In February 2018, my partner and I bought a 45% leasehold interest in a £625,000 two-bed shared ownership flat at an estate known as UNCLE Elephant & Castle in London. The estate has two buildings that contain flats of various tenure. In my building, a 46-storey tower, there are 64 shared ownership apartments sold through Peabody as the S.106 partner, and an additional 279 Build-To-Rent PRS flats that are retained by the Realstar Group (who are also the estate's owner and property manager). Realstar developed the estate with Mace. It was a high-profile development using GLA land for an estate originally designed by Rogers Stirk Harbour + Partners. Upon completion UNCLE Elephant & Castle was the UK's tallest BTR development (with a small number of Shared Ownership flats). Realstar received government-backed development funding from DLUHC and ARA Venn's PRS Operations Ltd.
When considering Shared Ownership in broad terms, I believe it has great potential to provide good value for money. There is no doubt that my partner and I would not have been able to purchase our flat at the time we did without a programme like shared ownership. We purchased the flat with approximately half of the deposit that we would have otherwise required on the open market for a similarly priced flat. Fortunately for us, our original purchase flat became more affordable to us over time because of salary increases. There was a significant increase in our borrowing costs when we remortgaged for a new term earlier this year, which we were able to absorb, but not without cost to us. The rising borrowing costs were the principal reason we were unable to staircase to 100% this year as we'd originally hoped.
I believe that staircasing is crucial to making shared ownership good value for money. Before buying our flat, I received advice from a friend who purchased a Shared Ownership London flat 15 years ago. He told me that he didn't staircase when the opportunity presented itself, and soon found himself priced out of full ownership because of the post-GFC house price increase in the early 2010s. This is why I believe that staircasing is crucial to ensuring that shared ownership continues to provide value for money. I believe the benefits of staircasing should be made clear to potential buyers, and they should be encouraged to fully staircase (which is contrary to how I believe that shared ownership is presently advertised).
Shared Ownership can only provide value for money when there is parity of product. At UNCLE Elephant & Castle, we are not permitted to use two residential amenities – being a gym and a residents lounge – even though these amenities were always intended to be available to all residents, as described in the developers’ planning application documents, and also on the architects website at https://rshp.com/projects/residential/uncle-elephant-and-castle/
Shared Ownership residents should be permitted to use residential amenities if they are prepared to pay for their upkeep. The segregation of Shared Ownership residents – such as what happens at Realstar’s UNCLE Elephant & Castle – makes for a system where Shared Ownership residents are “less than”, having purchased an inferior product, and so it can be argued that they did not receive value for money.
Value for money is also predicated on build quality. Our 46-storey tower suffers from a problem known as Creaky Building Syndrome. It’s a build and design defect that causes the interior apartment walls in all 343 apartments to loudly creak like a haunted pirate ship whenever we experience windy weather. The creaking noise is caused by the metal-on-metal friction of the steel frame interior walls, as the building moves and twists to accommodate the wind's force. The problem begins when wind speeds are as low as 19 km/h. By 35 km/h, a see-saw creaking noise is evident. By 65 km/h, our flats are uninhabitable. During winter, we are forced to hear this noise for up to three to four continuous days, sometimes followed by a brief reprieve, before the problem can start again with the next storm. This goes on for weeks and it makes our homes unlivable.
You can watch a video recorded in my apartment during an average storm on 7 April 2022.
Low-resolution: http://shorturl.at/csKW9
High-resolution: http://shorturl.at/azAMV
The developers Mace and Realstar believe that this sound is entirely normal, that they are not responsible, and we should live with it.
As the video shows, the sound level of the creaking reaches a very loud 58dB. The storm event on 7 April 2022 was a decent storm, but not remarkably significant, and far from the worst we've experienced. The creaking is always louder at night-time when it can easily wake us up from sleep, and is considerably worse during major storm events like "Beast From The East".
Shared Ownership flats should be built and sold with all the usual protections afforded to buyers on the open market. Creaky Building Syndrome has occurred at neighbouring towers Two Fifty One (built by Laing O'Rourke) and One The Elephant (built by Lend Lease). Both of those towers received remediation works performed by the developer to fix the problem in those buildings. That remediation work was commenced because residents threatened to sue if the problem was not fixed. A similar course of action might prove difficult at UNCLE Elephant & Castle because we have no direct contractual relationship with Realstar or Mace.
The problem that I'm presenting to DLUHC is that while I do think that Shared Ownership in general terms can represent good value for money, there are instances like UNCLE Elephant & Castle where the circumstances lead to a different outcome.
If our estate’s developers refuse to fix the problem, and at this time there appears to be no way to hold them to account, then we essentially bought a white elephant. If the Creaky Building Syndrome is not fixed, then Shared Ownership was not good value at UNCLE Elephant & Castle.
Coming from Australia, I view the UK's leasehold system as a disaster. It is absurd to me that the UK continues to prop up the medieval relic of leasehold when it causes so much misery for so many leaseholders. While leasehold affects all shared ownership flats, we have experienced additional complications at UNCLE Elephant & Castle because we have a hierarchy of landlords, and a head landlord and management company that have imposed arrangements that protect their own interests and only benefit themselves.
Our immediate landlord is Peabody who did not build, nor own, nor manage the estate. Peabody are an intermediate landlord, and merely leaseholders themselves, having purchased only a leasehold interest from the Realstar Group for the interiors of the apartments. Peabody have their own tripartite lease with two Realstar companies that act as the estate's landlord and property management companies. For 5.5+ years, Realstar has used aggressive tactics to keep us at arms-length, which they believe to be their right.
Even though Realstar employs onsite staff 24/7, for 5.5 years Realstar have not permitted us to:
- communicate with the onsite team team regarding our basic enquiries (eg "when are the windows being washed?"),
- raise repair requests for faults in the common parts,
- receive direct updates from Realstar about problems in the common parts.
In April 2020, during the height of the 1st pandemic lockdown, Realstar turned off the water supply to 250+ apartments on 35 floors of our building for 33 continuous hours to urgently stem a leak. Even during this unprecedented situation - that they created - Realstar still did not keep Shared Ownership leaseholders as regularly and thoroughly informed as they provided to their BTR PRS tenants. Shared Ownership leaseholders only received 4 email updates, whereas Realstar provided 13 to their BTR PRS tenants. Shared Ownership leaseholders were not permitted to directly ask Realstar questions during that critical situation, and instead we were directed to Peabody. Shared Ownership leaseholders regularly find ourselves in the humiliating situation of having to ask our BTR PRS neighbours for information about a building problem because Realstar refuses to provide it to us. They’ll directly email us when they want us to collect a parcel, but they won’t directly email us to give us fire safety information, or to tell us that the hot water supply is not working, or to tell us that they want to send an engineer to enter our apartment.
Realstar treats us as "sub-tenants" of Peabody, as if we only had an Assured Shorthold Tenancy, even though we are leaseholders who are obligated to pay 100% of the service charge that Realstar levy. I believe that Realstar’s arrangements breach their obligations as a member of The Property Ombudsman. In fact, Realstar have so vigorously held us at arms-length that they have never even told leaseholders that we have rights to refer unresolved complaints to the ombudsman. But who will hold them to account?
Leasehold adds complication to the already difficult task of holding Realstar to account. I have concerns that our flat's value could suffer if it becomes widely known that our estate's leaseholders ostensibly have fewer rights than leaseholders elsewhere.
Government must continue with the programme for leasehold reform, which has been promised for years but we continue to be kept waiting. If leaseholds cannot be replaced with something like commonhold, then leaseholders need increased rights concerning our service charge payments. The S.20 Consultation requirement is weak. We could, for example, be offered a say in how the property manager manages the estate.
Leaseholders also need a singular ombudsman - the long-promised Housing Complaints Resolution Service - because shared ownership leaseholders like ourselves have the additional complication of having to direct our complaints about intermediate landlord Peabody to the Housing Ombudsman, while directing complaints about Realstar to The Property Ombudsman. For example, when Realstar failed to issue proper notices of entry earlier this year, and breached our quiet enjoyment by sending engineers to all our flats without appointments, they simply blamed Peabody, claiming that Peabody had the responsibility to pass on Realstar's notice of entry. Both Peabody and Realstar are adept at blaming blame each other when something goes wrong, and the ombudsman for one party cannot enforce a decision against the other party. This isn't good enough, and we need a singular ombudsman to whom everyone would be accountable for, and that ombudsman would be able to get to the bottom of the complicated disputes that leasehold creates.
It is manifestly unfair that leaseholders are responsible for 100% of the cost of repairs before they own 100% of the flat. This needs to be reviewed, especially how significant building-wide problems like Creaky Building Syndrome are essentially our burden to fix because Mace, Realstar, and Peabody refuse to take responsibility for fixing the problem, essentially making us 100% responsible for build and design defects beyond our control, without being able to recover costs to remediate the problem.
September 2023