CIH calls for government review of shared ownership to secure tenure’s long-term financial stability

The Chartered Institute of Housing (CIH) is urging the UK government to carry out a review of shared ownership in England in order to ensure the tenure remains financially sustainable long-term, and not just at the point of entry.

The call comes as CIH publishes a new research report, Shared ownership in England: Assessing the tenure's evolving role, which looks at how affordability, staircasing and accessibility have changed since the scheme was introduced in 1980, and what more can be done to secure its future.

Shared ownership is an essential route into affordable homeownership for people who would otherwise be priced out, and the sector has many success stories of people building a stable home thanks to the tenure. But the research also finds that affordability assessed at the point of purchase does not always last over time.

A significant proportion of shared owners show signs of financial instability, and satisfaction is often shown to decline the longer someone lives in their home, particularly for those living in flats, who report  experiencing similar pressures to leaseholders.

Recent reforms – including 1% staircasing, a 10-year repair warranty, and the standardisation of lease terms to 990 years – are a welcome step forward, as well as the emphasis of service charge affordability and clearer transparency in the current Social and Affordable Homes Programme. Yet these positive changes only apply to new shared ownership homes. The report estimates that around 200,000 existing shared owners are not covered by the reforms, risking a two-tier system where the level of protection a shared owner has depends on when they bought their home.

The report sets out six recommendations for government, providers and regulators, including:

• Strengthening regional responsiveness in delivery
• Reforming affordability assessments to account for long-term sustainability
• Enhancing regulatory coordination and oversight
• Promoting greater transparency in staircasing and resale
• Improving data infrastructure and longitudinal tracking
• Undertaking a comprehensive, evidence-based review of the tenure.

Megan Hinch, co-author of the report and CIH Policy Manager, said: “Shared ownership has helped thousands of people take a first step onto the housing ladder who would otherwise have been shut out of it, and it's important that we don't lose sight of that. But our research shows that affordability can't just be considered once, at the point someone buys their home. Government, providers and lenders need to work together to build a tenure that is transparent and sustainable across its whole lifecycle. That means better data, clearer information for shared owners, and a proper, evidence-based review of how the model is working in practice.

“Recent reforms have taken the first step in improving shared owners’ experiences, but these can go further to ensure shared ownership is an accessible route towards sustainable homeownership. This includes encouraging providers to sign up to the Shared Ownership Code, which promotes transparency, fairness and consistency for shared owners across the sectors.”

The report recognises that housing associations and local authorities, who deliver most shared ownership homes, are navigating increased challenges themselves, including fluctuating interest rates, growing regulatory scrutiny and stricter lending rules. CIH acknowledges these pressures and calls for reform that supports providers to deliver a fairer, more transparent system which ensures that shared ownership can continue to be a successful, affordable and sustainable tenure for years to come.

The full report, Shared ownership in England: Assessing the tenure's evolving role, by Madina Orujlu and Megan Hinch, is available here.