Leasehold & shared ownership explained
Understanding your lease can sometimes be complicated so to help you understand some of these complexities, we have outlined some common leasehold and shared ownership FAQs below.
What does 'leasehold' mean?
Leasehold ownership of a flat or house is simply a long tenancy, the right to occupation and use of the property for a long period – the ‘term’ of the lease. This will usually be for 99 or 125 years and the flat or house can be bought and sold during that term. The term is fixed at the beginning and decreases in length year by year.
The leasehold ownership of a flat usually relates to everything within the four walls of the flat, including floorboards and plaster to walls and ceiling, but does not usually include the external or structural walls. The structure and common parts of the building and the land it stands on are usually owned by the freeholder, who is also the landlord. The freeholder is responsible for the maintenance and repair of the building. The costs for doing so are recoverable through the service charges and billed to the leaseholders.
A leasehold ownership of a house usually relates to the whole building both internal and external and possibly a garden and driveway. Typically a leaseholder of a house would be responsible for the repair and maintenance of the whole building.
A Lease is an extremely important legal contract relating to the occupation and ownership of your home and sets out the legal relationship between you, the leaseholder and us, the landlord. When you sign the lease or take over an existing Lease you are agreeing to certain responsibilities and so are we. The Lease grants you a number of rights but also serious obligations which you need to understand when you buy your new home.
It is essential that you seek legal advice prior to signing the lease and make sure that your solicitor goes through each clause of the Lease with you. Ask your solicitor to provide you with a copy of your Lease when you purchase your property.
A shared ownership lease sets out the rights and obligations of both the landlord us, and tenant (the shared owner). JJH has a contractual right to ensure that the shared owner complies with the terms of the lease. A shared ownership lease is where the leaseholder has purchased a share in the equity and pays rent on that share retained by the landlord.
Typically a shared ownership leaseholder will own between 25% – 75% of the property and pay rent on that part of the property owned by the landlord.
All repairs and maintenance to the home are your responsibility, regardless of the share you own. Most brand new homes come with a 1 year warranty period for defects and a longer warranty to cover any structural problems caused by poor workmanship. When you buy a flat, Johnnie Johnson Housing (JJH) will generally be responsible for any communal parts of the building and grounds and you will be responsible for all repairs and maintenance to your own flat. You pay a service charge to JJH which is used to cover the costs of maintenance and decoration to communal areas.
You are free to decorate your shared ownership property. JJH will not contribute to decorative improvements. Your shared ownership lease should have details about major alterations to the property, e.g. new flooring, structural changes, which will have to be authorised by us before work commences.
No, shared ownership leases do not allow you to sublet your home. This may also be a condition of the mortgage. In some cases, under exceptional circumstances, you may be able to sublet for a specified period. You will be required to obtain written permission from us.
You should check with us first when purchasing the property, but most shared ownership leases allow this. Please note, the income you will gain from taking a lodger will not be taken into account when assessing your affordability for a property, you must be able to afford to purchase the property and make the monthly costs independently of the income from a lodger.
If you live in a flat, you will usually be responsible for repairs inside your home, and we will be responsible for repairs and maintenance of the structure of the building and any communal areas (e.g. lifts, corridors, shared external areas).
If you are struggling to make your monthly payments you should let your lender and us know. We will work with you to support you through your situation along with our Welfare Benefits advisor who will be able to provide you with advice.
Yes, the rent paid to us on the share not owned by you will be reviewed periodically, usually every year, and will be increased in line with any proportionate increase in the Retail Prices Index plus an amount, typically between 0.5% and 2%. Note that the rent is reviewed on an “upwards only” basis and will not go down when reviewed. You should always check the terms of your lease carefully before you purchase a shared ownership property for details of possible rent increases.
You should check the terms of your lease. You must have our consent in writing before you make any alterations to your property.
You need to ask for consent from us at an early stage of the purchase process. If the property does not have a shared communal area you may be allowed to keep a pet subject to approval by JJH. If the property is in a block of flats and has shared communal areas you will not be allowed to keep pets.
Buildings insurance is usually the responsibility of us. The cost will often be included in the service charge. Contents insurance, which covers all your furniture, carpets, white goods and personal belongings, is the responsibility of the person living in the property – it is not compulsory to purchase but it is advisable.