What do shared owners want? Part 1

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Shared owners want reform of lease extension charges and premiums…

The topic of lease extension has acquired greater significance since the Government announcement on 7 January 2021 that large scale reforms to home ownership would include legislation to give millions of leaseholders a new right to extend their lease by 990 years and reduce ground rents to zero. While reform is overdue, these proposals will do nothing to help existing shared owners who were sold nominally ‘affordable’ homes with short leases and who do not have access to statutory routes to lease extension.

I asked people who’ve purchased shared ownership homes about their experiences of lease extension – via social media – and compiled the responses into a formal report with recommendations. This is the first of three articles summarising themes from that report. The next two articles will focus on lease extension in relation to:

  • formal and informal routes;
  • staircasing;
  • selling shared ownership homes; and
  • schemes for over 55s.

An ad-hoc informal approach can’t substitute for well-funded, rigorous research. Nonetheless, some key themes and distressing stories emerged which warrant greater attention. A selection of quotes from shared owners – and some key recommendations – follow. The full report can be downloaded at the end of this article.

Shared owners say:


“I asked the housing association about lease extension. Their only reply was ‘get a valuation’”.


“I am a retired nurse who bought a ‘shared ownership’ flat in London in 2007. 77 years on the lease left. In December 2020 my housing association charged me £420 for a valuation only to tell me the lease extension would cost £24,000+. As a pensioner paying £1,000 a month rent/mortgage this is way out of my reach”.


“When I bought the flat there was no mention of it coming with a short lease or of the need to extend the lease. I found out by speaking with friends who told me about the problems having a lease shorter than 80 years would bring.”


“I am currently having to try and go through the lease extension process with [my housing association] as I am at 81 years remaining on a 99 year max length lease. Unfortunately this wasn’t something that was told to me that I would have to do this when I purchased the house.”


“I’m currently in the process of selling my SO home of 13 years .. to go to a freehold property. The importance of the lease has NEVER been called out either at point of sale or when I’ve come to sell it. I’m hopeful this doesn’t jeopardise our sale. It’s a 50% share with 86 years remaining.” 


“We’ve never had any communication from [our housing association] about lease extensions. They send us a statement of service charges every year. Why don’t they include a statement of the remaining lease length alongside an explanation of the implications and options?”


“I think [my housing association] could do more to remind tenants on their annual service charge statements. Even if no action is taken, it brings it to the forefront of their mind to start planning for it.”


“It’s not equitable to pay 100% costs of a lease extension when you have a 10 – 20 – 30 – 40% share.”


“I bought my shared ownership flat in 2006, on a 99-year lease. There was no mention at the time from either my housing association, or from the solicitor I used on their recommendation, that I would need to extend the lease…. I have not budgeted for lease extension because until a couple of years ago I didn’t know I had to, and I am now in a position where to extend my lease would be prohibitively expensive.”


“The lease was never flagged to me by the housing association or the costs involved and it was sold to me at 75 years. I own 35%. Well, to clarify I lease 35%, I don’t own anything!”


Key Recommendations

  1. Shared owners pay only their proportionate share of the lease extension premium (and of all costs).
  2. Lease extension to 990-years with ground rents reduced to peppercorn as standard for all shared owners; with retrospective application for legacy shared owners with short leases for an affordable, nominal, flat fee of not more than £2,000.
  3. The Zucconi precedent (a change in the method for calculating the cost of leasehold premiums once fewer than 80 years remain on the lease, which can more or less double the cost compared to pre-Zucconi) not to be taken advantage of with immediate effect, with recompense to shared owners who’ve already paid a lease extension fee calculated taking advantage of the Zucconi precedent.

Additional Recommendations

Valuation fees

Shared owners are charged, what to some at least are significant fees, for valuations for lease extension purposes in some cases only to discover, when they receive the valuation, that they can’t actually afford to extend.

  • Signpost shared owners to online leasehold extension calculators in order that they can gain an indicative estimate without any initial outlay.
  • Ensure that valuation fees are justifiable and transparent.

Leasehold Extension Premiums

Shared owners emphasised problems with both transparency and affordability. Some shared owners may not have proceeded with the purchase of a shared ownership home had they known, at the point of sale, about the need to extend a short lease. Some (many?) shared owners cannot afford to extend their lease.

  • Shared owners should pay only their proportionate share of the costs of lease extension, including the premium.
  • Full transparency from housing associations on potential, long-term costs of shared ownership, including lease extension; and on tenure (assured tenancy).
  • Total lease length, and years remaining on lease, included in sales particulars.
  • Annual statement of years remaining in total and years remaining until the 80-year threshold, with explanation of significance of 80-year threshold.
  • Access to reverse staircasing if shared owners find that not being able to afford lease extension will leave them potentially trapped in a devaluing asset.
  • Immediate sector-wide policy to not take advantage of the Zucconi precedent, prior to the abolition of marriage value in Government reform of leasehold extension legislation.
  • Reimbursement of shared owners who have already been penalised through housing providers taking advantage of the Zucconi precedent (in context of marketing short leases whilst failing to inform first-time buyers about the 80-year threshold).
  • Convert all existing shared ownership leases to 990 years (the new Government standard).

Click on the text below to open the full report.

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