Mrs W was pleased to have found a flat to buy on a shared ownership basis at Tormaid Court, Atlas Crescent, Edgware, London HA8. She needed Conveyancing Solicitors in London to act for her and instructed London Property Lawyer Jaclyn Smith. The flat was being sold by Notting Hill Housing Association, 1 Butterwick, Hammersmith W6 8DL. Mrs W would be buying a 50% share with the remainder held by the Association.
Buy half now and 'staircase' in future
Shared ownership has become a popular way for buyers to get started on the property ladder now, especially in the London area. Jaclyn explained that the Association would grant her a long lease of the flat, giving her the exclusive right to occupy it. She would pay half the open market value of the property straight away to buy the 50% share, and would have the right to 'staircase' – that is, to buy further shares – at any time in the future. In that way the buyer could eventually own the property outright.
The Conveyancing Solicitors in London acting for the vendors were Orrick Herrington & Sutcliffe of 107 Cheapside, London EC2V 6DN. The lease which they sent was in a standard form which would be the same for all the flats in this block. However it was still necessary for Jaclyn to check it to make sure that it was in a form acceptable to mortgage companies, and contained all the necessary provisions from the tenant's point of view.
Shared ownership arrangements also have to be acceptable to the lenders. This is normally achieved by including provision in the lease allowing any lender to staircase to 100%, i.e. buy any outstanding share, should they need to foreclose and sell the property. Jaclyn therefore had to confirm to the lenders that the lease complied with their requirements.
Jaclyn explained to Mrs W that in addition to the usual maintenance charges payable to the Housing Association she would have to pay them an annual rent in respect of the remaining 50% share, which would be calculated by reference to the current market value each year. Should she buy any further shares then this rent would be reduced proportionately.
Once a satisfactory mortgage offer was received and the lenders had confirmed that they were satisfied with the shared ownership arrangements, contracts were exchanged and the new lease was completed, enabling Mrs W to move into her new home.
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