Shared owners exempt from 12-month ban on re-letting homes after eviction

Lord Young also stressed that sales of shared ownership homes are more likely to fall through because of limitations on the pool of buyers, sale price and reluctance from lenders due to building safety concerns.

It comes after the government, which had overturned Lord Young’s original amendment in the Commons, supported a compromise version that provided extra safeguards for tenants following talks earlier this month.

Lord Young said: “The group of shared owners that this amendment seeks to protect are principally those who bought a flat in a block that needs remediation but who have subsequently had to move.

“Normally, a shared owner would sell his or her share in the block, but because of the difficulties of selling in a block that needs remediation – because of the safety issues post Grenfell – that has often been impossible, so they have had to sublet.

“Here comes the distinction from all the other landlords: shared owners cannot sublet without express consent from their registered provider, because subletting is banned from their leases.

“Such consent already gives robust protection to their tenants. Registered providers control and approve the rent that is being charged, in line with guidance set by the government, so shared owners cannot evict a tenant simply to jack up the rent.”

Groups supporting shared owners welcomed the exemption from the ban, but highlighted that more needs to be done to support these “accidental landlords”.  

The Shared Owners’ Network said one in five of their members are subletting their flats because the homes are unmortgageable due to the building safety crisis, with some now subletting for more than five years.

A spokesperson for the group said: “We are pleased that the government accepted the amendment to exempt shared ownership leases from the 12-month ban on reletting.

“Such a ban would have had catastrophic consequences for shared owners who are accidental landlords as a result of the building safety crisis. It would have led to people defaulting on their mortgage and losing their home.

“The government needs to deliver rapid and meaningful change to help shared owners who are victims of the building safety crisis.

“This should include changing unfair RICS valuation rules that prevent resales. It should also include funding for registered providers to buy back unsaleable shared ownership flats.

“The forthcoming Social and Affordable Homes Programme is the perfect opportunity to deliver that.”

Sue Phillips, founder of Shared Ownership Resources, said: “It is welcome that shared ownership leaseholders who are accidental landlords will be exempt from the 12-month ban on re-letting if a sale of their property falls through.

“However, for many people, subletting may not be a desirable long-term solution to difficulties in selling their shared ownership property.

“The government should review the success (or otherwise) of existing exit routes from the scheme, and consider whether buyback should play a greater role.”