Shared Owners FAQ
Information for all Rooftop Housing group Shared Owners - your rights and your responsibilities
Information for Rooftop Housing Group Shared Owners
See below for some frequently asked questions regarding being a Shared Owner and what your roles and responsibilities are.
Your lease is the legal contract between you and your landlord and sets out the rights and obligations of both parties. Some of the key elements of a Shared Ownership lease contain the following:
- Your rights as a leaseholder
- Rules and regulations contained in your lease
- The conditions of your lease
There is no automatic right for a buyer through the shared ownership scheme to extend their lease unless they staircase up to 100% ownership of the property or have otherwise come to an agreement with their landlord to grant an extension. If considering extending a Shared Ownership lease, then you should read your lease agreement to see if there is a clause granting you this right.
If there is no provision in your lease granting a right to extend the term, then you may wish to staircase up to 100% to qualify for a statutory right to the extension. If a lease typically runs down to around 75 years or less, it may cause difficulties obtaining a mortgage on the property. A lease extension increases the number of years remaining.
The leaseholder is responsible for the cost and all legal fees associated with extending the lease.
The cost of the building insurance is covered in your service charge. Buildings insurance covers costs for damage to the structure of the property. It usually covers loss or damage caused by fire, explosion, storms, floods, or earthquakes.
You will need to arrange your own contents insurance separately.
Shared ownership leases do not allow subletting and if you are a shared owner you are required to live in your home as your main residence.
The lease makes the shared owner a homeowner who is responsible for all the repairs and maintenance, including internal and external works. If you own an apartment, you will be responsible for maintaining the inside and Rooftop or another managing agent will take care of the main structure of the building and communal areas, which will be paid for through your service charge.
Details of who is responsible for which repairs are detailed within the lease.
A new build property generally has a defects period in which the developer will attend to most faults within the property. This is usually one year from the date the property is built.
Once the defects period has ended, the shared owner is responsible for any subsequent repairs and maintenance costs. Your home is also covered by an NHBC warranty (or equivalent), which covers your home for structural problems for 10 years.
Defects will need to be reported within the defects period.
Please call 01386 420 800 or email Repairs.email@example.com.
Service charges can change from year to year and details of what can and can’t be charged, and the proportion of the charge to be paid by the individual homeowner, will all be set out in the terms of your lease. Your lease should say how service charges are calculated, how charges are divided between leaseholders and whether there is a sinking fund. There are generally no limits on the level of service charges, but the freeholder can only pass on reasonable costs to the leaseholder.
Service charges are payments made by the homeowner to the housing association for the services they provide. Service charges apply to most shared ownership properties and the charge usually includes buildings insurance and a management fee. The service charge is calculated at a monthly rate and typically covers the repairs and maintenance of communal areas, sometimes including grounds maintenance and pathways.
A service charge is used to cover the repairs and maintenance to communal areas. It does not include any maintenance or repair of your home, decoration, improvements, or gardening.
When the lease is first issued the rent that the leaseholder pays is generally calculated at 2.75% or 3% of the part owned/retained by Rooftop.
The rent will be reviewed periodically at the times set out in the lease. Typically, the rent will be reviewed every year. The reviewed rent will be increased in line with any proportionate increases in the retail prices index (RPI).
A sinking fund covers the cost of major repairs that may be needed in the future and provides a way to spread the cost of expensive work that may be needed on your building. Depending on your lease and property it could be used to pay towards external roofs, windows, drains and plumbing systems, parking areas, footpaths, redecorating shared areas and so on. A sinking fund is necessary to ensure that the costs of major renewals and replacements are paid equally by all residents.
If you must contribute to a sinking fund, you usually pay this as part of your service charge and you only have to pay into a sinking fund if your lease says you have to.
All leaseholders are required to notify us in writing of their intention to sell their share in the property. The purchase price payable by the new purchaser is based on the open market value of the property. Unless you staircase to 100%, you will only be able to sell the share of the property you currently own. When you sell your shared ownership lease, the new purchaser is agreeing to take on the terms and conditions within the lease.
To commence the 'resales' process we need to obtain an open market valuation of the property and it is a condition of the lease that you pay for this valuation.
Rooftop will advertise the property for sale, and you can advertise with a local estate agent. Once a buyer has been found we will carry out a financial assessment to verify eligibility and affordability to purchase. Any purchaser will be required to acquire the property subject to the covenants contained in your lease.
You will be responsible for any estate agents’ fees and your own legal costs. You will be required to pay an administrative cost for dealing with the sale. This fee is currently £150.00 plus VAT. You will also be required to pay reasonable legal costs for dealing with the assignment of the lease to the new leaseholder. All fees will be payable on completion via your solicitor and these fees are subject to change.
After your initial purchase you can usually buy further shares in your home. This is known as ‘staircasing’. In some cases, such as in rural areas, you will only be entitled to staircase up to 80% of the value of the property. The process will be carried out in accordance with your lease which you will need to refer to. You are allowed to staircase in tranches, and you will need to refer to your lease for the minimum amount required.
The price you pay for additional shares is based on the full open market value of the property and this may go up and down depending on housing market conditions. The value of your home will be set by an independent RICS surveyor.
As you increase your share of the ownership in the property, your rental payments will decrease. We will revise your rent to reflect the increased share purchased in your property from the time of staircasing completion. If you are staircasing to 100%, known as 'final staircasing', there are terms in your lease that cover these arrangements.
There will be costs involved including solicitors’ fees and valuation fees and an application form will need to be submitted. Please contact our dedicated Sales Team for more information.
You may decide to re-mortgage to obtain a better interest rate or when your current deals comes to an end.
You should advise us that you are intending to re-mortgage, and Rooftop must approve the new mortgage to ensure it meets our requirements.
As with every mortgage there will be associated costs.
If you own a shared ownership property we will need to agree to any changes to the person/people named on the shared ownership lease.
If we agree to the change you will also need to instruct a solicitor to register the changes at the land registry.
If you have a mortgage on the property and the person/ people named on the mortgage is/are changing we will also need to agree to these changes.
You are free to do any cosmetic improvements e.g., decoration, without our consent but you will need written permission to carry out any other improvements or alterations. Please refer to your lease for full terms and guidance. If permission is required, you will need to complete a Notification of Alterations & Improvements form which is available on request.
The entire expense of the alterations / improvements shall be met by the shared owner and the work will need to be carried out by a competent tradesperson and to the entire satisfaction of the Group. All authorised improvements will need be subject to the applicable building regulations and planning permissions and we may wish to inspect the works when complete.
There will be an administrative charge and additional information may be required to support your application.
It will be expected that you do not undertake in any anti-social behaviour while in the property and keep to the conditions outlined in your lease.
The cost of some services that we must provide under your lease are not paid for through the regular service charge and a full list is available on request.
This typically includes work which we are obliged to carry out including resale fees, valuations, assessments, alteration & improvement requests, lease extensions, and any other costs involved in handling all elements of an enquiry or sale.
Reservation fee – This is a £250 fee you will pay to reserve your home. It is non-refundable but when the sales “completes” it will be deducted from the monies due on completion.
Solicitors Fees – A solicitor will be required to carry out the necessary legal work and the fees will vary depending on the solicitor you use. They typically include search fees, land registry fees and other expenses also known as disbursements.
Mortgage Fees – There may be a fee required as part of your mortgage application and valuation. Please refer to your financial advisor or lender for a full breakdown of fees applicable to you.
Mortgage deposit – Your mortgage lender will usually require a deposit. The cost will vary between lender but typically begins at 5% of the share you are purchasing.
Stamp Duty – This is a government tax on buying a home. You should seek the advice of your solicitor who will tell you if the tax applies and how it can be paid.
Other moving costs – Other costs may be incurred throughout the process such as removal costs which can vary. We recommend that you have between £3000 and £5000 available to cover all the fees and costs of moving, including the solicitor and brokers fees.
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