The Shared Ownership market is accessible to those who want to gain a foothold on the property ladder but don’t have the savings or income to secure a mortgage required for outright ownership.
Housing Associations will purchase property from a Developer under a Section 106 scheme or Land Led Development where organizations then market a percentage of the units purchased.
Making the decision to purchase a Shared Ownership property offers purchasers the option to buy a small percentage of the property, usually between 30% – 45% and then pay a rental charge to the Housing Association dependent on the percentage they own. Under the agreement a leasehold agreement will be agreed whereby Shared Owners are asked to contribute to the costs of communal areas being grounds maintenance or in the case of flats communal cleaning and communal electricity cost for lighting and general maintenance. Within the leasehold agreement there is a clause which states the Shared Owner is responsible for all general maintenance for example, yearly gas services, five yearly electrical checks, maintenance of windows and doors, maintenance of roofs and guttering and repair following plumbing and making good costs in the event to material damage of walls or ceilings. In some cases, a Sinking fund is created to cover the costs of larger issues that may arise.
Shared Owners are given the opportunity of increasing the share they own by the Housing association by Staircasing and incrementally over time however until such time the property remains in the ownership of the Housing Association until the whole value is purchased.
The NBRA conducted this research to evidence the main issues we speak to Shared Ownership occupiers as we hear on a regular basis that they are not 100% happy with the service or experience they have had.
The Government announced a change in Shared Ownership regulations to be rolled out from April 2021 whereby Housing Associations may be liable for the maintenance costs for the first ten years however we look forward to reviewing this when the legislation is fully in place.
In the mean time we sought to gain some feedback from Shared Owners by asking relevant questions about their experience and are pleased to share our research with all interested parties.
New Build Rights Alliance (NBRA) Ltd.
Tel 01202 581305
A larger percentage of the people who completed our survey were unhappy with the Sales process as it is in many cases this can be seen as a heavy Sales oriented pitch with in some cases we have heard about where Sales days can be seen as ‘Dutch Auctions’ where many buyers are in attendance and may feel pressurized to agree to buy a share before the properties offered are purchased around them.
We were pleased to see that options were offered to prospective Shared Ownership purchasers as in the case of Outright Owners the majority are signposted towards the Developers ‘chosen’ legal team only to find out that they are in fact classified as a Conveyancer which means local searches and other searches may not be undertaken as would be the services of a traditional Solicitor’s.
As with any Sales process there may be occasions where by some clauses are not fully explained until the Shared Owner has moved in and has an issue they report. As we have mentioned previously the Government announced a change in Shared Ownership regulations to be rolled out from April 2021 which we look forward to reviewing this when the legislation is fully in place as it places the maintenance obligation at the door of the Housing Associations.
We were pleased to see the results of this question as it confirms that in the majority of cases, time was allowed for the new prospective owner to think over the information given to them prior to committing to purchase. We appreciate that whilst this was the case we would like to see improvements rolled out to ensure the remaining 40% of Shared Owners don’t feel affected by time barriers.
It shows from our research that the majority of Shared owners were happy with the lease agreements which were part of their purchase however it showed that 40% of purchasers were not. We consider this to be due to the complicated nature of the agreement and if access could be given to discuss any issues before signing would see this as best practice for all organizations to consider.
It is clear from our results that purchasers would expect a better standard of service from a Housing association than what they actually experience. It may be down to a comprehensive property introduction or familiarization experience where heating systems are explained or where the stop cock is. We are aware that packs are left at the property containing vital information for the home owner to read and question however from our experience do consider that in some cases this information could be better and the experience improved.
We were disappointed to read the outcome of our research regarding this two vital elements as essentially the Housing Associations own the larger share of the property so we consider it is in their best interest to ensure the Shared owner is offered support in resolving the Snagging and Defect issues as if left unaddressed it will become their responsibility under the maintenance clause or be the reason for poor publicity.
From our experience and review of a variety of packs some of our customers have shared improvements can always be made in the production of Owner Handover Pack. It is important that they follow a clear index and include not only information relating to the property by signposting links to Services i.e. Bin days and local Councils along with local facts and links to travel news.