On 07 June 2023 Homes England published updates to section 11 of the Capital Funding Guide (see 11.2.5) “because of the addition of new fundamental clauses to model leases to reflect the Shared Ownership product for homes funded by Homes England through the AHP 2021 to 2026”.
The changes set out in section 11.2.5 (applicable to “standard”, Older Persons Shared Ownership, and Designated Protected Area flat and house leases) are as follows:-
- updates to page numbering, formatting, and contents across all leases to ensure consistency
- minor revisions to Particulars
- minor wording changes to the definition of Valuer’s Certificate in some leases
- amendment of reference of ‘Mortgage Protection Claim’ to ‘Mortgagee Protection Claim’
- inclusion of an example clause 3.3.3 in the Flat lease to provide consistency with similar in the house lease (clause 3.4.5)
- addition of paragraph 1.9 in the Staircasing Provisions in all model leases
- in the Initial Repair Period Schedule an either / or option in paragraph 5.5.3 as to when providers can provide an update of the balance to the Leaseholder
- in the 1% Staircasing Schedule:
- updated definition of Additional Percentage Value Notice to make it clear that this can form part of the notice of rent increase
- updated HPI Index definition to make it clearer that each lease should set out in the definition the property type that is applicable to the specific Premises
- updated Example Additional Percentage Value Notice to follow the calculation more closely and to include a Stamp Duty Land Tax warning regarding potential payments where the purchase results in the Leaseholder owning more than 80% (not included in the OPSO and 80% DPA restricted staircasing leases)
- worked example of the calculation
We do not see any particular issues with these changes, but as far as paragraph 5.5.3 of the Initial Repair Period Schedule is concerned, landlords will need to decide which of the 2 options they wish to put into practice – i.e. the landlord can decide whether it notifies its SO tenants of the available balance of the “General Repairs and Maintenance Allowance” annually on the anniversary of the lease or annually at the same time as the landlord provides the annual notice of rent increase.
We await confirmation from Homes England as to exactly when it requires these changes to be put into practice – i.e. do the changes apply to all 2021/2026 draft leases currently circulating and awaiting completion, or do they only need to be included in draft leases issued after 07/06/2023. We will update as soon as we hear anything.
For more information, please contact Dominic Bauers.
