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Shared ownership debt trap

ended 01. May 2023

It's been brought to our attention that certain housing associations have far too much power in their draconian lease agreements and, in some cases, are preventing the owners of shared ownership properties from accessing their equity — to their detriment. For example, a growing number of people need to access their equity to consolidate debt through a remo or second charge because they are struggling amid the cost of living crisis. Many shared ownership homeowners have accumulated significant equity in their homes but some housing associations refuse to grant them permission to borrow against it. What are your views on this? Should the government, which is the backbone of these schemes, allow these freeholders such control over people's money, when it is often a way for them to stabilise their finances? Any thoughts, experiences of this or anecdotes, send them across.

2 responses from the Newspage community

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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
Shared ownership schemes were originally designed to help people who could not afford to buy a home outright. However, over the years this has turned out to be a game of chess with a faceless housing association for the many involved in these schemes. Housing associations like any other landlord have to play by the rules and have to carefully consider their bottom line and sustainability, even though they may not be for-profit. HAs will need to consider the impact on their balance sheets if their members dilute their equity, hence all the restrictions. However, it is important to note that these schemes are regulated by the government and there are clear guidelines that must be followed by housing associations. They can't just arbitrarily decline second charge applications. If you are struggling with debt consolidation or other financial issues, it may be worth speaking with a financial adviser or debt counsellor who can help you explore your options.
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Matthew Jackson
Director at Mint FS
Shared Ownership needs a re-brand and relaunch. It is that simple. In its current form, it is outdated and not delivering the assistance it should to people stepping onto the property ladder. Housing Associations have too much power to set their own terms and conditions which are not standard across the board, and even try and force clients to use their preferred mortgage brokers akin to some Estate Agency Groups. Enough is Enough. The time for change has come.