The National Audit Office (NAO) has warned that many residents who jump into shared ownership do not fully understand the “longer-term financial risks”, particularly concerning service charges.
In a new report investigating the shared ownership model, the country’s largest affordable housing subsector for home ownership, the NAO found that numerous complexities can catch out customers.
NAO head Gareth Davies said: “Shared ownership remains an important route into home ownership, but it is complex, and weaknesses in information, affordability, data quality and redress mean that government does not yet have a full understanding of how the model works for consumers.”
The report said the complexities of service charges and the ‘staircasing’ model – where customers increase the proportion of the property they own rather than rent – meant many who “take up the scheme don’t fully understand the longer-term financial risks”.
The report added: “Shared owners can face barriers to staircasing – buying an additional share of the property – due to the additional costs, on top of their mortgage and rent, and complexity.
“Shared owners pay the cost of the additional share of the property, including related transaction costs. In most instances, each time a shared owner staircases, they are required to not only fund the additional equity purchase, but also an RICS property valuation, additional legal fees and a landlord administration fee.”
There is currently no standardised format or terminology for service charges, and the NAO claimed that when service charges are unclear it can be “difficult for shared owners to contest them”.
The NAO also warned that while the Renters’ Rights Act, the £39bn Social and Affordable Homes Programme and changes to leasehold are “designed to improve the experience of shared owners”, it will “also add to the complex picture”.
“All leaseholders, including shared owners, can face affordability challenges over time,” the report noted. “While they are often well informed about initial affordability, the longer-term financial risks when buying their initial share may not be obvious.
“Service charge increases, including building insurance increases, lease extensions, potential costs relating to fire safety in flats, and maintenance of the building, particularly major components like roof and lift replacement, can all increase costs significantly over time.”
Annual completion of new shared ownership homes has increased over the past 10 years from 11,128 in 2014-15, to 20,353 in 2024-25. Last year, shared ownership properties represented 11% of all new-build homes.
However, the NAO claimed limited government data on shared ownership made it difficult to assess the overall performance of the model, meaning it “cannot fully show if it is working for everyone”, or if it still remains “an affordable and well-managed scheme over time”.
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