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For those struggling to get on the housing ladder in the UK, one of the options available is shared ownership. It’s a government scheme where you buy a portion of a property and pay rent on the rest to a housing association. In theory, it’s supposed to make things more affordable for buyers because the amount of money needed for a deposit is lower and you only take out a mortgage on your share. So where’s the catch?

A BBC Panorama programme lifts the lid on the huge drawbacks for ordinary people signing up to the shared ownership scheme. Housing associations are ultimately the financial winners and they’re calling the shots. Astonishingly, the programme reports that one housing association stands to make a massive windfall of £20 million from squeezed shared ownership tenants who’ve been left with no choice but to fork out large sums of money to extend their leasehold so they can sell their property.

Ahead of the broadcast Glamour UK looks into the hidden costs of shared-ownership speaking to one homeowner who has lived and breathed the stress of the scheme for the past two years. 28-year-old radiographer Valeria Martorelli tells Glamour UK about the litany of hidden costs she’s encountered that nobody warns about ahead of time. She says it’s been a crushing experience where the negatives far outweigh the positives. Her advice to first time buyers is don’t touch shared ownership with a barge pole. This is Valeria’s shocking story:

I moved to London (from Rome where I’m originally from) five years ago to work as a radiographer in the NHS. After a few years of renting in the city I decided it was time to think about putting down roots and getting a home of my own. I had £30,000 in savings and wanted to live somewhere that made it easy for me to get to different hospitals for work. But I found that with my annual salary I could only borrow around £185,000 which meant the options available to me were very limited -- even with what I thought was a generous deposit.

I was genuinely blown away by how inaccessible the property market was. So I looked at the option of shared ownership. It’s a government scheme that’s supposed to be a good way to get on the housing ladder. You pay part of the mortgage and rent on the rest of the property. In 2018 I bought a 2-bed flat that was one stop away from Bank Station in London. The property was £395,000 which I never would’ve been able to afford in my wildest dreams. But with my deposit of £30,000 I could take out a mortgage of £108,000 on it and the rest would be paid as rent under the scheme.

It was very appealing because I was now the ‘owner’ of a home in a great location and I remember thinking that at the age of 26 I’m only going to get around £100,000 in debt rather than nearly £400,000. I quickly learned that it was all too good to be true. So many of the promises associated with the scheme don’t stack up. Here are a few things that I have learned about the hidden cost of shared ownership:

Length of lease
If you’re looking for a long term investment that you can pass on to your children or grandchildren, or just looking for something that gets you on the ladder that you can sell on, shared ownership isn’t it. When I bought this property I didn’t really understand the implications of having a short lease. Under the scheme they gave me a lease of 125 years. That seems like a long time. But by the time I am at retirement age I would have to look into extending the lease. When the lease goes down to 80 years, you’re the one who has to pay big fees to extend it. You’re the one who will cover the cost of the valuation and any legal fees for both yourself and the housing association. It all comes out of your pocket. You, as the leaseholder, have no statutory right to the lease extension. You aren’t really covered by the law. The housing association can dictate the value of the lease. They are the ones who are really in control and the benefactors of shared ownership.

If you’re looking for a long term investment or to get on the ladder in order to move up, shared ownership isn’t it.

Staircasing is a con
They promise that you can staircase (buy a larger portion of the property) but the reality is no one ever staircases to 100 percent. Once you get to 75 percent ownership, it will be capped. So you can’t ever really fully own this property. Furthermore, every time you try to buy even a percent more, you pay solicitors fees both for yourself and the housing association. In addition to this, it’s always going to be a leasehold property. With shared ownership you will never be able to buy the freehold (the land that the property is built on). You don’t really own it. You merely have a mortgage on something that you’re effectively renting.

It will cost even if you’re just asking to get a cat or a dog
If you want to knock down a wall or make any structural modifications with the property you have to jump through so many hoops, the first one being seeking permission from the housing association. It will cost you every single time you make an inquiry. Even if you want to get a cat or a dog, you need to pay the housing association £100 simply for asking the question. All of these costs add up.

Service charges keep going up
In 2018 I used to pay £670 in service charges and rent. Now it has gone up to £900 but I’ve been given no explanation for the increase. The cleaning bill alone has gone from £135 to £200 in the space of two years. It’s a block of 50 flats where a clearer vacuums the place every now and then. I am also paying £7,000 per annum for security. I’ve never once seen anyone patrolling or securing the premises.

I honestly don’t think you can be described as a real homeowner under this scheme.

You’ll end up in a mortgage prison
Bear in mind, at the time I was buying it was before the negative headlines about building standards in the UK with the cladding scandal and before the terrible news about Grenfell tower. I had complete trust in the system. Coming from Italy, where public trust in politicians and the housing system is low, I had a very positive perception of the UK. My family and I trusted it as a place that was above board, socially-minded, fair and progressive. But in the past year I have realised this is not the case.

In December 2019 I decided to sell the property. Before selling I had to get a sellers pack from the housing association. They dictated who I used as a valuer for the property and they charged me £600 in fees just to be able to market the place. I had five interested buyers but none of them could get a mortgage on the property. It turns out that’s because the flat has cladding issues and it needs a special safety certificate (called an ESW1) that’s going to take up to 5 years to sort. The housing association now says it’ll be sorted in 2 to 5 years.

You could end up being a landlord against your will
In February this year I had to move to Northern Ireland for a new job (not in the NHS). As I couldn’t sell the property, I had to get special permission to sublet it. It cost £150 just to seek this permission and this fee needs to be renewed every year. When you sublet you have to take out insurance, change the mortgage to a Buy To Let, get gas safety checks and lots of other things. I have been forced to be a landlord. I’ve ended up renting the place out at the height of the pandemic when city centre rents are at an all time low. This isn’t something I would choose to do if I had other options. I appreciate that it is up to buyers to do their due diligence when buying a property but I honestly think we need more warnings about the hidden costs to be flagged by solicitors when going through this process.

To anyone considering signing up to shared ownership. Don’t do it. You would be better off renting.

You have no power
My tenant has allergies and wanted to remove the carpets. Even for something simple like that I had to get permission from the housing association and pay a fee for making the request just so that they can dictate the terms of how to proceed.

There isn’t really freedom with shared ownership. The government and the housing association are still completely in control of every aspect. I honestly don’t think you can be described as a homeowner under this scheme. I haven’t had a full night’s sleep for over a year now. My parents are completely shocked and heartbroken. Coming from a country that had leaders like Silvio Berlusconi, I didn’t think this could happen in the UK. There is no social responsibility. This experience has been utterly shocking. My advice to anyone considering signing up to the scheme. Don’t do it. You would be better off renting. It’s not worth the stress.

For more on the topic of shared ownership, BBC Panorama: The Home I Can’t Afford is on BBC One on Wednesday 25 November at 7:30pm and on the BBC iPlayer thereafter.

Glamour has contacted the housing association for the case study featured in this story and will update this piece upon receiving a response.

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