Source · Select Committees · Housing, Communities and Local Government Committee
Fifth Report - Shared Ownership
Housing, Communities and Local Government Committee
HC 61
Published 28 March 2024
Recommendations
2
Rejected
Para 37
Explore implications of changing shared ownership lease terms for proportionate service charges.
Recommendation
The Government should as a matter of urgency explore the implications of changing the terms of shared ownership leases delivered under current and previous iterations of the Affordable Homes Programme so that shared owners only ever have to pay service …
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Government Response Summary
The government rejects changing shared ownership lease terms for existing homes to ensure proportionate service charges, citing potential disruption and their focus on current legislative priorities. They will not consider major changes to the Affordable Homes Programme before its conclusion in April 2026.
Ministry of Housing, Communities and Local Government
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3
Rejected
Para 38
Collect and publish evidence to assess Rent to Buy and shared ownership viability and staircasing trends.
Recommendation
Rent to Buy may represent a better value for money product than shared ownership, but there is insufficient evidence to come to a firm judgement on this at present. Both Rent to Buy and Shared Ownership as affordable home ownership …
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Government Response Summary
The government dismisses the urgent assessment of Rent to Buy vs. shared ownership, stating their similarity under AHP and inappropriateness for private schemes. While it has adjusted data collection for staircasing and will review publishing it, it rejects using this data to directly inform the proportion of homes in the next Affordable Homes Programme.
Ministry of Housing, Communities and Local Government
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5
Accepted in Part
Para 47
Improve Homes England's affordability calculator to model long-term costs and staircasing likelihood.
Recommendation
Homes England should assess how fit for purpose their initial eligibility and affordability calculator is. As part of this, it should evaluate whether to include a ‘long-term’ function within the calculator to model affordability over 5-, 10- and 15- year …
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Government Response Summary
The government states Homes England is improving its affordability guidance, with new guidance due in Q1 2024. However, it rejects including long-term stress testing for service charges or incorporating staircasing assumptions into the calculator due to potential inaccuracy and unreliability.
Ministry of Housing, Communities and Local Government
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6
Accepted
Para 57
Relatives of deceased OPSO owners face unexpected and unfair service charge liabilities.
Recommendation
It can come as an unpleasant shock during a difficult time to relatives of deceased shared owners to find out that they are liable to pay service charge costs when their relative living in an OPSO property has died, despite …
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Government Response Summary
The Government and Homes England will amend the OPSO key information documents to clarify financial liabilities for beneficiaries and will consider mandating registered providers to include this information on their websites, while also offering providers options for supporting shared owners with the sale of their home.
Ministry of Housing, Communities and Local Government
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7
Accepted in Part
Para 58
Mandate OPSO providers highlight legacy service charge costs to prospective owners and families.
Recommendation
The Government must make it mandatory for providers of OPSO to highlight the potential legacy costs of service charges being passed on to family members to prospective shared owners and family members in line to inherit the property upon the …
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Government Response Summary
The government commits to amending OPSO key information documents to highlight potential legacy costs to beneficiaries and will consider mandating providers to include this information. For supporting heirs with sales, it outlines existing options available to providers but states providers must decide how best to support.
Ministry of Housing, Communities and Local Government
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9
Deferred
Require Older People’s Housing Taskforce to recommend OPSO reform regarding rent on equity.
Recommendation
As part of its report, the Older People’s Housing Taskforce must include recommendations for reform of OPSO, focussing on the potential merits of changes to ensure that no rent is charged for the top 25% of equity, regardless of the …
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Government Response Summary
The government states it looks forward to receiving the Older People’s Housing Taskforce's report and will consider its recommendations carefully, including those on OPSO, but does not commit to the Taskforce including specific recommendations as requested.
Ministry of Housing, Communities and Local Government
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11
Accepted in Part
Review CORE data to assess shared ownership loss and publish replacement plan.
Recommendation
The Government must urgently review data it has from the CORE platform regarding the new question on whether staircasing transactions are part of a ‘back-to-back’ sale for 2023–2024, from which it must make an assessment of the extent to which …
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Government Response Summary
The government commits to reviewing all relevant data on staircasing transactions once the 2023-24 reporting year concludes, but rejects the need to design and publish a plan for replacing homes lost to the open market, citing existing recycling provisions for grant funding.
Ministry of Housing, Communities and Local Government
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12
Accepted
Para 72
Develop a clear understanding of Right to Shared Ownership for future Affordable Homes Programme evaluation.
Recommendation
There is currently an evidence gap around Right to Shared Ownership, as a new product. It is unclear what the level of demand for this product is; what sort of value for money it represents; and what the likelihood is …
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Government Response Summary
The government commits to collecting data on Right to Shared Ownership sales through its CORE dataset, including buyer characteristics, initial share purchased, and staircasing transactions, in order to build a clear understanding of the product.
Ministry of Housing, Communities and Local Government
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13
Accepted
Require Government to collect and analyse data on Right to Shared Ownership take-up.
Recommendation
The Government should actively collect and analyse data on Right to Shared Ownership, to better understand supply and demand for this emerging product. This data should include: the level of take-up of the Right to Shared Ownership; the characteristics of …
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Government Response Summary
The government commits to collecting data on Right to Shared Ownership sales through its CORE dataset, which will include information on buyer characteristics, initial share purchased, and staircasing transactions, largely addressing the committee's request.
Ministry of Housing, Communities and Local Government
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15
Accepted
Para 91
Mandate Homes England ensure providers include lease guidance and signposting in Key Information Documents.
Recommendation
Homes England should ensure that providers include simple guidance on lease arrangements within the Key Information Documents distributed to shared owners, including information on how rights and responsibilities are allocated and guidance on how to extend the lease. It should …
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Government Response Summary
The government states that Homes England's key information documents already include relevant lease information, rights/responsibilities, lease extension processes, and signposting to advice services like LEASE, thus fulfilling the recommendation.
Ministry of Housing, Communities and Local Government
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16
Acknowledged
Para 92
Ensure appropriate advice is readily available for shared owners making significant financial decisions.
Recommendation
It is unacceptable that shared owners are having to make significant financial decisions without appropriate advice being readily available, and we believe the Government must act to remedy this. We also believe that it is unacceptable that shared owners do …
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Government Response Summary
The government agrees on the importance of specialist advice and details ongoing work, including mandating key information documents for buyers. However, the response does not explicitly address the committee's call for shared owners to have the same statutory right to leasehold extension as other leaseholders.
Ministry of Housing, Communities and Local Government
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17
Rejected
Para 93
Update Homes England Capital Funding Guide to require specialist advice teams for shared owners.
Recommendation
We urge Homes England to update its Capital Funding Guide for shared ownership to specify that providers should only be selling shared ownership properties on the condition they set up and maintain specialist teams of professionals who can provide accurate, …
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Government Response Summary
The government agrees on the importance of specialist advice, noting existing information documents and ongoing work. However, it rejects the recommendation for Homes England to mandate specialist teams via the Capital Funding Guide, stating it's not something they expect to enforce, and notes existing sector-led forums for best practice sharing.
Ministry of Housing, Communities and Local Government
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18
Accepted
Ensure leasehold extension legislation applies equally to all shared ownership properties and leaseholders.
Recommendation
Finally, the Government should ensure that any legislation passing through Parliament which has provisions to reduce the cost of, and simplify, the process of leasehold Shared Ownership 41 extension (for example, as in the Leasehold and Freehold Reform Bill) also …
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Government Response Summary
The government accepts the recommendation, confirming that shared owners will benefit from the Leasehold and Freehold Reform Bill's provisions, including a new statutory right to extend leases at a peppercorn ground rent, and other reforms to ensure they largely have the same rights as other leaseholders.
Ministry of Housing, Communities and Local Government
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20
Accepted in Part
Encourage providers to update terms of old shared ownership leases with financial incentives.
Recommendation
The Government should encourage providers to voluntarily update the terms of their ‘old’ shared ownership leases (for properties delivered under the 2016–2023 programme), particularly the minimum 990-year lease length and the 10-years repair period, and consider offering financial incentives for …
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Government Response Summary
The government states it has encouraged providers to offer new model terms voluntarily and will continue to do so for upcoming homes. While happy to encourage updates for old leases, it notes significant practical barriers and argues financial incentives for the 10-year repair period are disproportionate. Crucially, the Leasehold and Freehold Reform Bill will introduce a new statutory right for shared owners to extend leases to 990 years.
Ministry of Housing, Communities and Local Government
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22
Acknowledged
Para 115
Update Key Information Documents to clarify Housing Ombudsman role for shared owners.
Recommendation
The Government should ensure that there is more effective signposting to the Housing Ombudsman for shared owners; it should make it clear that the Ombudsman is their port of call for resolving disputes with landlords once internal mechanisms have failed …
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Government Response Summary
The government agrees shared owners need effective mechanisms for disputes and highlights existing robust frameworks, recent improvements, and requirements for registered providers to offer accessible information about complaints. It also notes new tenant satisfaction measures and a consultation on information access, but does not explicitly commit to updating Key Information Documents for clearer Ombudsman signposting.
Ministry of Housing, Communities and Local Government
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23
Rejected
Update tenant satisfaction measures to include shared owners' satisfaction with repairs and maintenance.
Recommendation
We welcome the Government’s confirmation that the Regulator is preparing to introduce a new, proactive consumer regulation regime. However, for the next round of tenant satisfaction data collection, the Regulator must update the measures to include satisfaction with repairs and …
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Government Response Summary
The government rejects the recommendation to include satisfaction with repairs and maintenance for shared owners in the next round of TSMs, stating shared owners are responsible for internal repairs and changes cannot be made for the current collection year. It defers potential future changes to a comprehensive review at an appropriate point.
Ministry of Housing, Communities and Local Government
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25
Rejected
Require providers to buy back shares from shared owners unable to sell due to remediation.
Recommendation
The Government should either require providers to buy back shares from shared owners in situations where they are trapped and unable to sell shares due to building remediation issues, or if not, set out the reasons why it has decided …
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Government Response Summary
The government rejects mandating providers to buy back shares from shared owners, stating it would lead to unintended consequences and is a commercial decision for providers. Instead, it encourages voluntary buyback and transparency about existing buyback policies.
Ministry of Housing, Communities and Local Government
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Conclusions (8)
1
Conclusion
Acknowledged
Para 36
Shared ownership products can often become unaffordable over time due to having to pay for 100% of repairs and maintenance costs despite only owning a proportion of the property. This is exacerbated by the fact that these service charges can increase over time, along with other costs such as rent. …
Government Response Summary
The government acknowledges concerns about the affordability of shared ownership and the disparity in repair periods, pointing to the existing 10-year initial repair period in the new model and ongoing improvements via the Leasehold and Freehold Reform Bill. It also states it will not consider major changes to the Affordable Homes Programme to address this issue before April 2026 due to potential disruption.
4
Conclusion
Accepted in Part
Para 46
Shared ownership as an ‘affordable homeownership’ scheme is predicated on shared owners being able to save enough money to staircase (eventually to 100%). However, its affordability appears to be so marginal for many shared owners that there is no guarantee that staircasing will be possible for them, and the guidance …
Government Response Summary
The government acknowledges the importance of affordability and states that Homes England has been working with stakeholders to proactively update its affordability guidance, due to be published in Quarter 1 of 2024, while deciding against stress testing for service charges, but will keep this under review.
8
Conclusion
Deferred
Para 79
It is unfair that OPSO owners with shares of less than 75% are liable to pay rent on the entirety of the landlord’s equity in the property, while those who own the maximum 75% share pay no rent at all.
Government Response Summary
The Government is looking forward to receiving the report of the independent Older People’s Housing Taskforce in due course, and will of course consider their recommendations carefully, including any regarding OPSO.
10
Conclusion
Accepted in Part
Para 68
It is currently unclear what proportion of shared ownership housing stock is being lost to the open market. This makes it impossible to judge what impact sales of shared ownership homes to the open market are having on the overall supply of affordable housing in the UK. We welcome the …
Government Response Summary
The government commits to reviewing all data on staircasing transactions, including back-to-back sales, and exploring further data improvement. However, it explicitly states it does not believe a plan to replace shared ownership homes lost to the open market is necessary, citing existing grant recycling requirements.
14
Conclusion
Accepted
Para 90
It is clear that many shared owners lack access to advice and guidance which can explain to them clearly and impartially the complexities of leasehold tenure and their rights and responsibilities under their shared ownership lease, as well as advise them on lease extension. There is a lack of awareness …
Government Response Summary
The government states that Homes England's key information documents already provide relevant advice and guidance on shared ownership, including links to the Leasehold Advisory Service, and confirms ongoing dialogue to improve these documents.
19
Conclusion
Acknowledged
Para 100
The changes brought to leases for shared ownership properties delivered under the 2021–2026 Affordable Homes Programme, while well-intended, risk creating an unnecessary and unfair ‘two-tier’ market where shared ownership homes delivered under the previous Affordable Homes Programme are considered less attractive properties, making them harder to sell. It is unfair …
Government Response Summary
The government acknowledges the concern about a two-tier market, stating it encourages providers to voluntarily offer new model terms but recognises significant practical barriers to broad application. It highlights that the Leasehold and Freehold Reform Bill will provide a statutory right for shared owners to extend leases, offering a more effective solution.
21
Conclusion
Accepted
Para 114
Shared owners need a proper mechanism through which to feed back dissatisfaction with repairs, maintenance and other aspects of the management of their property. Based on the evidence we have received, many shared owners are clearly unaware of the option of escalating unresolved complaints to the Housing Ombudsman, suggesting that …
Government Response Summary
The government agrees on the need for complaint mechanisms and states that a robust framework already exists, which has seen recent improvements including new tenant satisfaction measures and a consultation on access to information requirements.
24
Conclusion
Acknowledged
Para 133
Shared owners can face considerable difficulty selling shares in their property, which many are prompted to do once rising costs reach unaffordable levels. Many are still waiting on their buildings to be remediated, without which they are legally unable to sell their shares and so end up trapped in properties …
Government Response Summary
The government believes it is right to focus on ensuring people are not unable to sell their homes due to building remediation issues, while encouraging registered providers to consider buying back shares and making clear information on relevant policies available to shared owners.