Shared Ownership the terms of your lease
All repairs and maintenance to the home are your responsibility, regardless of the share you own. Most brand new homes come with a 1 year warranty period for defects and a longer warranty to cover any structural problems caused by poor workmanship. The housing provider you buy from can explain the warranties available on the home you want to buy.
When you buy a flat, the housing provider or manager will generally be responsible for any communal parts of the building and grounds and you will be responsible for all repairs and maintenance to your own flat. You pay a service charge to the housing provider which is used to cover the costs of maintenance and decoration to communal areas.
You are free to decorate your shared ownership property. The housing association will not contribute to decorative improvements. Your shared ownership lease should have details about major alterations to the property, e.g. new flooring, structural changes, which will have to be authorised by the housing association before work commences.
Leasehold ownership of a flat or house is simply a long tenancy, the right to occupation and use of the flat or house for a long period – the ‘term’ of the lease. This will usually be for 99 or 125 years and the flat or house can be bought and sold during that term. The term is fixed at the beginning and so decreases in length year by year. Thus, if it were not for inflation, the value of the flat or house would diminish over time until the eventual expiry of the lease, when the flat returns to the landlord (although an assured tenancy would then become a possibility).
The leasehold ownership of a flat usually relates to everything within the four walls of the flat, including floorboards and plaster to walls and ceiling, but does not usually include the external or structural walls. The structure and common parts of the building and the land it stands on are usually owned by the freeholder, who is also the landlord. The freeholder is responsible for the maintenance and repair of the building. The costs for doing so are recoverable through the service charges and billed to the leaseholders. A leasehold ownership of a house usually relates to the whole building both internal and external and possibly a garden and driveway. Typically a leaseholder of a house would be responsible for the repair and maintenance of the whole building.
The landlord can be a person or a company, including a local authority or a housing association.
The shared ownership lease sets out the rights and obligations of both the landlord (i.e. the housing association) and tenant (i.e. the shared owner). The housing association has a contractual right to ensure that the shared owner complies with the terms of the lease. A shared ownership lease is where the leaseholder has purchased a share in the equity and pays rent on that share retained by the landlord.
Typically a shared ownership leaseholder will own 25%, 50% or 75% of the property and pay rent on that part of the property owned by the landlord. The actual proportion owned by the leaseholder and the landlord can vary from the examples above.
No, shared ownership leases do not allow you to sublet your home. This may also be a condition of the mortgage. In some cases, under exceptional circumstances, you may be able to sublet for a specified period. You will be required to obtain written permission from your housing association.
You should check with the housing association you are purchasing the property from, but most shared ownership leases allow this. Please note, the income you will gain from taking a lodger will not be taken into account when assessing your affordability for a property, you must be able to afford to purchase the property and make the monthly costs independently of the income from a lodger.
If you live in a flat, you will usually be responsible for repairs inside your home, and the housing association will be responsible for repairs and maintenance of the structure of the building and any communal areas (e.g. lifts, corridors, shared external areas).
When a housing association buys back shared and allows you to rent the property this is known as flexible tenure. Flexible tenure is rare and is only granted in exceptional circumstances. You should approach your housing association if you do wish to sell back some or all of the shares in your shared ownership home.
If you are struggling to make your monthly payments you should let your lender and housing association know. Your housing association will try and help you manage your situation. In some circumstances the housing association may buy back shares from you in a process known as flexible tenure, but this is rare. If necessary, and if no other recourse is available, you may have to sell your property.
Yes, the rent paid to the Housing Association on the share not owned by you will be reviewed periodically, usually every year, and will be increased in line with any proportionate increase in the Retail Prices Index plus an amount, typically between 0.5% and 2%. Note that the rent is reviewed on an “upwards only” basis and will not go down when reviewed. You should always check the terms of your lease carefully before you purchase a shared ownership property for details of possible rent increases.
You should check the terms of your lease. You must have the landlord's permission in writing before you make any alterations to your property. However, they should not be able to withhold permission unreasonably.
Buildings insurance is be the responsibility of the Freeholder – quite often the housing association. The cost will often be included in the service charge. Contents insurance, which covers all your furniture, carpets, white goods and personal belongings, is the responsibility of the person living in the property – it is not compulsory to purchase but it is advisable.
20th November 2017
Is saving for a deposit holding you back from moving in to your own home? Saving money can be hard, but with these ten money saving apps available at your fingertips, you’ll soon discover how to put away the pennies and you’ll be ready to move in no time.
20th September 2017
Shared Ownership Week returns for its fifth year, 21st - 27th September. Shared Ownership week raises awareness this home ownership scheme which offers a life line to thousands of first time buyers.
19th September 2017
Countdown to the London Home Show Autumn 2017: Our sponsor Crest Nicholson give you the low down on their fantastic development Dylon Works, available via Help to Buy London.
18th September 2017
Countdown to the London Home Show Autumn 2017: Hear Marco and Olga's story about buying their first home for their young family with Notting Hill Sales.