Panorama 2020 E46
Category
🦄
CreativityTranscript
00:0090% of us want to own our own home, but for many, it's now almost impossible.
00:09No one can really afford to buy the entire thing unless you're earning a really good wage.
00:14A government part-buy, part-rent scheme could help.
00:19It does give you that security of your own front door, the ability to decorate your home,
00:24the things that you cannot do when you're renting.
00:28Shared ownership works for some, but what happens when things go wrong?
00:33The demand is around 4,400. It's obscene.
00:38Would you do it again if you could go back in time?
00:41Absolutely not.
00:43The government's now promising billions to expand the scheme.
00:47Tonight on Panorama, the truth about shared ownership.
00:51It's designed to get people onto the property ladder, but it very nearly kicked me off it.
00:56It's a daft product, and it's a daft product which is desperately in need of reform.
01:04Panorama
01:23This is Southwark in South London, where house prices have more than tripled in 20 years.
01:29The average price for a home here is now over half a million pounds.
01:38Hi, Deepa.
01:39Hi, Dashi. Come on in.
01:41Oh, thank you.
01:43Do you know what? It's a really lovely flat.
01:46For, like, your first home, I can see why you'd be really excited to move in.
01:48I was really happy, especially when, you know, the balcony and the rooms that I have.
01:54I've been working in London for a number of years.
01:57I'd saved up a really decent amount of deposit, and I thought,
02:01I want my own property, I want my own home.
02:04So I'd looked around.
02:07I'd realised that I probably can't afford this just through the open market.
02:16In 2010, Deepa's flat was worth £205,000.
02:20But with a £15,000 deposit, she could afford to buy 75% under the Shared Ownership Scheme.
02:27She pays a mortgage on her share and a subsidised rent on the remaining 25%
02:33to her housing association, Peabody.
02:36How did you feel when you initially bought it?
02:39Oh, I was really happy. I was thrilled, you know, to think, I've done it.
02:44Yeah.
02:45I'm 30 years old. I didn't have to ask anybody for help.
02:48It was me, and this was my own.
02:51Deepa's dream was to own the whole flat by purchasing more and more of it from Peabody.
02:57This is known as staircasing.
03:00Did you want to staircase?
03:02By the time I was ready, I couldn't afford it.
03:06The price had jumped, and it was impossible.
03:13The majority of shared owners never buy 100% of their property,
03:18and now for Deepa, the costs of living here have shot up.
03:23Do you have copies of those bills?
03:25I do, I do, yes.
03:27So I've got my service charges for when I moved in.
03:33The service charge covers building upkeep, property insurance and Deepa's gas bill.
03:40Although she only owns a share of her home, she has to pay the full charge.
03:46Ten years ago, it was around £1,800 a year.
03:50And the latest one shows that I'm paying £3,257. It's a huge jump.
03:57You're paying over three grand a year just for service charges?
04:00That's correct, and no extra service.
04:03It's an estimated charge which she has to pay up front,
04:07but she and her husband have been struggling financially since the pandemic.
04:11She's now on universal credit.
04:14How easy do you find it to pay these extra charges?
04:18I don't. I can't pay it.
04:21And I have, it's embarrassing to say, but I have amassed a lot of arrears because I cannot pay it.
04:28Professor David Cowan has studied the shared ownership model for 20 years.
04:35There are people for whom shared ownership is a good thing,
04:38but there are a lot of shared owners out there who are in financial misery as a result of these high service charges.
04:45I think the thing that we must always remember about shared owners,
04:50as opposed to ordinary homeowners, if I can put it like that,
04:56is that shared owners are, by their nature, at the more financially vulnerable end of the spectrum.
05:07Peabody said service charges are recovered for costs incurred and do not generate income,
05:13and they have teams to support people who may be struggling financially.
05:20Shared ownership has been around since the 70s.
05:24What's impressed you most about the new idea?
05:28The repayments, because if we bought a house normally, it would be too much for us.
05:33As house prices rocketed, shared ownership grew too.
05:37The shared ownership scheme enabled them to find the house they wanted and own part of it.
05:42Mark and Alison can't believe their luck.
05:45When you're in your own house, you just do what you want.
05:47You leave dirty socks everywhere and don't make your bed.
05:50Don't make your bed. It's great, it really is.
05:55The number of shared ownership homes built in England each year has almost doubled since 2016.
06:01In England alone, there are now over 150,000 shared ownership properties.
06:07Scotland, Wales and Northern Ireland all have their own versions.
06:15Chris Worrell lives in Bromley-by-Bow, East London.
06:20I was elated, really.
06:22It takes your breath away when you first come up here.
06:26Stuff you dream of, really, when you're thinking you're going to get a flat.
06:29You want to have a nice view, don't you?
06:32In 2016, he bought a 30% share of his three-bedroom flat.
06:37The full value was £475,000.
06:42On top of his mortgage, this year Chris is paying over £10,000 in rent
06:47to his housing association, Clarion.
06:51So this is what we saw when we came in.
06:54It's a beautiful flat.
06:56Yeah, it's amazing.
06:58Chris works in property himself and is involved in the Labour Party.
07:02My mum always said, you've got to get your foot on the housing ladder.
07:05It seemed at the time a really exciting and achievable thing to do.
07:12Like Deepa, Chris is now in arrears.
07:15When he moved in four years ago, his service charge was almost £2,300 a year.
07:21This year, the demand is around £4,400, so double, almost.
07:29And this is something that you had no idea you'd be facing when you came in?
07:33No, not increases at this rate.
07:36It's obscene.
07:39Clarion told Chris that in recent years they had underestimated the service charge.
07:44He now has to pay thousands of pounds in back payments,
07:48as well as this year's increased charge.
07:52He's refusing to pay while he goes through a complaints process.
07:57It's really difficult to know where you are at any point
08:02because their communication is just so poor.
08:04They're not really interested.
08:06They keep wanting to knock it into the next phase, dragging it out, promising information.
08:12And they just wait for people to tire, you know.
08:17Clarion told Panorama that Chris's service charge includes increased concierge costs
08:23and is in line with similar buildings.
08:25They say all residents were given a year to pay the balance.
08:30But are these service charges justifiable on supposedly affordable homes?
08:35I'm on my way to talk to Kate Henderson, who represents Housing Associations in England.
08:41We've talked to shared ownership tenants who've gone into the scheme
08:44because they've been told their service charge was a certain amount,
08:47and yet that has doubled within just a number of years.
08:50How can that be justified as reasonable or affordable?
08:54As not-for-profit housing associations, there is no profit from this.
08:57As not-for-profit housing associations, there is no profit from the service charge.
09:00It's purely to cover the cost of services.
09:02These people say that their so-called affordable home is no longer affordable.
09:07What do you say to that?
09:08I think it's really important that when a home is sold that it has a service charge attached to it,
09:13that it's really clearly communicated that what it covers and that it could go up and that it could go down.
09:19In terms of shared owners specifically, we do know that the majority,
09:24it's around 60% report having a good experience.
09:28OK, but 40% don't have a good experience with their housing association then, by your admission?
09:33The majority, so around 60% do have a good experience.
09:36We would like that number to be higher.
09:40In fact, the survey found 21% of shared owners were dissatisfied with their housing association.
09:47And it's not just because of service charges.
09:50Many shared ownership homes are new builds and that can bring its own problems.
09:56It's something Giulia Trovato knows a lot about.
09:59She bought a flat here in Hoxton, East London in 2007.
10:03So what is this? This is the basement?
10:05Absolutely. This is the basement where from time to time the pipes would burst.
10:12So, as you can see, this is the video that I took.
10:16So that's actual sewage water?
10:18Absolutely.
10:20So that's actual toilet roll or tissue that's coming to the burning pipe?
10:25It could be any kind of things.
10:29Giulia bought a 45% share of her three-bedroom property.
10:34The total value of the flat was £295,000.
10:38She pays rent to her housing association L&Q.
10:43Soon after she moved in, she realised there were problems with the building.
10:48I mean, what did they say when you would call them up and say,
10:51our basement is flooded with literal sewage?
10:54Some answers were really ridiculous, like, can you use some gaffer tape and, you know...
10:58Gaffer tape to what?
11:00To just seal the patch which has burst or the crack,
11:05or some of them were like, OK, but we cannot do anything until Monday.
11:11Leaks from poorly fitted pipes cause damp and mould in Giulia's ground floor flat.
11:17L&Q agreed to the repairs, which took six months to complete.
11:23So what happened next?
11:25We received, obviously, notice of future rent and service charges.
11:32We received something a little bit bizarre.
11:35Something like £3,000 per month just for service charges.
11:39And what had your service charge been before?
11:41Always in the region, I'd say £150, £200 at the most.
11:45So your service charge went up from £150, £200 per month to £3,000 per month?
11:51Yeah.
11:52Yeah, unbelievable, right?
11:57Quite a lot of shared owners are finding that there are structural problems,
12:00build defects with their buildings, particularly new builds.
12:03The trouble is that for shared owners, their rights are very, very limited.
12:09So ultimately, they could still end up having to pay these costs,
12:12even though they only own a fraction of the property?
12:14That's what they're obligated to pay, and really, there's no way around that.
12:20How much do you think you should pay for the repairs?
12:22I bought this flat convinced that it was structurally sound,
12:27and with the flat, the whole building.
12:29So to be confronted with a bill for 100% of the repair works, I don't think it's fair.
12:35And at the most, at the very, very most, I should be paying my share,
12:40not 100%, like they are insisting I should pay, no.
12:46Julia owes over £20,000 to L&Q for the repairs.
12:53L&Q told Panorama that given the benefits of the scheme,
12:57it is fair and reasonable for shared owners to pay for repairs.
13:02And they said they will continue to explore repayment options with Julia.
13:12In September, the government announced £12bn of investment in affordable housing,
13:17including a new reformed shared ownership scheme.
13:23In the current scheme, new shared owners have to buy at least 25% of their property to start with.
13:30But the government want to reduce that to just 10%.
13:35I think if you lower the stakes to get in,
13:37then you are talking about people on potentially lower incomes than are now required.
13:42They will be, almost by definition, the people who are potentially most economically fragile,
13:48and that bears risk for them.
13:52Under the new scheme, the government wants housing associations to pay for the first 10 years of repairs.
13:58But this won't help current shared owners, like Julia.
14:02Can you afford to pay £3,000 a month in service charges and repair costs?
14:07Absolutely not. That is more than our salaries put together.
14:13If I had some younger couple coming to me and saying,
14:16we would like to go into shared ownership,
14:18I would say, you know what, better eat bread and drink water for several years
14:25and put money aside, rather than having to face what we face.
14:31The government told Panorama the new shared ownership model will be fairer
14:35and would help more people across the country realise their dream of owning their home.
14:48For some, shared ownership is a way to stay living and working in the area they grew up in.
14:55I'm in the Cotswolds, where the average home costs over £400,000, well above the national average.
15:05Kelly Reynolds grew up here and works as a manager in a hotel.
15:09She bought 50% of her property for £50,000 12 years ago.
15:16I was a single person with just one wage. I couldn't afford to purchase outright.
15:21If I hadn't have gone into shared ownership, I would have just been renting.
15:24And this seemed a way to sort of break into the housing market.
15:28It seemed like a fantastic scheme.
15:32Her problem started when she tried to sell her home last year.
15:37I received a message from my buyers to say they were having difficulty finding a lender
15:42that would loan them the mortgage amount because of the remaining length of term of the lease,
15:47which at that point was 67 years.
15:49And they asked me if I would consider extending the lease.
15:53And the buyers had explained that if I didn't extend the lease, they wouldn't be able to proceed with the sale.
16:00Like Kelly, nearly all shared owners are leaseholders.
16:03They only own their home for the duration of the lease.
16:07Once the lease is under 80 years, it can be difficult to sell and very expensive to extend.
16:15I'd never heard of having to extend a lease before,
16:18so I contacted the Housing Association, which was the Guinness partnership,
16:23to enquire how I might go about doing that.
16:28She had to pay £12,800 to extend her lease,
16:32plus an administration charge, their legal fees and her own.
16:38In total, you're talking best part of £15,000 to £16,000.
16:43Well, I didn't have that kind of money sat in a savings account.
16:46When you take off the lease premium plus all the fees I had to pay,
16:50I actually came out with, I think, around £5,000 less than what I actually bought it for 11 years previously.
17:00Even though the value of Kelly's property had increased,
17:04extending her lease meant she ended up losing money.
17:08Well, some people would say you were sold a short lease
17:11and you possibly should have found out more about it before you bought.
17:14What would you say to that?
17:16Well, I don't really think that I understood that I was buying a short lease.
17:20I would have expected that to be pointed out to me and explained to me.
17:25By who?
17:27Well, by the Housing Association.
17:29They passed the blame onto my solicitor and took no responsibility themselves.
17:34Guinness and other housing associations, they do have a duty of care to their customers
17:39and I think there should be more transparency.
17:46The Guinness partnership told Panorama that the cost of Kelly's lease extension
17:50was determined by an independent valuer.
17:53They said, as a charitable housing provider,
17:55we reinvest the proceeds of any sale to produce more homes to meet this country's housing need.
18:02I wanted to speak to Kelly's neighbours,
18:05who are also in shared ownership homes run by Guinness.
18:11Hi, I'm a reporter for BBC Panorama.
18:13When did you buy this shared ownership?
18:17None of the people I spoke to were aware of the problems with short leases
18:21when they bought their home.
18:23Thank you very much for speaking to me.
18:25OK. Thank you.
18:27It does feel like a lot of people have been kept in the dark
18:29about their lease length and what it means
18:32and I think Guinness have a lot of questions to answer.
18:37In law, we define shared ownership as a social housing product
18:42and we should never forget that.
18:45So if you're asking me whether a social landlord
18:50should be telling their shared owners,
18:53that their lease is going below a certain period,
18:56then I would hope that they would.
19:03When we asked Guinness how many of their shared ownership homes
19:06across the country had leases under 80 years,
19:09they told us 1,500.
19:14If all of these were to be extended at the average price,
19:17we estimate Guinness could receive around £1,000.
19:21We estimate Guinness could receive more than £20 million.
19:28Guinness said Panorama's investigations have drawn attention to the fact
19:32that not all property owners are aware of the implications
19:35of decreasing lease terms
19:37and said that they will now be writing to all their shared owners
19:40highlighting this.
19:42We are now approaching Battersea Park.
19:46Even when housing associations can give shared owners a long lease,
19:50they don't always do so.
19:53These swanky flats in South London are being sold by Clarion,
19:57the UK's largest housing association,
20:00but we've discovered that Clarion bought these flats last year
20:03from a developer with a 999-year lease.
20:07They're now being sold to shared owners
20:09with a 125-year lease.
20:11The question is, why are they doing that?
20:18I can't see any reason in law why they couldn't give,
20:21let's say, a 200-, 300-, 999-year lease.
20:24As long as they've got a long lease themselves
20:27or they own the freehold,
20:29they could give any length of lease they like.
20:32What would be the benefit in not offering a very long lease
20:35to a shared owner?
20:37There is a price to extend your lease.
20:39So there is a sort of income stream that comes with shorter leases.
20:48Clarion said they are a charitable registered society
20:51and don't exist to make profits.
20:53They told us the 125-year lease is in line with the government rules.
20:58The government told us it expects a 99-year minimum lease term,
21:03it expects a 99-year minimum lease term,
21:06but it was up to providers to decide.
21:10When a housing association can grant a shared ownership property
21:15a 999-year lease, should they be doing that?
21:18At the moment, a shared ownership new-build property
21:22would go with a traditional lease length of 125 years.
21:26I think, at the moment, they're following current leasehold rules
21:30and practice.
21:32But there are no current leasehold rules and practice
21:34that say you have to offer 125 years.
21:36You can offer 999 years on a leasehold property.
21:39In terms of the overall length of leases
21:41that housing associations individually decide to opt for,
21:45I think that's for individual housing associations to work through.
21:49So it just seems strange to me
21:51why they wouldn't want to pass on 999 years
21:54to a shared ownership person who is in that scheme
21:57because it's meant to be affordable.
21:59I can't comment at this stage on behalf of the sector,
22:01but I think the ability to extend lease lengths at the beginning
22:04to have longer leases would be a positive thing for the consumer.
22:11But for now, many of the shared owners we've spoken to
22:14feel anything but positive.
22:16What was sold to them as affordable housing
22:19has become unaffordable,
22:21while their housing associations derive an income from the scheme.
22:25We've been through the profits of three of the housing associations
22:29that provide the most shared ownership homes,
22:32and they get over £140 million in profit
22:35through shared ownership sales
22:37and the rent generated from those shared ownership homes.
22:40That seems like quite a hefty amount.
22:43So housing associations are not-for-profit,
22:47but we do operate as a sector to generate a surplus.
22:51That surplus then gets reinvested in the upkeep of existing homes.
22:56We have a desperate housing crisis.
22:58We need 90,000 social rented homes each year.
23:00So it's really important that we do generate income
23:03to invest in the building of new social and affordable homes as well.
23:15A month after we last met, I'm back to visit Chris in East London.
23:19He's had some news about the service charges he's challenging.
23:24How's it going?
23:26Yeah, not bad, but had been better.
23:31Had a bit of an update from Clarion.
23:34They're sending threats of, you know,
23:37for them considering to serve a notice of seeking possession.
23:40Why do you think they're threatening to take legal action
23:43and possess your home
23:45whilst you're in the middle of a complaints process with them?
23:48The only thing I can think of is that it's just bullying and intimidation.
23:52They're trying to scare people into paying the service charge.
23:56You know, we've had some of my neighbours who have received similar letters
24:00and they've paid it out of fear.
24:04Clarion said repossessing someone's home is a last resort
24:08and they will always discuss a tailored repayment plan.
24:13So it's been three weeks since I saw Chris and Clarion have been in touch.
24:16They've told him that they're not upholding his complaint
24:19and that it's now closed.
24:21They have offered him £50 in compensation, though, for the time taken,
24:25which they say they will offset against the £3,000 he still owes them.
24:33He's still waiting to see whether they will carry out their repossession threat.
24:38It's rare for shared owners to be repossessed, but it can happen.
24:42And if it does, you can lose everything,
24:46including your deposit and any equity.
24:49If you have the flat on a shared ownership tenancy,
24:52it's actually a lot easier to lose the flat
24:55than it is if you bought it outright with a mortgage, say.
24:58They could potentially lose everything.
25:01If a possession order is made, that ends their entitlement to the flat,
25:06it ends their entitlement to the money they paid for it,
25:09they would get nothing back, potentially.
25:13Back in South London,
25:15Deepa is still struggling with a home she can no longer afford.
25:19I still have to pay all this money, and I've got nothing to pay it with.
25:24I don't really know what to do.
25:28Since buying her property ten years ago through Peabody,
25:31Deepa's started a family.
25:33Do you want Mummy to play? Yay!
25:35Oh, I see, you've got a little smiley face here.
25:37Deepa and her husband, Greg, now live in the same flat.
25:40Deepa and her husband, Greg,
25:42now have three young children crammed into a two-bedroom flat.
25:48I can't afford it. It's as simple as that.
25:50And I can't sell, so I'm stuck.
25:58That's because there's another problem.
26:00Since the Grenfell tragedy,
26:02thousands of buildings across the country
26:05have had to be tested for fire safety.
26:08Residents like Deepa can't sell their flats
26:11until they have certificates proving they're safe.
26:15Peabody have said to us through a blanket letter
26:19that it's going to take a number of years.
26:21We are effectively trapped,
26:23because until we have that certification,
26:26a lender is not going to lend to our buyer,
26:29so we can't even start a selling process.
26:32Deepa's family is desperate to move outside London
26:35to a bigger and cheaper place.
26:38That next step is far away right now.
26:41I don't know how many years it's going to take.
26:43I can't...
26:45I never imagined my children growing up as teenagers in this place,
26:49but it's looking more and more likely.
26:52And upsettingly likely.
26:57Her last hope is to sublet the property and rent elsewhere.
27:02But she needs her mortgage provider's permission,
27:05and she's still waiting to hear from them.
27:09Until she sells, her money is tied up in the flat.
27:14I've trapped us.
27:16A decision that I made based on information that I was given
27:20and how things were sold to me as being affordable
27:24has now turned into the worst,
27:27the absolute worst thing I could have ever done.
27:30I've put everything into this place.
27:33All my money, everything I had.
27:40I'm stuck.
27:42I'm really sorry.
27:50Peabody told Panorama that they have employed a team of experts
27:54to carry out the investigations needed
27:56for a safety certificate to be issued.
27:59The government said it was unacceptable
28:01that some homeowners are stuck in limbo,
28:04and it was working to resolve the issue.
28:13In a housing market that prices out so many of us,
28:17shared ownership is seen as a way to give those on lower incomes
28:21a leg onto the property ladder and to boost homeownership.
28:26But at what cost?
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