Shared-ownership homes will cost residents '50 per cent of net take-home pay'
Shared-ownership homes cost residents more than half their wages, new figues show. Many people now feel trapped despite major provider’s guidance that mortgage, rent and service charges should not exceed 40% of take-home pay.
Some residents face annual charges of more than £5,000 a year. L&Q housing association, one of the largest in England, promotes its properties with the guidance that, typically, the costs of mortgage, rent and service charge “should be no more than 40% of your net take-home pay”.
But the Observer has been told of numerous cases in L&Q homes where residents are paying more than 50%. Suzanne Muna, from the Social Housing Action Campaign, said: “It is the worst of both worlds for shared owners, because even though they only own a share of their home, they are responsible for all the repair costs in the home and the service charges.”
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“It is a form of financial abuse, because the power is all on the side of the landlord. If you refuse to pay the charges, they can evict you,” she said. Residents were told this month of deficits in annual service charges, with some facing demands for more than £2,000 on top of charges already paid.
One 33-year-old resident said: “The charges just seem to be getting out of control. I don’t mind paying service charges if I understand what the costs are for, but it’s difficult trying to get even very basic information. I feel trapped because it’s just me trying to pay for these things. I’ve never felt trapped like this in all the places I’ve rented. I’ve no control over it and no recourse.
"No one will want to buy a property with an insane amount of service charges.” Matt Foreman, executive director of customer services at L&Q, said: “Following a purchase, many factors beyond a landlord’s control can result in increases to service charges, mortgages and other housing costs for leaseholders, whether they are outright or shared owners. In recent years, energy prices have risen sharply. Landlords are unable to absorb these costs, so they unfortunately have to be passed on through service charges. We are listening to residents, and we recognise this is putting significant pressure on their finances.”