Shared ownership_ why is it not working for first-time buyers_ _ Housing Network _ The Guardian housing benefit gov uk

Shared ownership has had a bad press in recent years, with negative stories about lack of security, high service charges and negative equity. It is beset by complexity, with more hoops to jump through than just buying a house outright. But there is another problem with shared ownership that is rarely discussed.

Shared ownership was meant to be a stepping stone to outright ownership, yet a study by cambridge university in 2012 found shared owners to be less mobile than outright owners. Too many shared owners part-buy their properties and then stay put. This prevents others taking their first steps on the housing ladder and confounds the original purpose of shared ownership.

A key element of mobility for shared owners is staircasing – the ability to increase the share of the property you own.

Most shared owners buy between 25% and 75% of their home, but buying extra shares improves your chances of buying outright in the longer term, and then moving to a bigger or better place.Housing benefit gov uk

So why does this happen? A new report has identified the blockages to staircasing and suggests recommendations to improve the scheme. The report, by gateway housing association, includes a survey of shared owners and a survey of the london home ownership group – the main providers of shared ownership in the capital.

Income and savings were a key factor in owners’ decisions to buy more shares: those who had staircased had an average income of £10,000 more than those who had not, and they also had greater access to savings and inheritances. Selling up and moving on from a shared ownership home is far easier if you own 100% of the property, but for many owners the up-front fees involved in staircasing, such as valuation and solicitor fees, were a major turn-off.

Housing providers could encourage owners to staircase simply by discounting some of these fees and setting them against future capital receipts.Housing benefit gov uk shared owners should also receive better financial advice and be able to access online calculators that would allow owners to see quickly and easily the costs of staircasing.

One key finding was that housing providers know far less about their shared owners than social housing tenants. The challenge is to gather more detailed intelligence and to target owners with suitable advice and support. For example, if landlords know when fixed-rate mortgages are about to expire they can contact owners with suggestions about re-mortgaging and increasing the percentage of the property the resident owns.

The benefits of encouraging more people to buy a larger stake in their home is obvious. It would improve mobility for residents and allow them to sell up and move on, and it would also raise money for the housing provider that could be used to provide new homes for the large numbers of people on waiting lists for shared ownership properties.Housing benefit gov uk

The report also calls for housing providers to improve the branding of shared ownership and to simplify it as a productso that it has greater appeal for generation rent. A recent report by shelter showed that shared ownership has the potential to provide decent homes for thousands of people in the squeezed middle. For london, this means those on salaries of £20,000 and £45,000 a year. Shelter says that nearly four out of five of these households would still be unable to buy, even if they used help to buy, yet more than nine out of 10 would be able to afford shared ownership.