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Changes to shared ownership leases

18 February 2010

The Homes Community Agency (HCA) has created a new suite of model shared ownership leases designed to create more certainty for lenders and more clarity for purchasers of New Build HomeBuy properties.

Shared ownership leases granted on and after 6 April 2010 must be in the new form where the homes have been funded by the HCA.

The new leases have been developed with the Department for Communities and Local Government, the Council for Mortgage Lenders, the National Housing Federation and a number of leading mortgage lenders and providers of affordable housing.

The HCA expects the leases to simplify and speed up the shared ownership home buying process.

The changes increase the protection afforded to mortgage lenders in the shared ownership lease and simplify the mortgagee protection clause – one of the most fundamental clauses – which has been an area of dispute between registered providers and lenders in recent years with ‘repossession staircasing’ sales.

This will strengthen the protection for existing lenders who provide shared ownership mortgages and hopefully will encourage new mortgage lenders into the shared ownership market.

The revisions represent a more fundamental rethink of the HCA model documents than has been seen before. They are wide ranging and use plainer English to provide greater clarity of the rights and obligations of both parties, making the document more ‘user friendly’.

Although the new leases are not for use before 6 April, shared ownership providers will need to ensure promptly that they have compliant sales documentation for leases to be granted on and after 6 April.

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