As part of the Autumn Statement 2014, the government committed to work with register providers, lenders and the regulator to identify and lift barriers to extending shared ownership. On 31 January 2015, the Department for Communities and Local Government (DCLG) and the Homes & Communities Agency (HCA) launched a consultation on proposals to streamline the resale of shared ownership properties to make it quicker and easier to sell them.
Currently, if a shared ownership householder wants to sell their home, first they must seek the consent of their landlord/housing provider (usually a housing association) to assign the lease. To gain this consent the shared owner must put their intention to sell in writing to their housing provider. Once the shared owner has made the notification, the housing provider has eight weeks in which to decide whether to nominate itself or another purchaser to acquire the shared owner’s interest in the lease before the home can be put on the open market.
While the housing providers regularly nominate people, they would have very little interest in taking the lease back nor would they have budgets to purchase that lease. In the event that the housing provider is able to nominate it collects the fee for such nominations (usually 1% of the sale price plus the VAT)
The opportunity on the part of the housing provider to nominate the next purchaser continues during the period of shared ownership for each owner and for 21 years after a householder has bought the property outright.
These provisions are perceived to have hampered the selling of shared ownership homes because:
- They overcomplicate the process when the householder wants a quick and straightforward transaction.
- Lenders see the process as a fetter on realising the value of the home. This has meant the market for lending on shared ownership homes is restricted.
The consultation is therefore considering how the process can be revised to reduce the delays currently caused and to simplify the procedure. In particular, it is looking at how the pre-emption right could be watered down, especially as in practice, housing providers do not use it as often as expected.
The consultation closes on 28 February 2015.