Key Update: 1st December
The following article was published on the 21st November and challenged the housing sector on their approach to shared ownership and rent rises. We felt Shared Ownership properties had been forgotten in the rent and cost of living debate. The article created a lot of discussion behind the scenes as some landlords hadn’t considered their position on shared ownership.
Our public article below challenged the sector and we were pleased it was picked up by a member of the Senedd, Mabon ap Gwynfor MS, who tabled a question for the Minister Julie James MS in the Senedd.
TPAS Cymru are delighted to see the response from the Minister, that there has been a voluntary agreement from social landlords in Wales who have shared ownership properties, that the same rent cap will apply. This is good news.
Urgent message for Tenant groups: Shared owners need your help!
Shared Ownership residents are facing some very tough times and TPAS Cymru is asking tenant groups of Housing Associations to help them in their hour of need.
Not familiar with the shared ownership model?
Shared ownership properties are one of the options under the very confusing title of ‘affordable housing’. Put simply, you buy a percentage of a new home and rent the rest of the percentage from a landlord, normally a Housing Association (local authorities don’t usually offer this model).
The idea is, that when you earn more money, you are able to buy out more of the rented percentage from the housing association (called staircasing), so eventually you fully own the property. Whether people can ever afford to do that is very debatable and there are lots of costs and restrictions along the way.
Shared ownership is generally marketed to 3 key audiences:
Young first-time buyers unable to afford soaring house prices,
Key Workers doing essential jobs, who can’t not afford to live in the locality of their job,
Local people priced out of their local community.
One final thing to note, Wales does not have as many shared ownership properties compared to England and in fact a couple of Welsh housing associations have none. However, whilst they may be fewer in number in Wales, the residents that it does affect need YOUR help.
Back to the issue and why they need your help?
Welsh Government recently announced a rent cap at 6.5% for social housing rents. However, this does not cover shared ownership properties. Shared Ownership contracts typically say CPI +1% - which in the current climate could mean a painful 13% rent rise.
They are facing a massive double whammy - the half of the property that they own is facing higher mortgage payments as interest rates spiral upwards (they are already likely to be paying a higher interest rate than standard mortgages) and the half they rent is facing a rent rise double that of social housing.
Do we believe our key workers, young people priced out of local markets, etc will be getting a pay rise that will match or exceed a 13% rent rise being put on them from the housing association? We can guess the answer to that!
In England, it was reported in the press that English housing associations had reached agreement with the National Housing Federation (English housing association trade body) to cap shared ownership rises to the same level as the English social housing cap (7%). Later, there was further clarification saying that it wasn't all English landlords, just the big ones (who own the most, c80%) and that some smaller HAs weren't part of that agreement. That implies they will be going higher than the rent cap.
TPAS Cymru has been asking around Welsh housing sector and no similar collective deal seems to exist in Wales. This is disappointing.
Housing associations in Wales are able to push up rent for shared owners by 13%. Will they?
TPAS Cymru does not support this approach and will be writing today to the Chief Executives of housing associations to challenge that policy.
Shared owners are facing tough times and they need tenants like you to step up and help them. We need you to challenge your housing association and ask the following questions:
1. Does your landlord have any shared ownership properties?
2. What is their plan for raising rent on shared ownership properties?
3. Why can't they cap at 6.5% in line with social rents?
Act now – either individually or as a tenant group. Let us know any response you get!
Also, depending on the response you get, share this with your elected officials e.g., your Senedd member. Who represents you? Find out here: https://www.writetothem.com/
Note: We will update this blog as new information comes in - if you are reading this then its already had its first amend as new information has come in.
David Wilton, Chief Executive
We frequently hear about issues with the shared ownership model. Some of us at TPAS Cymru have felt uncomfortable with some of the contractual terms and restrictions of shared ownership. This model doesn’t always pass the internal ‘vibe test’ – ‘would you advise a loved one to buy a shared ownership property?’ We believe a formal Wales wide review is needed by the Welsh Government Housing Dept (or the housing scrutiny committee in the Senedd.)
We will be talking to partners and friends in the housing sector to progress this.