Shared Ownership Lease Extension

Poppy1505

I own 25% of a shared ownership house. The lease has 61 years remaining. I am looking to extend the lease as I don't think I can sell without doing this. The issue wasn't explained when I bought 6 years ago. I am really worried about how much this could cost and wondered if anyone had experience of this please. 

princeofpounds

Yes lots of people have experience, but unfortunately not all of it is good. That doesn't mean you have a problem, but you need to find out.

Shared ownership properties are exempt from the right to pursue a statutory lease extension (i.e. access the Tribunal to extend the lease on terms and a price defined in law). This means that you can only extend your lease through the informal route of negotiation, by talking to your freeholder/co-owner (presuming they are the same body).

They do not have to offer you an extension, and they can demand any price they like. Some of them have enlightened policies, and will allow you to extend the lease based on a RICS valuation, for example. Others do not, and simply refuse unless you get close to or actually achieve staircasing to 100% ownership.

It's not quite right to say you can't sell, but practically speaking that may be the case. Mortgage lenders will usually not lend on a lease that is so short, so you can only sell to cash buyers who would demand a big discount. Unfortunately because your SO co-owner will have a veto over your marketing price, that's something you usually can't offer. If you don't have the resources to staircase to 100% or whatever limit the freeholder demands, then yes, you're kind of stuck.

So step one is to find out what that policy is. 

Can you also tell us the approximate value of your property, and your ground rent terms? That might help us estimate how much it could cost IF you are allowed to do it, and IF they use the statutory formula as a basis for the valuation.

Then we have to ask how you ended up in this situation. Did you manage to buy with a mortgage somehow? I would presume not. Also, are you 100% sure this was never discussed with you by your solicitor - they didn't even send you a piece of paper with some explanation about this? This is precisely the sort of thing they should have flagged at the time and you may have a case against them. However, don't immediately leap on that because complaining, reporting to the regulator and/or suing a solicitor can be a tough and uncertain process - they may well be able to point to a piece of paper they gave you that does explain some of this, even if it wasn't made clear at the time. 

Finally, this is becoming a political issue I think, as people start to realise the 'traps' that were built into many SO schemes. The usual excuse is that it encourages staircasing, but of course if you don't have the resources that's not much use, is it? So it may be something you want to complain to your MP about in a letter too.

Poppy1505

Thank you for your reply, that's really helpful. The housing association are going to appoint a RICS surveyor and then send me an offer letter. I only became aware of this issue after watching the Panorama programme recently. I now realise the property would not be mortgageable. 
I did get a mortgage through Santander when I purchased the 25% and went through a financial advisor. 
It's a two bed semi-detached house, I don't pay ground rent and I don't know what it will be valued at, I would think around £200,000.
I was aware of the lease but not the extent of the issue. I recall trying to obtain information from the housing association and they reassured me "it could cost hundreds but not thousands to extend it". I should have looked into this further but at the time was grateful to have found an affordable property that gave me more stability than renting. I could definitely not afford to staircase to 100%.

Puddings

I'm shared ownership with a housing association and their policy is to stick close to the statutory route. My flat currently has 83 years remaining and I've just been quoted £6782 plus theirs and my legal costs. Flat valued at £171k with ground rent of £250 a year. I started a thread about this a couple of weeks ago if you can find it (on my phone so can't link) and someone posted a helpful link to an online lease extension calculator which showed my estimate to be about right. 

Poppy1505

Thank you, I will have a look. It sounds as though it could be a lot more expensive than I'd originally anticipated, there are only 61 years remaining on the lease. It isn't a flat so I don't pay ground rent but I am unsure whether that makes a difference to the cost of extending the lease.