Real Talk: Why Shared Ownership is worse than not owning at all

Real Talk: Why Shared Ownership is worse than not owning at all

District 34 is the anti-agent – we’re on the buyers’ side and not anyone else’s. That means, unlike estate agents who work for sellers, we can tell hard truths without worrying about losing business. “Real Talk” cuts through the marketing fluff and calls out bad things being hawked by the property industry.

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The Shared Ownership scheme is getting more attention these days, perhaps because of the recent BBC Panorama episode about it. Hot tip: if BBC Panorama is interested in it, then you probably shouldn’t be.

You would think with an episode synopsis like that, buyers wouldn’t be so keen to jump onboard the shared ownership train. But estate agency Savills is predicting a jump in the number of people buying shared ownership homes (probably because they have been persuading private equity investors to pile into the sector and now need to deliver the goods), so the time feels right for District 34 to chip in with our objective perspective on this scheme.

What is Shared Ownership?

Shared ownership schemes allow buyers to buy a minority stake in a property, while paying rent on the remaining share to the developer who owns the building. Even though you only have a minority stake, you are liable for the full costs of maintaining the property. That means you pay 100% of service charges, ground rents, maintenance works not covered by service charges, and so on, even if you own a 25% stake.

You can increase your stake in the property over time by “staircasing” i.e. buying a bigger share in the property. This will decrease the developer’s stake in the property and the corresponding rent, although that rent increases consistently year-on-year by at least the inflation rate (RPI).

What’s the point of Shared Ownership?

The marketing pitch to buyers is that it is a scheme to help you buy a home you otherwise could not afford. The marketing pitch to developers, however, is very different...

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We hope you enjoyed this snippet from our popular piece on Shared Ownership. If you’d like to read the article in full, including:

  • why Shared Ownership is great for developers. But not for you
  • why Shared Ownership is a lie
  • how Shared Ownership is the worst of all worlds
  • the financial consequences of buying through Shared Ownership
  • and more

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