The purpose of shared ownership Lease’s is to enable a potential buyer who cannot afford the full purchase price of a flat to buy a percentage interest in the Lease at the market price and then pay rent to his or her Landlord, who is often a Housing Association, for occupying the part that he or she does not “own”.
As the buyer’s finances improve, the shared ownership leaseholder can “staircase” up and increase the amount of equity he or she owns up to a 100% interest.
There are Mortgage lenders that do assist, and mortgages have been created to assist these arrangements. The Leaseholder pays a full share of the contribution toward the service charges payable for maintaining the building.
The buyer may buy any size of share so long as the final outright purchase of the home is completed in four or less stages.
Homes and Communities Agency (HCA) may require and need written notification that the buyer would like to purchase further shares and that the buyer requires a valuation of the property to be carried out.
The property solicitors will liaise with HCA to arrange for an independent valuation of the property by a RICS (Royal Institute of Chartered Surveyors) qualified valuer to be carried out at its earliest. The other option is that the buyer could also instruct their own (RICS). This will be used to set the value of any extra share you wish to purchase. The buyer will have to pay for this valuation.
The valuation carried out will calculate the current market value of the home, however, it will not take into account any major improvements nor alterations that have been carried out.
The HCA will require a payment to be made in respect of the valuation fee. Once received they will then contact the buyer and send to the buyer the valuation report in writing. The buyer will then have a period of three months to purchase any extra share on the property.
Stamp duty may be payable on the remaining shares depending on whether you paid duty in full when you purchased your initial share.
Where the buyer is/are purchasing further shares but are not purchasing 100% of the shares in their property, this is referred to as ‘intermediate staircasing’.
When the buyer purchases all of the remaining shares in the property, obtaining 100% ownership, this is referred to as ‘final staircasing’. If the buyer resides in a house or bungalow they will be able to apply for the freehold. At that point, the buyer would then cease to own the lease and would own the free hold upon completion.
For more information and assistance please contact us.
For more information contact us at 7 Church Street, Kidderminster, DY10 2AD (Tel No 01562 702655 or email info@hb121solicitors.co.uk.
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If you need any advice or assistant in Property matters, please contact us on 01562 702655 or email at info@hb121solicitors.co.uk
