Funders and major landlord defend shared ownership as ‘viable’ product

For example, Mr Jenkins said that if there are amenities in the scheme, such as a gym, Peabody does not ask shared owners to pay towards the cost of that.

Instead, the G15 landlord allows shared owners to opt in to use the amenities if they wish and only then would they be charged.

“So, we try to make the burden of service charges as low as possible,” Mr Jenkins said.

“That said, for tall buildings, the cost of developing them and the cost of operating them has risen exponentially as building safety regulations have taken hold, and that is a particular challenge, I think, for all tenures, and a challenge around viability for anyone who’s building in a dense urban environment.

“We’re very alive to the challenges of service charges, but roughly from our analysis, we think that there is a ratio of 10 to one in terms of demand for shared ownership relative to supply. So, it is still very much a product that works for some people.”

David Cleary, managing director and head of housing at Lloyds Banking Group, said that the bank’s consumer lending business from its retail banking side is “really focused on shared ownership”.

“We think it’s great product,” he said.

Mr Cleary said that Lloyds is among those who created The Shared Ownership Council to look at protecting people buying shared ownership properties and making sure they understand what they enter into.

The group includes Brendan Sarsfield, former Peabody chief executive and former chair of Sustainability for Housing; Ann Santry, former chief executive of Sovereign Housing; and Janet Pope, former chief of staff and chief sustainability officer at Lloyds.

Paula Higgins, founder of the HomeOwners Alliance, and Peter Williams, former executive director of the Intermediary Mortgage Lenders Association, make up the rest of the team.

Priya Nair, chief executive of The Housing Finance Corporation, said that shared ownership is still an attractive proposition for housing associations and funders.

“It was a product that was seen as part of the toolkit for housing associations and from an institutional investor standpoint, it was probably the part of the market that was most interesting, given the risk-reward profile and the certainty of cash flows,” she said.

“So, from an investment funding standpoint, I think there will continue to be interest, given the sort of nature of the underlying investment. But there are challenges… on making sure that all relevant parties are treated right and [that] the transparency is seen by all from a financing perspective.”

In May, the G15 said improvement plans are being “urgently implemented” to the way service charges are set and collected, following accusations from a group of MPs that the charges were often being abused.

Also in the same month, the previous Conservative government’s Leasehold and Freehold Reform Act 2024, which introduces increased transparency around service charges, was passed into law.

The act does not yet have a date for full implementation, with secondary legislation due to be introduced by the new Labour government, which has previously vowed to deliver it “quickly”.