In this quick-fire guide, we outline the steps social landlords should take when assigning a shared ownership lease to ensure the process runs smoothly:
- Use a license
Unless the leaseholder has staircased to 100%, the landlord’s consent will be required to assign the lease. To provide evidence of this consent, enter into a licence to assign, and state that the buyer and seller should do the same.
There was a series of model leases issued between 2012 and 2015, which required the buyer to enter into a direct deed of covenant with the landlord, but using a license to assign will enable you to do both in one document.
- Establish who is approving the mortgage offer
Every shared ownership mortgage offer requires landlord approval or it won’t benefit from the mortgagee protection clause. Establish from the outset whether the housing association, or its solicitors, will be approving mortgage offers, and what their criteria will be.
- Be clear on leasehold information
All leasehold sales, shared ownership or outright, will require a pack of standard information such as confirmation that rent and service charges aren’t in arrears, if any major works are planned, and if the landlord has taken steps to forfeit and close the lease. These packs often take a lot of time to produce, and once provided, there are usually further questions. Ensure you’re being clear with your leaseholders about how they get this information from you, and how much it will cost to produce this pack.
- Take expert advice
Most legal titles are the same but it’s important to get them checked as some information may not be immediately clear. Specialist lawyers will be able to quickly review multiple titles and leases, and conclude precisely what documentation is required.
- Do your homework on notices and compliance certificates
The majority of leases require the buyer to serve notice on the landlord formally declaring they are the legal owner. There is also usually a restriction at HM Land Registry to ensure the landlord confirms the lease has been complied with before the new buyer is registered – the buyer will require a certificate to satisfy this restriction. Confirm who is providing the certificates, how much they are charging, and what information will be needed before it is issued.
By taking these steps and being clear with your people about who is responsible for key tasks, the assignment process should be straightforward and you will avoid any potential pitfalls.
For further information on staircasing or assigning an existing lease, please speak to Alasdair Muir or Lale Ali in our Real Estate and Projects Team.