Shaun Bailey’s flagship housing policy: the shared-ownership scam

London mayoral candidate Shaun Bailey has announced he wants to build 100,000 homes for £100,000.

Sounds great, right?

Well, yes until you see the details. It’s via shared ownership, so what will that get?

£100,000 will get a small percentage of a 1 bed flat (as little as 10 per cent), that values a small flat between £400,000 – £1 million. Affordable for many? Nope. It’s a way to mask every rising prices.

Let’s not forget that shared ownership means buyers have to pay the mortgage then rent and service charges on top. Last night’s Panorama covered ever growing service charges leaving buyers at the mercy of steep rises. It’s not unusual to see service charges rise far above inflation each year and costing more than £3,000 per annum.

So who will benefit from Bailey’s latest policy, which is being supported by a local Tory GLA candidate?

Well, developers of course who can push prices ever up under the guise of a home “only” costing £100,000, and hoping buyers don’t read too deeply into the other commitments. They can keep that £100,000 level and push the share of ownership ever further down.

Without shared ownership and Help to Buy would developers be able to charge half a million for a studio flat in much of London? No. Wrap it in these schemes that apparently “help” and suddenly that’s the asking price.

Ultimately what shared ownership entails is a buyer – predominantly first time and younger – paying the same amount for a small share of a home when people just 20 years ago would have gained the entire ownership. It’s a way to put younger generations in hock for life. Only very few ever manage to move from 25-50 per cent ownership to complete ownership. Rent and service charges are simply too great.

Some will benefit from the model and it worked for them. But not all do, and it continues the cycle which increases prices for generations following – and pushes the obtainable share ever lower.

In Greenwich borough the ruling Labour administration appear attached to the model. Plans to redevelop a Woolwich estate – covered yesterday – have affordable housing at just 27 per cent at Morris Walk South. Of that, a third is shared ownership. Excluding it and affordable falls to less than 20  per cent on site.

At Peabody sites in Thamesmead  – when they aren’t charging £537,300 for a flat – they are seeking £70,000 for a 25 per cent share of a tiny flat opposite Belmarsh Prison with a “buyer” then needing to pay rent of £481 a month and a service charge each month of £157. And that service charge will rise sharply if other sites are a guide. Peabody were one of the main offenders on Panorama last night as a buyer a decade ago saw service charges rise far above inflation. When the Thamesmead development opened, Greenwich politicians were on hand for smiles and photoshoots.

Pushing shared ownership does nothing to solve the underlying issue that the average house price in London has raised far more quickly than the average wage. Shared ownership doesn’t address that but rather cement it – and hides many other costs that an outright buyer simply would not have paid in previous decades. Prices are now over 15 times average wages in London. Just 20 years ago it was around 6.

Shaun Bailey’s policy doesn’t address many housing problems and costs but further entrenches them. Where does it end up – a 10 per cent share, then a five per cent share for £100,000? Two per cent in a decade? There is no housing ladder when shared ownership and ever rising associated costs become the norm.

 

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John Smith

I've lived in south east London most of my life growing up in Greenwich borough and working in the area for many years. The site has contributors on occasion and we cover many different topics. Living and working in the area offers an insight into what is happening locally.

10 thoughts on “Shaun Bailey’s flagship housing policy: the shared-ownership scam

  • November 26, 2020 at 2:19 pm
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    I’m afraid Developers…Builders…will if given a clear run…make the most of it….
    I think appealing to their better nature is never going to work…
    As Greenwich Council are hopeless…the only long term solution is as usual the Market and the Economy….
    If as expected we will be having a large group of unemployed…this may affect the fortunes of the Builders

    Reply
  • November 27, 2020 at 12:14 am
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    Great article Murky.

    Even the name Shared Ownership is completely misleading. You do not ‘own’ the flat, you do not own a percentage of the flat, you will actually have a lease on a percentage of a flat. And if that lease falls below 80 years? You need to extend it. Average cost 15 grand. What a con!

    Reply
  • November 27, 2020 at 10:15 am
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    I saw the Panorama programme and it was shocking. I felt sorry for the couple trapped in a small flat with three children, but less so for the property professional who surely should have spotted the pitfalls.

    That the revised scheme should be considering shares as low as 10% is truly cynical. What is needed is wholesale reform of property holding and an end to the gouging of buyers.

    Reply
    • November 27, 2020 at 4:21 pm
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      Could the property professional forsee that the housing association miscalculated the service charge? I understood that was the issue. I really felt sorry for all of the shared owners.

      Reply
      • November 28, 2020 at 1:38 pm
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        @Anonymous: those monolithic blocks are notorious for over valuation and high charges. People get dazzled by the flash marketing and the light bouncing off the shiny surfaces in the show unit. That they can’t see how ploughing a goodly proportion of their income into a flawed product is a bad idea escapes me.

        Reply
  • November 27, 2020 at 5:20 pm
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    A quick win. Remove the restriction to only new build homes and allow shared owners to chose their own home available on the open market.

    Reply
  • November 27, 2020 at 9:32 pm
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    Local governments ware so much involved too. It is so sad that the people who work so hard are the one are in this mess. THE LOCAL GOVERNMENT HAS TO RESOLVE THIS ASP.. THE SHARED OWNERSHIP IS A DAY LIGHT ROBBERY. THOSE AFFECTED AND MISSLEAD by THE GOVERNMENT SHOULD be able to own homes . Action now .

    Reply
  • November 27, 2020 at 11:00 pm
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    I was looking to buy flat on shared ownership scheme, but apparently it’s a mafia. If flat value is low, you will need to buy a bigger percentage of the flat. It’s is scheme helping to housing associations to get richer, and make the buyers poorer. The service charges has not limits for the service they charge. It’s a scam, because nobody talks that the rent will be increased every year and etc. As soon you get into this carousel, there is very hard to exit, because not all buyers know the rules of this game.

    Reply
    • November 28, 2020 at 1:26 pm
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      It’s a government licensed scam. You buy a percentage on which both mortgage AND rent are paid together with 100% of the charges.

      The government is now looking at lowering the percentage to 10%. No-one in their right mind should entertain shared ownership for a second.

      Reply
  • February 13, 2021 at 5:21 pm
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    For several years I looked to get a Shared Ownership place in London but my salary was just too low – despite having a decent deposit to hand.

    Leaving aside the service charge, which all new shiny buildings (especially with lifts) will attract, the scheme might be okay if the overall price of the flats were genuinely affordable – which they never are in London or big cities with high property prices. Also, your do not even own 25/30/50% of the legal rights to the place – the people you pay the rent to are the real owners.

    Reply

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