PLEASE READ BEFORE POSTING: Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.
We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Shared ownership lease extension restrictions

Options
Hi all, I wonder if anyone has experience of this.
I am looking to “purchase” a shared ownership flat, going in at a 25% share. The flat was originally sold in 2010 so I am purchasing it as a resale, and there are approx 114 years left on the lease. I'm buying it on my own in London and it's unlikely I would be able to staircase to 100% - I would either need to inherit c. 300k (extremely unlikely); get a pay rise of c. £30k so I could borrow that much (extremely unlikely, especially now in the Covid climate); or find a wealthy partner and marry them (not currently on the cards and also not what I see as the purpose of marriage!!)

The HA is named as the landlord on the lease, but there is also a head lease, with a superior landlord which is a property developer, and the HA is named as tenant on the head lease.

I appreciate that there is still quite a long term left on the lease and I wouldn’t need to worry about extending it for at least 25 years, however I am concerned that I may not ever be able to extend the lease. First of all because as a “shared owner” I have no legal right to do this unless I own 100% of the property, which I may not ever be in a position to do; and secondly because the HA might not have the ability to grant this either. The guidance on their website says:

“Shared ownership leaseholders do not have a legal right to extend their leases. However we wish to give these leaseholders the same choice as 100% lease owners. This procedure explains the circumstances in which [Housing Association] will allow shared owners to extend their leases and its ‘informal’ procedure for doing so.

Upon receipt of an initial enquiry we will check if [Housing Association] is the freeholder. Where [Housing Association] owns a head lease we check whether [Housing Association] is the immediate landlord and that the head lease has a long enough term remaining to be able to grant the lease extension. In cases where [Housing Association] only holds a head lease which does not have a sufficient term remaining it will not normally have a legal right to extend its head lease and may therefore be unable to extend the underlease.”

And in another place on the housing association’s website it says:

“We’ll check that we’re both the freeholder and the immediate landlord, and confirm the lease has a long enough term remaining for an extension. If we don’t own the freehold, we don’t have the legal right to extend your lease.”

The term remaining on the head lease is about 113 years.
If it’s basically impossible for me to extend the lease then it makes no sense to buy this property and surely it would be impossible to sell in the future?

I have queried this with my conveyancer and will post an update on here, but if anyone else as knowledge or experience on this area it would be appreciated! Right now this feels like a big red flag and I shouldn't go ahead with it.

Comments

  • Update from my conveyancer on this:

    "A shared ownership lease of a house does not qualify for the right to purchase the freehold, under the provisions of the Leasehold Reform Act 1967, if there is a provision in the lease for the freehold to be transferred on the purchase by the leaseholder of the remaining share in the property (referred to as the final staircasing). A shared ownership leaseholder of a flat only qualifies for the statutory right to extend their lease as the holder of a “long lease” if they have “staircased” up to 100% ownership. However, the landlord may have their own policy of allowing lease extension where there is less than 100% ownership. Leaseholders would need to check with their landlord for their own procedure.

    In your case, [housing association] is the superior landlord and not the Freeholder so in order to extend your own lease, [housing association] must have a sufficient term remaining under their headlease. If they do not have this then it may mean they have to extend their headlease with the Freeholder first before they can extend your underlease.

    I would suggest that you speak with [housing association] directly to confirm what their procedure is in this instance. This will help you make a decision on whether to proceed or not."

    I'll post again when I hear back from the HA. Ultimately though it seems that I am essentially "buying" a lease which I have no guarantee I can extend.


  • rik111
    rik111 Posts: 367 Forumite
    100 Posts Name Dropper
    If they do grant you a lease extension it could work out very expensive plus you would be liable for solicitors fees for all three parties.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.9K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.5K Spending & Discounts
  • 243.9K Work, Benefits & Business
  • 598.8K Mortgages, Homes & Bills
  • 176.9K Life & Family
  • 257.2K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.