Information About Leasehold Homes
What is leasehold?
To put it merely, leasehold ownership is a long occupancy. Your lease will give you the right to inhabit and utilize the home for a longer duration - or the 'term' of the lease.
The regard to the lease will be repaired at the start, decreasing in length each year. Therefore, if it were not for inflation, the value of the flat would diminish gradually up until the ultimate expiry of the lease, when the flat returns to the proprietor, although this goes through some rights to remain as an occupant in particular scenarios. The property owner can be an individual or company, including a housing association or local authority.
The leasehold ownership of a flat normally connects to whatever within the 4 walls of the residential or commercial property, consisting of floorboards and plaster to walls and ceilings, but does not generally consist of the external or structural walls. The structure and common parts of a structure, as well as the land it stands on, are generally owned by the freeholder, who is likewise the proprietor. The freeholder is accountable for the maintenance and repair of the structure, with expenses for doing so being recoverable through the service fee which are billed to the leaseholders.
When referring to the leasehold ownership of a house, this normally associates with the entire structure - both internal and external - and can consist of a garden and/or driveway. Typically, the leaseholder of a house would be accountable for the repair and upkeep of the whole building.
What is a Shared Ownership lease?
For those who are unable to purchase a home on the open market, Shared Ownership makes it possible for buyers to buy a percentage of a residential or commercial property while paying lease on the staying share to a property owner.
Up until recently, the terms for Shared Ownership leases have actually been set at 99 or 125 years however under the new Shared Ownership model as part of the federal government's Affordable Homes Programme, rents can be encompassed 999 years as requirement. The home can be purchased or offered during that time.
Those who buy a home through the Shared Ownership scheme will have a right to purchase additional shares in their residential or commercial property through a process referred to as staircasing and, in many cases, can go on to purchase 100% of the residential or commercial property. At this point, the buyer will become the outright owner.
Most Shared Ownership leasehold residential or commercial properties are granted by housing associations as part of their homeownership program. Such leases are nearly constantly in a format approved by the Homes and Communities Agency (HCA, previously the Housing Corporation).
For information about the differences between a Shared Ownership lease and a common long residential release, we would advise visiting the main LEASE site.
Shared Ownership leases: FAQs
I have a Shared - how is the rent of the owned share computed by the property owner?
When the lease on a Shared Ownership home is very first granted, the rent is usually determined at 3% of the equity owned by the landlord/freeholder. For example, if the residential or commercial property is worth ₤ 100,000 and the share owned by the leaseholder is 50%, the lease will be 3% of the staying share that's held by the property owner. 3% of ₤ 50,000 would therefore equate to ₤ 125 monthly.
The lease will likewise provide that the rent will increase every year generally by a defined portion above the upward motion of the Retail Price Index (RPI).
Can I increase my share of the equity in the residential or commercial property leased to me?
The overwhelming majority of Shared Ownership leases offer that the leaseholder can purchase additional shares - with most able to buy up to 100% of the residential or commercial property. The term utilized to describe the leaseholder's right to acquire additional shares is called staircasing.
Do I have the right to extend the lease on my Shared Ownership home?
A Shared Ownership lease is particularly left out from this right under the terms of the Leasehold Reform Housing and Urban Development Act 1993, unless the leaseholder owns 100% of the lease.
Can I sublet my home?
While you ought to constantly refer to your lease for exact terms and conditions, the huge bulk of Shared Ownership leases do not permit subletting.
However, if your situations change (for instance, if you are needed to briefly move abroad for work) then you can call your landlord to discuss your options. Please know that the landlord has a last word on permitting or refusing subletting.
Do I have any commitments to the property owner if I want to offer my share of the home?
Many Shared Ownership leases describe that the leaseholder needs to offer a right of first refusal - or a 'election period' - to the property owner if they wish to offer their home. Under a Shared Ownership lease, the proprietor generally nominates a buyer and the purchase cost is identified by an independent surveyor designated by the landlord.
This election period is usually around eight weeks, although this can differ depending upon the supplier. If the property owner is unable to offer the home during this time, the leaseholder is frequently allowed to then offer the home privately or through an estate agent of their choice.
Does leasehold apply to personal sale flats or just those offered through Shared Ownership?
Most flats, regardless of period, are offered as leasehold residential or commercial properties with the freehold held by the property owner - this will frequently be a local authority or housing association.
If I have a Shared Ownership lease, do I have the right to take part in a collective purchase of the freehold in my structure?
A Shared Ownership lease is particularly excluded from this right under the regards to the Leasehold Reform Housing and Urban Development Act 1993 - unless the leaseholder owns 100% of the lease. Once you have actually obtained 100% ownership in the residential or commercial property, this restriction no longer applies.
To find out more about Shared Ownership leaseholds, please check out the official LEASE site. LEASE are an independent body who provide complimentary advice on domestic leasehold (that is, a flat or home with a lease longer than 21 years) and park homes law. All of their advisors are legally certified.