The following Local Government guidance note Produced in partnership with Kevin Long of Hackney Community Law Centre provides comprehensive and up to date legal information covering:
Through shared ownership (SO) the purchaser buys a share of the property and pays rent on the remainder. Additional shares can be bought and the equity share increased by what is commonly known as staircasing, until the property is owned outright. The purchaser buys an initial share in the property of between 25% and 75%. Additional shares can be purchased in tranches of 10% to increase the share owned up to 100% (final staircasing).
The premium payable on the grant of the lease (ie the initial share) must be equal to the relevant percentage of the market value of the property as assessed by an independent Royal Institute of Chartered Surveyors qualified valuer.
To ensure the shared ownership lease is acceptable to mortgagees, Homes England (HE) has produced a capital funding guide which includes standard model documents for flats and houses.
Providers need not follow the model lease but all shared ownership leases must incorporate the HE’s fundamental SO clauses. There is no set lease term but to qualify for HE grant funding it must be at least 25 years longer than the mortgage. The model lease specifies a 99-year term.
SO leases are exempt from the right to purchase the freehold under Leasehold Reform Act 1967 (LRA 1967).
Rent is payable on the rental share of the property,
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