When the lease is first issued the rent that the leaseholder pays is generally calculated at 3% of the part owned/retained by the landlord.
For example if the property is worth £100,000 and the landlord’s share is 50%, the rent paid by the leaseholder will be 3% of the share held by the landlord.
The rent will be; 3% of £50,000 which equals £1,500 per year or £125 per month. The lease will also provide that the rent will increase every year typically by a specified percentage above the upward movement of the Retail Price Index (RPI).
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A shared ownership lease is specifically excluded from this right under the terms of the Leasehold Reform Housing and Urban Development Act 1993, unless the leaseholder owns 100% of the lease.
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You need to examine the lease carefully, but the overwhelming majority of shared ownership leases prevent subletting. The reason for this restriction on subletting is because shared ownership leases are overwhelmingly granted by Housing Associations and leases are offered to persons on the local housing list or to existing tenants of the Housing Association, Local Authority or to key workers public sector workers. You can of course contact your landlord if your circumstances require you to move away from the area or for any other good reason. Please be aware that the landlord has an absolute discretion to allow or to refuse to allow subletting.
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Some versions of shared ownership leases provide that the leaseholder has to give a right of first refusal to the landlord if the property is sold. This may apply even though the leaseholder has purchased 100% of the property under the staircasing provisions of the lease.
Typically, under a shared ownership lease, the landlord nominates a purchaser and the purchase price is determined by an independent surveyor appointed by the landlord.
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A shared ownership lease is specifically excluded from this right under the terms of the Leasehold Reform Housing and Urban Development Act 1993 unless the leaseholder owns 100% of the lease. Once you have acquired 100% ownership in the property this restriction no longer applies.
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The overwhelming majority of shared ownership leases provide that the leaseholder can purchase additional shares in a maximum of three stages until they own 100% of the property. The term used to describe the leaseholder’s right to purchase additional shares is called staircasing.
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