Shared ownership lease

Baffledlass

Hi everyone, we own 85% of a shared ownership house and are now looking to buy the remaining 15%. We knew there was a short lease left when we bought it and were no looking to. It the remaining 15% before we hit 70 years as our mortgage lender won’t lend on anything less.  I’ve just noticed that the commencement date of the lease on our house is 2 years before the property became a leasehold property (when it was bought as a shared ownership by a housing association).  The lease is dated May 1998 but the “commencement date” is June 1996.  I don’t understand how this could be possible. The lease only came into existence when the housing association bought the property in 98.  Could this likely to be an administrative error at the time of drawing up the lease? If it is really 1996 then we’re goosed as we’re now down to 69 years left on the lease:/ Would be grateful for any thoughts or experience on this matter, thank you!

eddddy

With many (most?) Housing Association shared ownership leasehold houses, the Housing Association  automatically transfer the freehold to you when you staircase to 100% ownership.

In which case, you would want a mortgage for a freehold house - which shouldn't be a problem.

Does your lease mention anything along those lines?

Baffledlass said:

The lease only came into existence when the housing association bought the property in 98. 

Or are you saying that the Housing Association aren't the freeholders of the house?

So instead they bought a leasehold house - which makes the Housing Association Head leaseholders, and you a sub-leaseholder?

Baffledlass

Thanks so much for your reply. The house was bought on the open market (under the DIYSO scheme). It’s on an estate of leasehold houses, all with 999 years lease. When the HA bought it in “98 they drew up a second lease for just 99 years for the first shared ownership purchaser.  They do allow staircasing up to 100% and will hand over freehold at that point. So it’s a very good point you make that maybe the mortgage lender would be willing to lend under those circumstances. When we took out the mortgage for the 85% share we mentioned that we’d like to buy the remaining shares at some point and the advisor did say to make sure we did it before lease dropped below 70 years. However, I wonder if the point you’ve made hadn’t occurred to her - as it certainly hadn’t occurred to me. Thank you for the suggestion I will take it forward to the bank!

eddddy

Perhaps a good starting point would be to check with the HA that you can staircase to 100% and have the freehold transferred simultaneously. (i.e. both things happen on the same day - and you don't have to wait for the freehold transfer to happen later.)


You can try talking to the bank, but maybe don't be too surprised if the person you speak to doesn't know much about how shared ownership leases work.

Maybe once the HA has confirmed, you could say to the bank "I currently have a mortgage for £x on a 85% share of a shared ownership leasehold house. I will shortly become the freehold owner of the house same. So I will then require a mortgage of £y on the freehold house instead. What process do you want me to follow to arrange that mortgage?"


Or alternatively find a mortgage broker who specialises in shared ownership property. 

Baffledlass

Thank you, that’s a very smart way for me to approach the bank, I wouldn’t have thought of putting it that way but that might make all the difference. Plus checking whether the freehold happens on completion is another very good point. Have you any thoughts on why the lease would be dated 2 years before the house came into the HA ownership? Prior to that the house was privately owned and just had the same 999 lease that covers the whole estate. I’ve looked online and can’t find any situation similar so I wonder if it’s an admin error? The original HA was taken over by the current one many years along with their own solicitors so I doubt they’ll have an answer.

user1977

Not unknown for a lease to be backdated to prior to the property even being built - I think it's so that leases e.g. across a whole development are harmonised rather than each property having its own term, rent review dates etc. So I think more likely to be deliberate, rather than an error which everybody has overlooked so far.