A Shared Ownership Lease
What's in a Lease? Kerry Hicks, Senior Associate at Penningtons Manches solicitors, explains below one of the most frequent questions asked.
Buying your first home will undoubtedly be one of the most exciting yet daunting experiences of your life. The fact that you are buying a shared ownership lease may seem scary but it doesn’t need to be. Just a basic knowledge of what you can expect to see in the lease should reassure you. The lease will be between you and your landlord. It will commonly be for a fixed term of 125 years. It will clearly show the extent of the property that you are buying by reference to a plan. This will include the flat or house and possibly other areas such as a garden, parking space, balcony or terrace.
The lease sets out the contractual obligations between you and your landlord. These are called covenants. Some of the common ones on your part will the monthly payment (on the share retained by your landlord); to pay a service charge contribution which will enable the landlord to maintain the structure of the building and any other areas managed and maintained by your landlord; what you must do if you want to sell the property in the future, particularly up until the point when you have purchased 100% interest in the property. During this time, your landlord has the right of first refusal and the right to nominate a buyer. Additional covenants are included to ensure that all leaseholders act in a good neighbourly way.
Your landlord will normally covenant to maintain and insure the building in which your property is located or the house subject to receiving the service charge contributions from you; to enforce covenants against other leaseholders if requested by you and subject to payment of costs. Your landlord will also covenant not to interfere with your use and enjoyment of the property except in certain circumstances.
The lease will set out what is covered by the service charge and how the costs are recovered from you. It will also detail how you go about buying additional shares in the future should you wish to do so and how the monthly payment is reviewed on an annual basis in respect of the share retained by the landlord at any time.
Rights will be granted to enable you to live at and enjoy the property
When you are ready to take the next step, plenty of help and advice is available from customer services of the relevant social landlord.
Kerry Hicks
Senior Associate, Social Housing, Penningtons Manches LLP