Last updated 21/01/2013
Leasehold & Shared Ownership
The property is owned by a person by way of a lease agreement between the leaseholder and the owner of the land/building (freeholder). The lease permits them to own/occupy the property for the duration of the lease (normally 99 or 125 years). The leaseholder pays to buy the lease from the freeholder or a previous leaseholder. It differs from freehold ownership because they only have the right to occupy the property for a fixed time and the property is returnable after the expiry of the period.
Shared ownership is a type of leasehold ownership. Schemes let people buy a share in a property rather than buying all of it, so they only take out a mortgage on what they can afford in relation to their savings and salary. They then pay rent on the share they haven't bought. Shared owners can increase their share over time until they own the whole property. Shared owners have fewer rights than other types of leaseholder and can be evicted in the same way as a rented tenant if they don't pay their rent.
The rights and responsibilities of the leaseholder are set out more specifically in their lease and all leaseholders should go through the lease with their solicitor before buying the property, to ensure that they fully understand it. As each lease is different depending on the property, the rights and responsibilities are usually slightly different too. Some things are always the landlord's responsibility, for example providing buildings insurance. This is then charged to tenants through their service charge. Tenants must ensure they have contents insurance as they are responsible for all maintenance inside the property.
Leaseholders should receive their copy of the lease from their solicitor when they buy the property. If this has been lost we can provide a replacement copy but there is a charge of £25 + VAT to cover our administration costs.
There is a procedure to follow when selling a leasehold property. Leaseholders who are thinking of selling their property should contact the leasehold team as soon as possible to ensure the sale complies with the lease. If we are not contacted initially it may case problems later or delay the sale and cost the leaseholder money.
This is the term for buying extra shares of a shared ownership property. Almost all shared owners are eligible to staircase to at least 70% however it is specified in their lease whether they can staircase completely (100%) or just to a certain percentage. Many retirement properties or properties in rural areas do not allow staircasing to 100%.
Any enquiries about staircasing should be sent to the leasehold team.
When a request is received will double check the lease and rent account to ensure the shared owner is eligible. Eligible shared owners will be sent our staircasing application form. If there are arrears, the shared owner will be asked to pay these off before the application is processed.
The application will take approximately 6 - 8 weeks to approve as long as all the information needed is sent with the application form. The shared owner will have to pay for a valuation from a RICS qualified surveyor (not an estate agent) and pay their legal costs.
This is also called downward staircasing and is when we buy back some, or all, of a shared owners shares in their property. It is only available as a last resort to shared owners who are in severe financial difficulty.
If leaseholders are facing financial difficulty, particularly if they are struggling to pay the mortgage or rent, we strongly recommend they seek professional advice before the situation worsens and their home is put at risk. Our money advisors can assist with money/debt problems or offer help applying for benefits.
Flexible tenure cannot be used to pay off credit cards or any other debt. It will simply pay off some, or all, of the mortgage. Shared owners do not have a right to flexible tenure and it is offered purely at our discretion.
Please contact the leasehold team for further information and an application form.
Repair and maintenance responsibilities for leaseholders are set out in the lease. In most cases leaseholders in flats are responsible for everything inside the flat but we will be responsible for the external structure of the building and any common areas. The costs of this work are then recovered through the service charge. Shared owners who live in houses are normally responsible for all repairs and maintenance to their house.
All leaseholders must ask for our consent before they can make any alterations or improvements to their home. This does not include redecoration but would include bathrooms, kitchens, windows etc. There is an administration charge for consent. The leasehold team can give further information about this.
Shared owners are not normally allowed to sublet. This is because shared ownership schemes are government funded and we have to ensure this funding is not abused to make a profit. There are some exceptional circumstances when we may allow shared owners to sublet. The leasehold team can give more information on this.
Some other leases also have restrictions on subletting. When considering subletting leaseholders should always contact the leasehold team to confirm what their lease requires. If you are subletting your home we will require a copy of the tenancy agreement you will be using and contact details in the UK for you or someone authorised to act on your behalf.
Leaseholders who own 100% of their property normally have the right to a lease extension. To apply for a lease extension leaseholders need to find a solicitor to act on their behalf. We are not able to give you any advice about prices and leaseholders will probably need to arrange a professional valuation. A solicitor will be able to advise about this further.
Shared owners do not have the right to a lease extension but we will normally agree an extension where the lease is so short that it would affect the ability to mortgage the property. Contact the leasehold team for further information.
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Updated by Emily Patterson on 21/01/2013 11:29:27
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Updated by Elesh Makwana on 02/12/2011 11:56:47
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Updated by Admin on 01/12/2011 15:06:19
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