Brighton people 'trapped' in shared ownership schemes

Ayman Shaker, 36, bought 25 per cent of a flat in a new development called The Courtyard in Circus Street, Brighton. He wanted to get on the property ladder like his wife Hannah, 33, so the pair could eventually buy a place together.

After completing the purchase in March 2021, the pair, who live together in the flat, discovered that they did not have access to the gym and co-working facilities.

This was to be the first of many problems.

Because the flat is shared ownership, Mr Shaker, a manager at a language training company, must pay a mortgage for the part he owns, rent for the part he does not and service charges to the managing agent, Savills.

Savills is legally responsible for setting the service charge.

When they moved in, the service charge was £150 a month. In 2022, it was raised to £370 a month and in February this year they were told it would rise again to £460 a month.

“We are screwed,” Mrs Shaker told The Argus.

Ayman and Hannah Shaker say they are 'screwed' (Image: Ayman Shaker)

Mr Shaker has previously tried to sell the flat but has been unable to.

He said they had their flat independently valued by a lender. It was valued at £0 and the provider would not offer a mortgage to new owners.

“We are trapped,” Mr Shaker said. “The lender did not think the charges were justifiable.”

The couple have to pay over £2,000 a month to own just 25 per cent of their flat.

“We have all been sold this as affordable living,” said Mr Shaker. “This is not affordable.”

Mrs Shaker, who is a self-employed social media advertiser, said: “We would have started trying to have kids if we weren’t in this situation. It is putting our lives on hold.”

Housing association Clarion owns the other 75 per cent of the flat, but tenants are supposed to be able to increase their share over time.

Michelle Furber, a primary school teacher, also has a flat in the same block.

Michelle Furber, a single mum, thought shared ownership would be an affordable way to own property (Image: Michelle Furber)

There are 28 shared owners in the building, out of 142 households.

Ms Furber, a 52-year-old single mother said: “Purchasing my property in September 2021 through a shared ownership scheme enabled me to be able to afford a home for myself and my son to live in that I probably would have not been able to afford in other circumstances.”

But now her service charge has increased from £1,500 to £5,000 a year.

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“What was meant to have been a lifesaver for me as a single parent to get on the housing ladder and build an investment for the future is turning into a nightmare,” Ms Furber said.

“We are at our wits' end.”

In March, tenants met with representatives from Savills, Clarion and their constituency MP Lloyd Russell-Moyle to discuss the problems they are facing and work out a solution.

But nothing has been resolved, they said. 

A Clarion spokesman sympathised with residents and said Savills has “failed to provide a satisfactory explanation” for the service charge increase.

The spokesman added: “Savills have a responsibility to justify the very substantial increase for residents.

“Despite making promises in a meeting with Clarion, the local MP and a group of residents, Savills have failed to provide final accounts, or a satisfactory explanation for why the service charge has increased so dramatically.

"It’s completely understandable that our shared owners are angry. Savills need to take urgent action to provide evidence for the increase in costs and meet again with everyone who has been impacted to agree on a way forward.”

A view from a balcony in The Courtyard, Circus Street (Image: Zoopla)

India Phillips and her partner Josh Brady say their dreams have been “shattered”.

The 27-year-old said: “In November 2021 Josh and I made the decision to invest a significant portion of our savings into a flat in Circus Street."

These five people, along with others in the shared ownership flats, have asked for an explanation as to why the service charge has risen so greatly. These requests have been ignored, they say.

“What is alarming is there appears to be no cap on these charges,” Ms Phillips said.

“We would have undoubtedly failed the affordability test if we knew about the rise in charges.”

The tenants The Argus spoke to were also told by Savills they owed a backdated fee of £2,221 for the financial year 2022/23 because they were “undercharged”.

Mr Shaker said: “We were told we had to pay it in 30 days.”

A spokeswoman for Savills said: “As the appointed managing agent at The Courtyard in Brighton, Savills can confirm that the current service charge has been budgeted against the growing needs of the estate and is working hard with the social housing provider to ensure they are as low as they can be for residents.

“The main drivers of the increase in service charge at the scheme is a result of rises in communal utility and insurance charges, as well as increasing operational and maintenance costs to ensure good levels of property management. We are engaged with residents regarding service charge levels moving forward.”

One of the flats in The Courtyard (Image: Zoopla)

This comes as the cross-party Levelling Up, Housing and Communities (LUHC) committee declared shared ownership schemes are “drastically failing to deliver an affordable route to home ownership” in a report published by the Government on March 28.

The report listed problems such as rising rents and uncapped service charges.

It concluded: “Shared ownership products can often become unaffordable over time due to having to pay for 100 per cent of repairs and maintenance costs despite only owning a proportion of the property. This is exacerbated by the fact that these service charges can increase over time, along with other costs such as rent.”

Lloyd Russell-Moyle said shared ownership schemes are 'flawed by design'

Mr Russell-Moyle, MP for Brighton Kemptown, said: “Shared-ownership schemes totally lack regulation and transparency. They are flawed by design.

“Residents are forced to buy in at the brink of what they can afford and are then powerless when service charges soar and the value of their homes plummet as a result. Rather than empowering people to get on and move up the property ladder, first time buyers are trapped in an expensive scheme while these government backed projects allow developers and housing providers to rake in the profit.

“It is completely unacceptable, the Government must do more to protect first-time buyers in shared ownership schemes.

“Participants in the scheme are being lured in with the promise of owning their first home, only to be faced with unexpected rent hikes and unaffordable service charge increases, making it impossible for them to increase the share of their ownership.”

A spokesman for the Department of Levelling Up, Housing and Communities, said: “Increases in service charges without proper justification are completely unacceptable, which is why we are committed to strengthening protection for leaseholders, including shared owners, through the Leasehold and Freehold Reform Bill.

“The secretary of state has been clear that we are always looking for ways to improve the legislation and improve homeownership for millions across England and Wales.”