Shared ownership is changing, what do the reforms mean for current shared owners?
The government are proposing changes to lease extensions and nomination periods for current shared owners. This has not yet been approved in parliament but if implemented will have a positive impact for our shared owners.
Lease Extensions for Shared Owners
Under the proposal current shared owners would be given the statutory right to extend their lease by 990 years where the Shared Ownership landlord is also the freeholder. Having a longer lease provides more financial peace of mind and will make it easier for shared owners to sell the property on.
Nomination Period – Resales
The government is recommending a reduction to the nomination period; currently Hightown has 8 weeks to market and identify a purchaser for a shared ownership property. The new reforms will reduce this to 4 weeks and if Hightown have not been able to nominate a buyer within this time frame the property can be advertised and sold as either shared ownership or a 100% sale on the open market.
What do the reforms mean for new shared owners?
If you buy a shared ownership property delivered through the Affordable Homes Programme 2021-2026, which is not excluded because of transitional provisions you will fall under the new model shared ownership lease. The new model lease has not been introduced retrospectively.
A summary of the key changes the new shared ownership lease introduces are detailed below:
• All new homes built under the new model for shared ownership will be issued with a minimum 990-year lease term
• Shared owners will be able to claim a maximum of £500 per year to cover certain repairs, and any unspent expenditure can be carried over for one year
• The minimum initial share purchase has reduced from 25% to 10%
• A new 1% gradual staircasing process and a new valuation methodology
• The standard minimum staircasing has reduced from 10% to 5%
• A new 10-year period during which the landlord will support the shared owner with the cost of certain repairs and maintenance in new build homes
Right to Shared Ownership
The government has introduced the right to shared ownership for tenants who are renting social housing and living in a new home delivered through the Affordable Homes Programme 2021-2026.
If you are eligible, you’ll be able to buy a share in your home between 10% and 75%, helping you to get on the property ladder.
You need to have lived in a new home delivered through the Affordable Homes Programme 2021-2026 for at least 12 months to qualify.