Your lease explained

There are different types of lease depending on the property you have bought and when you purchased it.

 

Do-it-yourself shared ownership (DIYSO) lease:

If you have bought a flat through DIYSO, two leases affect your property.

 

The head lease:

This is the contract between the freehold owner and us.

 

The DIYSO lease:

This is the shared ownership contract between you and us. It is also known as an under-lease or sub-lease. By signing the DIYSO lease, you agree to any conditions in the head lease.

If you have bought a house through DIYSO, a single shared ownership lease affects your property. There will be no head lease.

 

Shared ownership lease:

If we own the land on which your property has been built, there will be a single shared ownership lease between you and us.

If the land (and property) is owned by somebody else, we will hold a head lease and you will have a shared ownership under-lease and will be subject to the provisions of the head lease so far as they affect your property.

NOTE: Your lease is a legal document is very important as it sets out your legal rights and responsibilities as the leaseholder. Please keep it in a safe place.

 

What does being a leaseholder mean?

Being a leaseholder means that provided you pay the rent you have the right to live in your home for the period set out in your lease but subject to the obligations and restrictions set out in your lease. Once you own all the equity shares in the property, you can normally extend the term of your lease at a reasonable cost. Subject to the terms of the lease, you can sell your interest in your property to somebody else.

 

Basic details (the ‘Particulars’ page)

This part/page of the lease includes the name of the landlord, the address of the property, the purchase price and your share of the property (if you are a shared owner). It will also include the original rent, any ground rent, the term of the lease and your share of the service charges.

 

The demise

This part of the lease describes the extent of your property. This is called the demise. The lease may include a plan. The areas you share with other properties or residents, such as a shared entrance hall, do not form part of the demise; such areas are called the common parts. They are usually (but not always) shown on the plan in the lease.

 

Covenants

Covenants are rules or promises. The covenants are contained in the body of the lease (as well as in other sections of the lease known as schedules). Covenants (and the rest of the lease) set out your responsibilities and ours and regulate what can and can’t be done in respect of the property and (where applicable) the building and the estate.

What are we responsible for:

In flats, we are responsible for the following things (unless the head lease gives this responsibility to the freeholder):

• Insuring the building but not the contents of your flat.
• Maintaining the structure and exterior of the building.
• Maintaining all the common parts of the building and the estate.
• Managing your building and estate.
• Managing a reserve fund for cyclical works if these are provided for in the lease (for newer schemes we may introduce additional reserve funds).

In houses, the lease gives you responsibility for maintaining your property.

 

What you are responsible for:

In flats, you are responsible for paying your share of the cost of the things that we are responsible for through your service charge. You must not do any work for which we are responsible.

• Paying your rent and service charges.
• Using your property as a private home only.
• Keeping the interior of your property in good condition.
• Not causing nuisance and annoyance.
• Not making structural alterations or extensions (like removing a load bearing wall).
• Provide access for all Health and Safety checks e.g. Annual Gas Safety check
• Make sure any areas where we may be working are clean and unobstructed
• Supervise all children and pets
• Treat SBHG staff and contractors with respect and dignity
• Not making non-structural alterations (like putting in a new kitchen, or re-wiring) without getting our written permission.
• Allowing access for inspections and repairs to work required in the building and in neighbouring properties.
• When arranging appointments, we expect you to confirm the appointment within 48 hours when we provide possible appointment times
• If you can no longer make an appointment, we expect you to let us know as soon as possible
• You will also need our written agreement if you want to change your mortgage lender or you wish to borrow more money.

Your rights as a leaseholder include:

• Peacefully living in your home.
• Using shared parts of the building and communal parts of the estate, such as communal gardens.

As well as the rights given to you in the lease, you also have ‘statutory rights’ which are contained in various Acts of Parliament.

This section sets out some of your statutory rights as a leaseholder (although please note that take advantage of some of these rights you may have to ‘qualify’ first).

 

Statement of accounts (summary of costs)

Each year we provide a Summary of Service Charge Costs by 30th September for the previous financial year ending 31st March. However, if we fail to do so, you can request the most recent summary in writing. We must supply this to you within one month or within six months from the end of the financial year.

 

You may inspect the accounts within six months of receiving the summary; the request must be made in writing. We have one month to agree to your request. We will provide facilities for you to inspect and make copies. There may be a charge for this.

We also provide a summary of your Rights and Obligations.

Where we own the freehold of your property, we send a summary to you each year by the end of September.

 

Management audit

You can request a management audit under the Leasehold Reform Housing and Urban Development Act 1993.

For this to apply, there must be more than two leaseholders in the building and more than two thirds of the leaseholders must want an audit.

The leaseholder is responsible for paying the auditor’s costs. The auditor must serve proper notice on the landlord. The notice must include full details of the auditor and the leaseholders who wants it. The auditor can inspect documents and the shared areas of buildings we manage. Details of the inspection facilities required must be included in the notice. We would have one month to respond to the notice including supplying relevant documents or making facilities available for inspecting them.

 

Leasehold enfranchisement

Leasehold enfranchisement (or collective enfranchisement) applies only if you own all the shares under your lease, and your lease has 21 years or more left to run. It is not available to shared ownership leases.

Leasehold enfranchisement means the right of leaseholders to buy the freehold from the landlord. There is an exemption from the right if a substantial part (more than 25%) of the building is commercial or the building is due for demolition within five years.

For the purchase to go ahead, there must be two or more flats in the building; individual leaseholders must live in at least two thirds of the flats in the building, and at least 50% of those individual leaseholders must wish to claim the right.

If you are considering this it is advisable to get independent legal advice. You will also need a qualified surveyor.

 

Extending leases

Shared ownership leaseholders do not have the right to extend their leases, but you can ask us if we will consider it. Any extension would be at market value, (which means that you would pay a premium for the extension) plus our legal and valuation costs as well as paying your own legal costs and Stamp Duty Land Tax (if applicable).

However, where you were a shared ownership leaseholder and now own outright, you will normally have the right to buy an extension of the lease if you have owned the flat for at least two years.

A legal procedure must be followed in order to extend the lease, so if you are thinking about this, please get your own independent legal advice.

 

First Tier Tribunals

The Housing Act 1996 introduced Leasehold Valuation Tribunals (LVTs) to help deal with disagreements about service charges. In 2013 the LVT became the First Tier Tribunal (FTT). 

FTTs can decide whether service charges are reasonable and whether the services or work is of a reasonable standard. It

can also decide on many disagreements arising from using the legal rights set out in this section.

Both the landlord and the leaseholder have the right to apply to the FTT. The county court can also refer matters to them if there are legal proceedings for not paying service charges.

You can appeal against the FTT’s decision but permission to appeal must be given by the FTT or the lands tribunal/Upper Tier Tribunal (UTT).

You should always get professional advice before going ahead, from your solicitor, a citizens advice bureau or LEASE.

You will be responsible for the costs of any legal advisers or experts you employ in connection with the FTT application (whether you or the landlord made the application).

In exceptional circumstances, if the FTT decides that bringing or defending an application was unreasonable, either side can recover its costs from the other side.

If you are a shared owner, your lease prohibits you sub-letting your property. This is because the money we get for shared ownership aims to help people on modest incomes to buy their homes and shared owners are required to occupy their properties rather than rent them out. We will consider allowing shared owners to sub-let only in exceptional circumstances. If you want to sub-let, you will have to buy all the shares in your home first.

We will charge for considering your sub-letting request.

If you break a condition of your lease, we will take action against you. This may include going through the courts. In serious situations we can ask the courts to make an order for forfeiture, which means your lease can be terminated and you will have to move out of the property.

Varying the lease after completion is not always a straightforward process and all the relevant parties usually have to agree to the changes.

For example, where residents of all the flats in a building or on an estate wish to take responsibility for maintaining or upgrading their windows, all of their leases will need to be varied at the same time. This is because the proportional liability for the share of costs is set out in the lease.

Residents would also have to meet all parties’ legal costs (and the administrative costs which are payable by each leaseholder.

If the leases were to be varied for this reason, we would still reserve the right to carry out maintenance of windows if a leaseholder does not carry out the maintenance.

In another example, in limited circumstances the roof space may be added into the lease of the top floor flat(s), and this will also require a variation to the lease.

In addition to the costs payable above, we would also require payment at full market value because the leaseholder is making their flat bigger. This variation might require the agreement of the other residents who may need to have their leases varied because of the addition of the roof space to the top floor flat.

We may need to get approval from the appropriate Government agency to lease variations, and if your property is mortgaged, then you will also need to get approval from your mortgagee.

There will also be Land Registry costs (this is usually handled by your solicitors but you will be responsible for payment).

Should you plan to be away from your home for more than 60 consecutive days you must notify SBHA because, in the event of an insurance claim, there would be an increase to the excess payment.

If you are considering having a pet, please advise us using the on-line form. Refer to the Pets Policy on our website.

We will always give permission for a Guide Dog, a Hearing Dog or a support or assistance animal when requested and supported by medical evidence.