership is a homeownership product or it isn’t, in which case don’t pretend otherwise.
Also, make sure that shared ownership homes offered by social housing providers are clearly differentiated from house builder products such as Help to Buy.
David Levenson, executive coach, Coaching Futures
