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Brendan is the founding Chair of Sustainability for Housing. He has more than 20 years’ experience as a CEO in the social housing sector,...more
Time to reimagine shared ownership
Brendan Sarsfield explains why it is time to look again at how shared ownership works
I’ve spent most of my career seeing shared ownership as a good product which helps so many people achieve their ambition to own their own home and gain independence. I would still recommend it to my children if they were trying to buy a home.
This month, we launched a couple of new schemes in London and they sold out in record time. Existing residents are also staircasing and moving on to another home.
The demand is strong and so why am I worrying about its future?
First, demand isn’t a good indicator of how well a product is serving people. We are in the midst of a much wider housing supply crisis with limited availability of alternatives.
“Buying into a share but paying 100% of the maintenance, and service charge deal in a high-density/high-service charge scheme is now perceived by some as unfair.”
In addition, the shared ownership model is increasingly coming under scrutiny including in the recent green paper. Some people see it as poor value.
It is fine when we are selling houses and low-rise flats with low service charges.
But our world has changed and buying into a share but paying 100% of the maintenance, and service charge deal in a high-density/high-service charge scheme is now perceived by some as unfair.
In the past, this may have been a short-term problem as buyers would staircase reasonably quickly but the higher values and stalled salaries today make this more difficult. This is a problem I would like to try and address.
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There are also profit-making businesses trying to take this market without offering the cross-subsidy for social rent that most of us do. Is this telling us that the product is too commercially driven and needs rebalancing, and that we are unclear about who shared ownership is for?
Finally, with very high property prices, many of us in London are faced with schemes where we are selling shares of homes worth near £1m. This poses us with a difficult conundrum, as the product, while attractive to a new group of buyers, becomes out of reach for those who should benefit from our charitable objectives. I have a number of suggestions that I think the sector should explore with the government.
“We need to see if we can find new ways to let leaseholders have control even if they have a minority interest.”
First, leaseholders across all sectors, whether shared owners or owning 100% or public or private sector, tend to be more dissatisfied than renters with services and communications. We need to tackle this challenge together. This is a priority in the Peabody business plan.
Second, self-management options could be the future. Of course, not everybody wants to do this but this option should be available to those who collectively would like the responsibility.
We need to see if we can find new ways to let leaseholders have control even if they have a minority interest.
Third, we need to decide and clearly communicate the role of shared ownership in the market, agree its role in high-value areas and also if there ought to be a floor on the minimum equity stake sold.
At the moment, the range of people it could help is too wide, with those using it as a way of helping key workers being outpriced by new bidders looking to maximise income.
Fourth, service charges are just very high in modern high-density schemes. Tenants and leaseholders have common ground here, but is there something we can offer to help share the burden on sinking funds or just make lower service charges one of our priorities when designing new homes? (“Poor doors!” opponents will shout.)
Finally, and more radically, should we be selling future shares at the original (or close to) purchase price? This would require much more subsidy from government.
This may be mainly a London issue, but within the M25 we think improving the product makes sense financially, morally and politically but we can’t do that on our own. If we improved the shared ownership offer, I could move from recommending it to my adult children to encouraging them to leave home.
Brendan Sarsfield, chief executive, Peabody
