Shared Ownership Leaseholder s Guide Shared Ownership Guide

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1 Shared Ownership Leaseholder s Guide

2 Contents 1. Welcome 2. About Bernicia 3. What is Shared Ownership? 4. The lease and your legal obligation 5. Rent and Other Payments 6. Ways to pay Rent and Service Charges 7. Repairs and Maintenance 8. Service Charges and Major Repairs 9. Buildings Insurance 10. Improving your Home 11. Selling your Home 12. Staircasing 13. Subletting 14. Consultation and Complaints 15. Keeping Pets 16. Administration Fees 17. Remortgage 18. Varying a Shared Ownership Lease 19. Lease Extensions 20. Complaints 21. Anti Social Behaviour 22. Contacting Us 23. Other Useful Information

3 1. Welcome This guide explains more about owning a leasehold property and what it means for you as a resident of Bernicia Group. Bernicia are committed to giving you clear and concise information about owning a leasehold property however please do not treat this document as a substitute to the lease, by which you are legally bound.

4 2. About Bernicia We provide housing, care and support services for single people, couples, families, older residents and those requiring additional support and assistance. The Group s social housing assets are owned and managed by Wansbeck and Cheviot Homes, Three Rivers Housing and Berwick Borough Housing, all registered providers of social housing. Whilst legally distinct subsidiary companies we are working towards integrating operational structures to allow consistent services to be delivered across all of our social housing activities, under the name Bernicia Homes. Bernicia Homes owns and manages over 14,000 properties, and is developing new homes across a range of property types and tenures. 3. What is Shared Ownership? Shared Ownership is where you have purchased a share in the property and pay rent on the share retained by Bernicia. Typically a shared ownership leaseholder will own 25%, 50% or 75% of the property and pay rent on that part of the property owned by the landlord. When buying on this basis a monthly service may be payable which covers the insurance of the property any administration fees and service charges (where applicable). Shared Ownership gives you an opportunity to gain a foothold on the home ownership ladder at an affordable cost. It provides flexibility in that you can remain as a Shared Owner, purchase additional shares or offer your current share for sale in order that others can also benefit from the scheme.

5 4. The lease and your legal obligations When purchasing a Shared Ownership property you will enter into a lease agreement. This lease is a witnessed legal document that entitles you the buyer (called the lessee ) to live in a property for a set number of years. The terms of the lease fix the rights and obligations of both parties. These rights and obligations cannot be changed without the agreement of both parties or by an Act of Parliament. When you purchase the property from Bernicia, you purchase a lease for a number of years, either 99 or 125 years. You should remember that when buying a property on a leasehold basis you do not own the bricks and mortar or the land that they stand upon. You buy the right to live on the property for a fixed period of time. The land and the building remain in the ownership of the Freeholder. This lease requires you to: Pay the rent, admin fee and insurance premium Pay all outgoings on the property such as council tax, water charges, gas, electricity Keep the interior and exterior of the property in good repair and decoration; Not carry out alterations without our prior consent Allow access for staff to the property Not to let (rent out) the property or part with the possession of it The lease requires us to: Insure the building Allow the occupier quiet enjoyment Grant future leases in a similar form to that as at present, for example on the same terms and conditions, length of time If you do not keep to the legal obligations then you are considered to have breached the lease. If you were to breach the lease we can take legal action against you to compel you to keep your legal obligations.

6 Ultimately if you continue to breach your lease we can apply to the County Court to have your lease forfeited (cancelled). This means we will take possession of your home and you will be required to leave it. You will not be entitled to any compensation. 5. Rent and Other Payments Under the terms of the lease you must pay rent on the portion of the property that is owned by Bernicia. The amount of rent is determined by the percentage we own so that the smaller the share, the lower the rent. In additional to the rent an administration and insurance fee may be payable. The rent is due on the first of each month and is payable in advance. The lease allows us to review and increase the rent every 12 months and this review will take place on the 1st of April of each year. Bernicia will provide at least one month s notice of any increases in the rent and service charge payable. The lease also requires you to pay all outgoings to your home. Typically, in addition to the rent and service charge you will have to make regular payments such as mortgage, council tax, water charges, gas and electricity bills plus normal household spending. If rent arrears accrue we will ask your mortgage lender to add any rent arrears to your mortgage. If your lender refuses to do this, we may seek a court order to repossess your home. If we obtain a court order against you then this may prevent you from getting credit. It is very important to keep up your payments. If you fall behind you risk losing your home. If you are unable to maintain payments and are experiencing financial difficulty you are advised to contact your lender or the Citizens Advice Bureau as soon as possible. We are sympathetic to Shared Owners who suffer financial hardship through no fault of their own. We will try and offer help or assistance wherever possible. Depending upon your circumstances, you may be able to claim housing benefit to meet some or all of the rent and service charge payments to us.

7 There are many ways to pay your rent or service charges...

8 6. Ways to Pay Rent and Service Charges You can pay your rent and service charges at outlets displaying the following signs. Direct Debit (DD) Bernicia are also able to collect payments every date of the month using Allpay s Direct Debit service. Our staff can set up a Direct Debit Instruction immediately over the phone should you wish to consider this alternative method of payment. Standing Order (SO) Monthly or weekly payments can be made directly from your bank account. We will calculate your payments and sent details on a form for you to present to your bank. On Line You can pay on line using your debit card, by visiting and following the online instructions or by telephoning In addition to your rent reference number have your debit card details ready and the amount you need to pay. Text Payment To use the service you must register online at By Post You may also post your payment to Bernicia s offices at: Oakwood Way, Ashwood Business Park, Ashington, NE63 0XF OR Cheviot House, Beaminster Way East, Kingston Park, Newcastle upon Tyne, NE3 2ER Do not send cash

9 7. Repairs and Maintenance Under the terms and conditions of your lease agreement you are solely responsible for both arranging and funding all necessary repairs and maintenance on your home. Although we have an equity share in your home we are not liable for any cost of the repairs or maintenance of the property. If you have a private garden(s), maintenance is your responsibility. If you have the use of communal grounds, along with other residents of your block, then we will maintain these gardens. All shared owners will be responsible to arrange for a gas service to be carried out annually. Once you have purchased your home you may wish to make some improvements or alterations to your property. You must write to us to request permission before you carry out any work. We will not unreasonably withhold permission, but obtaining our consent is an important condition under the terms of your lease. If you intend to make structural changes to your property we will also need to see detailed plans along with building and/or planning regulation approval before consent can be given by Bernicia. If permission is not granted you may need to pay for the cost of putting things back as they were originally. When the improvements or alterations are complete, copies of guarantees and test certificates must be sent to us for retention on your file. We may also inspect the work before and after its completion. Please note that PVCu doors are not suitable as front doors to flats that open into internal communal areas and permission will not be granted. Under the Regulatory Reform (Fire Safety) Order 2005 we are obliged to ensure the safety of you and all residents within blocks of flats and maisonettes. To ensure all residents have the maximum opportunity to vacate their premises in the event of a fire, consent for replacement front doors will only be granted for type FD30S fire doors. FD30S fire doors are designed to give protection against fire and smoke for a minimum of 30 minutes. We will request to see the fire resistance certificate supplied with the door.

10 8. Service Charges and Major Repairs Some Shared Ownership flats with communal areas are subject to service charges which cover the day to day services we provide maintaining building, communal and surrounding areas. These can include; Grounds maintenance Building insurance Caretaking/cleaning Lighting Heating Reactive maintenance Service charges vary year to year and reflect the actual cost of services and payments that have been paid by Bernicia in the preceding year. In line with the original lease agreement you may be liable to pay a proportionate share of the bill. An administration/ management charge is also added. We are legally required to consult all leaseholders who pay a variable service charge about two areas of costs. These are: Long Term Agreements This is an agreement or contract for more than 12 months. It could include repairs, maintenance, planned works, servicing, improvement works, communal cleaning and gardening, contracts for door entry systems or lift maintenance, fire precautions, equipment servicing and any other contracts. We will consult if the cost to the leaseholder will be more than 100, including VAT, in the financial year. Major works to Shared Ownership Flats This is repair, maintenance, planned decoration or improvement works. We will consult if the contribution to each leaseholder will be more than including VAT.

11 9. Buildings Insurance We are obliged to insure your home i.e. bricks and mortar as part of our obligations under the terms of your lease. This insurance does not cover your contents. You are strongly advised to arrange your own contents insurance cover for personal belongings e.g. carpets, furniture, electrical goods etc. The buildings insurance policy covers damage that may occur to the property due to a storm or accidental damage. It will also cover the cost of rebuilding or reinstating the building if there as a major fire or other catastrophe. As with any insurance policy there is an excess payable (this means the first part of the claim which the policy holder agrees to pay). This varies between 50 and 1000 depending on the claim. This means you will have to pay the excess on any insurance claim you make.

12 If you wish to make a claim under the buildings insurance policy please contact Bernicia immediately. If there is a delay in notifying us of any insurance claim this may reduce the amount of any money the insurers are prepared to pay in settling any claim. Many believe that Bernicia automatically insure their furniture, belongings and decorations against fire, theft, vandalism or water damage such as bust pipes. This is not the case. Unfortunately some only realise this after the damage has been done. We make it easy for you to ensure your belongings under a special household contents insurance scheme. The insurance is arranged with Royal Sun Alliance plc and is available only to Bernicia customers. Further information can be requested from Bernicia.

13 10. Improving your Home As a Shared Owner you may at some time wish to carry out improvements to the property, for example installing new ceiling lights, replacing your bathroom or kitchen, conservatory or an extension. We request that you contact ourselves before any works proceed so that the necessary permissions are granted. This is to safeguard our investment in the property. You should also be aware that if you sell your home at a later date and have carried out improvements to the property, you are not guaranteed to recover the full cost of the works you have done. There may be occasions when you feel that your home needs to be adapted,if you or someone living with you has a disability. You may be able to apply to your local authority for a Disabled Facilities Grant (DFG) for this work. If you wish to carry out any adaptations, please remember to ask our permission for anything structural, or that affects the communal or exterior areas of your property.

14 11. Selling your Home As a shared owner looking to sell your share, the terms of the lease require you to offer the property to qualifying applications nominated by ourselves. If we are unable to nominate a suitable purchasers within 8 weeks, under the terms of the lease you will be able to sell your share of the property on the open market. When marketing the property you should ensure that the market value is assessed by an independent RICS qualified surveyor and based on vacant possession of the whole property. We would suggest that you ensure that any proposed estate agency are able to supply this valuation or you may be liable to arrange for an additional survey to be carried out to satisfy this requirement. A copy of the above valuation should be forwarded to Bernicia for approval and may need to be updated on a regular basis as it is only valid for three months. In view of our continuing interest in the property if anyone is interested in purchasing the available share, our consent must be sought. No sale must progress or offer be accepted until the applicant has been approved by Bernicia. We will only approve an application if the person meets the publicised eligibility criteria. Both you and your buyer will be responsible for your own legal fees Bernicia will charge an admin fee for the assignment of the lease. Please contact Bernicia for a copy of our Selling Process for Resales Guide.

15 12. Staircasing As an existing Shared Ownership Leaseholder of Bernicia you are able to increase your share of the equity you own at any time during the term of the shared ownership lease. This is known as staircasing. The price paid for further shares is based on the current open market value of the property and does not take into account any improvements you have made to your home. Currently Bernicia employs Rook Matthews Sayers to carry out these valuations on our behalf and you will be liable for payment for this valuation. Under the terms of the original lease, you have three months to complete the staircasing purchase from the date Bernicia receive the valuation from Rook Matthews Sayers. Bernicia have discretion to extend the 3 month period to 6 months where there has been a delay which is outside the control of either yourself or Bernicia,for example if documents were lost in the post or there were legal delays. Details of the staircasing requirements are set out in your original lease. The lease makes provision for the resolution of disagreement or dispute that may arise, between yourself and Bernicia. Once the property has been fully staircased you will need to arrange for your own buildings insurance for your home. Should you wish to resell the property once in full ownership you must inform Bernicia in line with your original lease. Please contact Bernicia for a copy of our Staircasing Guide

16 13. Subletting As Shared Ownership is designed for owner occupation, there are clauses within your lease agreement which prevent you sub-letting your home. Your lease will say that you cannot sublet or part with possession (allow somebody else to occupy) part of or whole of the property. Taking in a lodger is not the same as sub-letting because the lodger does not have the security of a tenancy. 14. Consultation and Complaints Bernicia will consult with you whenever we are legally required to and when it is good practice to do so. However, having purchased a house our day to day involvement in managing the property is kept to a minimum. There may be times when you have to complain about the standard of our service. We have a formal complaints procedure, which should be followed, a copy of which is available on request. 15. Keeping of Pets You are free to keep the normal domestic pets in your home. Your lease may contain restrictions on the keeping of unusual animals at the property. If you are intending to keep anything other than normal domestic pets then contact ourselves in the first instance.

17 16. Administration Fees Bernicia charge an administration fee to cover our costs when providing additional services which are not covered by the management fee recovered through the service charge. This following list is not exhaustive and is subject to change. Leasehold Information Pack The fee for this information is plus VAT. Should you require additional information, we may charge a further fee of plus VAT. Consent to alterations The fee for providing this consent is plus VAT per application. Notice of Assignment/Transfer The fee for acknowledging a Notice of Transfer/Mortgage is plus VAT per notice.

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19 17. Remortgage Bernicia have a financial interest in your home because we own a share of it. You must inform us of any changes so that we can decide whether to agree to these changes. There are three options available: Remortgage with no further borrowing, this is where you negotiate a better deal with your current lender, or you move from your current lender to another without increasing the amount borrowed Further borrowing this is where you borrow more money but stay with your current lender Remortgage and further borrowing this is where you move from your current lender and borrow more money We will approve remortgaging if the amount you want to borrow is the same as or less than the amount you currently owe. We will only agree to you borrowing more than this in limited circumstances. We will not give our approval for you to borrow extra money against your property to consolidate unsecured personal loans or debt. To approve additional lending we will require you to provide us with: A copy of your mortgage offer from your proposed new lender Written confirmation informing us why you want to increase your borrowing and if the additional borrowing is for home improvements, give details of the home improvements you plan to make, together with quotes, invoices or receipts for work being carried out

20 18. Varying a Shared Ownership Lease It is possible that Bernicia may wish to vary the lease. The terms of lease can only be varied by agreement between you and Bernicia or through an order made by a Leasehold Valuation Tribunal, or sometimes a county court. There are specific procedures that need to be followed in these circumstances and you will need to get legal advice. If the change or correction to your lease involves one of the clauses that the Homes and Communities Agency considers to be fundamental to shared ownership, Bernicia will also need to obtain their agreement. The following list does not cover every possibility but we would need the Agency s agreement to change; The basis of service charge calculations or apportionments Rent review clauses The landlord s right of first refusal on resale The clause that protects your mortgage lender s interest in the property Clauses affecting your right to staircase Clauses setting out the procedure for selling The clause that prevents sub-letting the property Any other changes that have a knock on effect on the above

21 As a shared owner, your lease gives you a number of rights and responsibilities, and you should always seek appropriate advice if you have queries about your lease. If you are buying a house, you usually become the freeholder when you staircase to 100%. Then the lease ceases to apply. If you are buying a flat, you continue to be a leaseholder after staircasing to 100%, but the terms of your lease usually change. The change is that the clauses to do with shared ownership drop out of the lease and it becomes like an ordinary private residential lease. For both houses and flats, Bernicia normally keeps a right of first refusal on any onward sales for 21 years. We are not able to alter this without the Agency s agreement. Should you have a dispute with Bernicia we have a complaints procedure to help resolve the situation. If there are still problems even when you have exhausted this procedure, you can complain to the Independent Housing Ombudsman. We will be able to tell you how to do this. But if your dispute is over certain matters connected with your lease, for example the level of service charges or your liability to pay them, then there are other routes of complaint and you should seek appropriate legal advice.

22 19. Lease Extension A shared ownership lease is a legal contract between Bernicia as Freeholder and you as the Leaseholder or Lessee. The lease sets out rights and responsibilities for both parties. As your lease gets shorter, the value of the lease decreases and in turn this can affect the value of your share. It may be highlighted when selling as lenders are often reluctant to lend on a lease with less than 75 years left on it. By extending the term of your shared ownership lease, lenders are likely to be more willing to agree a mortgage and your share will also be more desirable to purchasers. Extending the term of your lease may also increase the value of your share. Original shared ownership leases are generally for either 99 or 125 years. If a lease is assigned to you from another shared owner, you take over the number of years remaining on the lease when you purchase it. Extending your shared ownership lease is not a legal right and we will consider each application separately. We will only consent to you extending your lease when the term is 75 years or less. It will be necessary to have a second valuation undertaken in order to determine the increase in value of the property from the current term to an extended lease term. Bernicia will arrange for a Valuer to visit your property on your behalf to carry out this. On receipt of the valuation we will notify you in writing of the amount that you will be required to pay on completion of the lease extension (the Premium ). Once all parties agree the Premium, our solicitors will be instructed to proceed with the variation of the lease to extend the term. The amounts that need to be paid by you (via your solicitors) at completion are: The agreed amount for the extra years to be added (from the calculation of the valuation) Our reasonable solicitors costs plus any disbursements Valuation fee This lease extension can proceed whilst your property is being marketed so that both processes are completed simultaneously.

23 20. Complaints We always try our very best to deliver services to the satisfaction of customers but occasionally things can go wrong. If you feel that things have not been dealt with properly or we have not provided you with the service you expect then you can make a formal complaint. There are a number of ways you can make a complaint: Telephone our Customer Service Team on By telling a member of staff if they are visiting your home or you see them on your estate In writing By sending an to complaints@bernicia.com By sending a fax to By reporting it on line via Report It Make a Complaint at

24 21. Anti Social Behaviour Bernicia recognise the adverse effect that anti-social behaviour has on our local communities and take the issue very seriously...

25 Working with our residents and partners, we have a number of measures available to reduce the impact of anti-social behaviour on our communities. Examples of what we would classify as anti-social behaviour may include but is not exclusive to: Violence, threats of violence or intimidation Harassment, hate crime and domestic abuse Yobbish behaviour Intimidating groups taking over public spaces Unreasonable and excessive noise Criminal activities, including drug offences and the use of weapons The misuse of fireworks Reckless use of motor vehicles, including mini motorbikes If you are experiencing nuisance or anti-social behaviour, contact our customer services team. If the incidents are serious, contact your local police station immediately. As each incident or problem is different, we assess the problem and then agree a suitable action plan with you to deal with it.

26 22. Contacting Us Our Sales Team can be contacted on by writing/visiting our office at Cheviot House, Beaminster Way East, Kingston Park, Newcastle upon Tyne NE3 2ER or by sending an to

27 LEASE (Leasehold Advisory Service) 31 Worship Street London EC2A 2DX Telephone: Fax: Website: National Association of Citizens Advice Bureau Myddleton House Pentonville Road London N1 9LZ Website: Housing Ombudsman Service 81 Aldwych London WC2B 4HB Telephone: Lo-call: Website:

28 All our publications can be made available on request in large print, braille, or audio and in other languages. Bernicia Group Ltd Oakwood Way Ashwood Business Park Ashington Northumberland NE63 0XF T: F: E: Information provided by the Bernicia Group: Bernicia Group Limited is a Registered Society in England and Wales under the Co-operative and Community Benefit Societies Act 2014 No R. Affiliated to the Federation of Housing Associations. Registered under the Housing and Regeneration Act Registration No. L4512 Vat Registration No