Crippling shared ownership premiums are holding back house buyers in Milton Keynes, complain would-be purchasers

Owners - including MK Council - can set their own premium

Monday, 16th August 2021, 1:01 pm
Updated Monday, 16th August 2021, 1:02 pm

MK Council has received another complaint about the high premiums set on many shared ownership properties in the borough.

Dozens of the shared ownership homes in MK were originally built by the development corporation and now the leases have been transferred to Milton Keynes Council.

Designed for those who are unable to afford a high mortgage, the scheme enables them to buy a percentage of a house and pay rent for the remainder. They can then add to their share if they wish, when they can afford it in the future.

Many shared ownership premiums are unfair, say buyers

The system is so popular locally that sellers can demand a 'premium' payment - a sum of money allegedly to cover the fixtures and fittings or 'improvements' made to a property. And some of these premiums can be as high as £30,000, complain purchasers.

One woman, a university lecturer, carried out her own investigation into premium prices when her son was attempting to buy a shared ownership property in MK.

She said: "It has come to our attention that owners are adding their own ‘premiums’ to the cost of the homes, defeating the object of affordability. MK Council website states that the purpose of shared ownership properties are ‘a form of Low Cost Home Ownership and offers a route into owner occupation for those who would not normally be able to afford their own home outright’.

The woman said the high premiums on some properties rendered them out of her son's budget and she has asked for an explanation of how the council intends of address this problem.

"As the council are part owners of some of these properties (lease), I find it difficult to understand how this is being approved," she said.

Shared ownership premiums to be paid upfront, on top of the deposit, equating to up to £50,000 in all. They cannot be added to the mortgage.

Earlier this year the Citizen wrote about another young prospective buyer, has started a petition to the government on Change.org to demand that shared ownership premiums should be abolished.

She said: "House prices in Milton Keynes are already high, resulting in a higher deposit to begin with. The premiums are stopping young people from getting a chance on the property ladder, when you cannot borrow a full house price this is their only option.

"You would need less of a deposit buying outright which then makes the shared ownership scheme void."

The petition can be viewed here.

An MK Council spokesman said: "The council has an interest in a number of shared ownership properties, most of which were originally built by the Development Corporation. The majority of the properties are houses but there are a number of flats and bungalows.

"By buying a share in the property, the purchaser may pay a mortgage on the purchased share and will pay a rent on the unsold share of the property.

"As part of your decision to buy your home, you need to consider the charges we make towards the upkeep of the local estate or block you live in.

"A shared owner may buy more shares in their property, which is called staircasing, and eventually can own their home outright."