Things must be bad when even London estate agents’ weekly booster pages identify how one of the housing market’s on-trend deals is failing to deliver.
Today’s Homes and Property advertorial section in the Evening Standard (Editor: Gideon Osborne) lays into shared ownership in the capital for the unaffordable sham that it has become.
“Is shared-ownership ‘affordable’ for the average Londoner?” the headline asks, before offering its own answer: “You must be joking.”
This won’t do much to prompt laughs at the council-funded housing developers Brick by Brick in Croydon, for whom shared ownership has been a vital crutch in their failing efforts towards their target for providing affordable homes.
Indeed, it does not take much reading between the lines to see that shared ownership is becoming just another ruse used for social cleansing, forcing lower paid workers out of an area to make way for Yuppies.
Or, as the Standard’s property section puts it: “What was once hailed a potential solution to London’s housing shortage, helping key workers buy a stake in a new home, is now seen by many as a subsidy allowing high-salaried professionals to get a foothold in the capital’s overpriced housing market.
“Even lower-paid people who do succeed in buying a share of a new home can find themselves crippled by service charges and the high cost of the ‘rented’ portion of their property.”
Many of the Brick by Brick schemes, being built in Croydon using council finance and publicly owned land and property, were given planning permission on the basis that some of the homes would be “affordable”. Often, these supposedly affordable homes proposed are for shared ownership schemes.
Inside Croydon’s loyal reader, Nix Glover, highlighted the nonsense that lies behind the notion that shared ownership is in anyway affordable for many workers, or those receiving benefits, when she penned a Croydon Commentary column six months ago.
Glover provided this example of a typical shared ownership scheme: “A property of only 76m² is currently on offer in Coulsdon. It has two bedrooms (one with en-suite shower room), a bathroom, an open plan kitchen-living room, balcony and parking space. It’s current market value is £340,000.
“This property is available as shared ownership, so you can own 45per cent of it for £153,000.
“But you then also have to pay rent of £408.52 per month.
“So if you get a mortgage with payments of £800 per month, it will cost you £1,208 per month.
“Who can afford that?”
It appears that today, the Standard is catching up with Inside Croydon, as they cite further examples from around the capital where a shared ownership flat would require minimum household earnings of £41,000 in areas where the average household earnings are £10,000 per year less than that.
In Croydon, the average salary in 2017 was slightly above the national average, at £35,900.
The Standard notes: “The four biggest housing associations are set to build 9,000 new shared-ownership homes in London in the next two years: welcome news for young professionals on a decent salary who struggle to save the eye-watering deposit needed to buy a property outright with a mortgage.
“But shared ownership was not originally intended for young professionals. First designed for key workers — who could buy as little as a 25 per cent stake in a property, put down a small deposit and pay part-mortgage and reduced rent — it is now under scrutiny from the London Assembly housing committee for often being ‘ridiculously’ costly.”
And while private rents have risen in line wages growth, it seems that the rental portion of the bills for someone who has a shared ownership home with a housing association has increased far more quickly.
The Standard quotes Paula Higgins, chief executive of the HomeOwners Alliance, with some salutary advice for anyone considering shared ownership as an option. “Costs can spiral. Check you can afford increased maintenance charges. While rents start low, expect these to increase, too.”
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