Adding years

The Housing Corporation granted the first model shared ownership leases in the late 1970s. Originally granted for a term of 99 years, they have around 70 years left to run.

Prospective purchasers may have difficulty obtaining mortgages for such ‘short’ leases, so lease extension claims are likely to become increasingly common. Registered providers need policies and procedures to deal with such applications, particularly where they are not dealt with by agreement between the landlord and leaseholder.

So, what are the issues? It is generally considered, but not yet certain, that leaseholders with less than a 100 per cent share have a statutory right to extend their lease by 90 years.

The leaseholder first serves a notice of claim which states the price, based on a statutory formula. The landlord must serve a counter notice by the date in the notice (not less than two months).

If notice is not served then the leaseholder is entitled to a new lease at the proposed price, which is likely to be less than the registered provider would propose.

A leaseholder can serve a notice and pass the right to their purchaser, so the new owner does not have to wait two years before they can serve
a notice.

Registered providers need to have procedures in place to ensure that as soon as a notice is served they instruct the right specialist valuer to advise on the price, and serve the counter notice on time.

Otherwise registered providers will be selling leasehold interests at discount.

Simon Bagg is a solicitor in Lewis Silkin’s social housing team
Simon.bagg@lewissilkin.com

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