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Shared Ownership Conveyancing
The web page you are viewing has been created with conveyancing practitioners in mind concerning mortgage company specific obligations in connection with shared ownership conveyancing. Housing associations, alternative social landlords and house builders sometimes provide schemes under which a borrower does not have complete ownership of the property and a 3rd party will also own a share or will be a registering an interest against the title. In these cases a solicitor must check with the lending bank to see whether they wish to lend and what their requirements are.
The CML lenders handbook dictates the instructions (and even tells the solicitor if they are willing to lend in shared ownership properties at all). For instance:
| Lender | Policy |
|---|---|
| Ahli United Bank | We will not lend on either shared ownershio or shared equity tenures |
| Bank of Scotland | We do not support shared ownership or shared equity lending. |
| Barclays plc | Issuing Office. We will lend on both shared ownership and shared equity tenures. For shared ownership leases, the borrower must be acquiring at least a 25% share and the lease must be in the Housing Corporation standard form which includes a mortgagee protection clause. The RSL's consent to our charge should be obtained in the usual way. For shared equity, you should satisfy yourself that the second charge, and in particular the insurance provisions, does not prejudice our security in any way. If the second charge contains a restriction, please refer to the Issuing Office. Section 106 agreements Buy to let applications Where there is Section 106 agreement in place and the transaction is Buy to Let, you must inform us and the application will be declined. The presence of a section 106 agreement is only acceptable for residential transactions. Residential applications -General The property must be used as the applicant’s only or main residence. You must notify us if the existence of such an agreement will adversely affect our security. Section 106 agreements must contain a mortgagee exclusion clause to protect the mortgagee in the event that the registered provider defaults. You should obtain written confirmation from the borrowers that they are able to comply with any outstanding provisions in the Section 106 agreement (or that they will be carried out by another party), without making it a commercial proposition. You should retain this in your file. Residential applications- Restrictions on re-sale/ disposal The Section 106 agreement may stipulate that the Local authority has the right to nominate a buyer (meeting defined eligibility requirements) when the property is sold or disposed of: If such ‘nomination rights’ exist or there are any restrictions as to whom the subject property can be sold (whether by the borrower or mortgagee in possession), the clause must stipulate that the total time period within which an eligible buyer must have exchanged contracts / concluded missives should not exceed 3 months from receipt of the notice to sell; after which the mortgagee in possession must be free to market the property at the open market value, free from these restrictions. The property must not be on a retirement development with an over 55 age restriction. Residential applications-Re-sale price covenant (discounted purchase price) Where the Section 106 is subject to a re-sale price covenant, meaning a discount applies in perpetuity, this is acceptable only where the restriction does not apply to the mortgagee in possession. Residential applications-Moratorium period Where a clause exists that provides for a registered social landlord, registered provider or local authority to buy back an affordable housing unit if the mortgagee serves default notice; this clause must stipulate that the sale will complete within a period no greater than 3 months from the date at which the mortgagee gives notice of their intention to dispose of the property; after which time the property must be released from affordable tenure enabling the mortgagee in possession to dispose of the security. The clause must also stipulate that, should this right be exercised, the consideration should not be less than the amount due and outstanding under the terms of the relevant security documentation including all accrued principal monies, interest, costs and expenses. |
| Family Building Society | We do not lend on such schemes. |
| Gen H | For affordable housing, shared equity and shared ownership, you need to notify us (as detailed above in 1.11a). We do not normally lend on government affordable housing schemes or shared ownership properties other than in circumstances where the borrower will own 100% of the property at completion. |
| National Counties Building Society | We do not lend on such schemes. |
| Santander | Refer to Mortgage Operations office instructing you. |
Sample of Shared Ownership Conveyancing Questions:
- We have got an AIP from Kent Reliance. We are applying for shared ownership. Conveyancing is underway My grandmother gave us a gift of £two thousand pounds towards the property. Our conveyancing practitioner have requested her bank statements. We have provided them with a letter confirming it’s not a loan her ID but she refusing to supplying her bank statement as this is too personal which is understandable.
- My daughter has just acquired a shared ownership house in Leeds, acquiring the minimum amount of shares permitted but with an option to acquire further shares in the future. Would the Help to Buy scheme help to purchase more shares?
- What expenses are there likely to be on if acquiring a new Shared Ownership Property?
- if buying a shared ownership home what level of deposit do I require, Five per cent of the share or of total property valuation?
- I am in the process of purchasing our shared ownership property outright. Our Housing Association valuation is £25,000 over the lender's figure. I approached the Association to lower the valuation and they said that because their "independent surveyor" can not change his valuation they are unable to lower the valuation to match the lender's valuation.