Quiz - how well do you understand your lease?
Understand the key things you should know about your lease. If you are a purchaser, this can help make sure your solicitor has covered all of these points and explained them clearly to you.
The government has released its response to the consultation on the implementation of a new model for shared ownership. The consultation sought views on how to best implement the new model for shared ownership to ensure it can be smoothly adopted by providers and lenders, and effectively support aspiring homeowners.
The consultation response outlined a number of changes to create a new model for shared ownership, including:
- All new homes built under the new model for shared ownership will be issued with a minimum 990-year lease term. Under the current model, shared owners can be issued with a minimum lease of 99 years.
- Current shared owners will be given the statutory right to extend their lease by 990 years where the Shared Ownership landlord is also the freeholder. The government is also exploring options on how shared owners can extend their lease by 990 years when their landlord does not have sufficient leasehold interest to issues a 990-year lease extension.
- Shared owners will be able to claim a maximum of £500 per year to cover certain repairs, and any unspent expenditure can be carried over for one year. Shared owners will be able to claim for the repair of replacement of:
- installations in the flat or house for making use of the supply of water, gas and electricity and for sanitation (including basins, sinks, baths and sanitary conveniences, but not other fixtures, fittings and appliances for making use of the supply of water, gas or electricity), pipes and drainage
- installations in the flat or house for space heating and heating water
In addition to the changes outlined above, the government also announced 4 key differences under the new model for shared ownership. They are:
- Reducing the minimum initial stake for shared ownership properties from 25% to 10%.
- The introduction of a new 1% gradual staircasing process and a new valuation methodology. In addition, the government has also reduced standard minimum staircasing from 10% to 5%.
- The introduction of a new 10-year period during which the landlord will support the shared owner with the cost of repairs and maintenance in new build homes. The current situation is that shared owners, like other homeowners, are responsible for all the maintenance of their property and contribute towards the full cost of repairs from day one.
- Reducing the resale nominations period from 8 weeks to 4 weeks.
The new model will apply to all homes that receive grant funding via the Affordable Homes Programme. It will also apply to shared ownership homes funded via section 106 contributions, however the government has said there will be a transition period to ensure developments already progressing through the planning process are not adversely affected by the new rules.
Planning obligations are normally agreed between a council, the landowners, and developers in a legal agreement called a Section 106 (S106) agreement. These legal agreements are drawn up to make acceptable a development that would otherwise be unacceptable in planning terms. In Section 106 agreements, the local authority can attach conditions to the planning consent to ensure a development benefits the local area.
For more information on the new model for shared ownership, you can read the government’s full response
- Shared Ownership Leases
- I have a shared ownership lease. How is the rent that I pay calculated?
- I have a shared ownership lease. Do I have a right to extend my lease?