Government proposals to reform the shared ownership model include all new leases being granted for 990 years instead of the current 99 or 125 years.
Existing shared owners would be given the right to extend their lease to 990 years in situations where their Registered Provider landlord is also the freehold owner of the property.
Further details on this point are yet to be announced and so it is unclear whether the shared owner would need to pay a premium for the extension, whether any premium is capped or whether any associated fees would also be capped.
Most lenders will not lend on a lease with less than 85 years left to run and where there is less than 80 years left to run something called ‘marriage value’ is included in the calculation of the premium which can increase the sum significantly.
Other leasehold extension reforms include the abolition of ‘marriage value’, so if a shared owner still has a few years left before the lease term dips below 80 years, they may delay their application to extend in order to see which of the above scenarios applies as it could potentially save them money.
How can Tozers help?
Our Affordable Housing team have over 25 years’ experience in this sector, forming close working relationships with their housing clients. To find out more about the areas they advise on and their bespoke services please visit their hub page or contact a member of the team.
