Enfranchisement and lease extensions for shared owners

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20 April, 2021

The Housing (Shared Ownership Leases) (Exclusion from Leasehold Reform Act 1967 and Rent Act 1977) (England) Regulations 2021 (SI 2021/212) (Regulations) were made on 1 March 2021 and came into force on 1 April 2021. The Regulations amend Schedule 4A of the Leasehold Reform Act 1967 (LRA 1967) and section 5A of the Rent Act 1977 (RA 1977) in England.

Schedule 4A of the LRA 1967 excludes certain housing association and other shared ownership leases from the right to enfranchise (purchase the freehold) or claim an extended lease under Part 1 of the LRA 1967. The LRA applies to houses, not flats.

One of the conditions of exclusion relates to the premium paid by the tenant on grant of the lease.

Previously, to fall within the exclusion, a shared ownership lease had to be granted at a premium of no less than 25% of the value of the house or the cost of providing it (or such other percentage that might be prescribed). The Regulations reduce this figure to 10%.

The Regulations make the same change to section 5A(2) of the RA 1977, which exempts certain shared ownership leases from the definition of a protected tenancy.

These changes have been introduced to reflect the government's new shared ownership model, which allows purchasers to buy an initial share of 10% of a property.

Unfortunately, the new Regulations do nothing to resolve the question of whether a shared ownership lease is a "long lease" for RTM and other regulatory issues.

For more information contact Emily Jordan in our Housing & Regeneration department via email or phone on 01257 240850. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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