Shared Ownership - Bernicia Homes · Shared Ownership Guide Contents 1. Welcome 2. About Bernicia...

Shared Ownership Guide

Shared Ownership Leaseholder’s Guide


Contents

1. Welcome

2. About Bernicia

3. What is Shared Ownership?

4. The lease and your legal obligations

5. Rent and Other Payments

6. Ways to Pay Rent

7. Repairs, Maintenance and Improvements

8. Service Charges and Major Repairs

9. Buildings Insurance

10. Keeping of Pets

11. Anti-Social Behaviour

12. Subletting

13. Remortgaging

14. Staircasing

15. Selling your home

16. Varying a Shared Ownership Lease

17. Lease Extension

18. Administration Fees

19. Complaints

20. Contacting Us

Shared Ownership GuideShared Ownership Guide

1. WelcomeThis guide explains some of the main principles of owning a leasehold property and what it means for you as a shared owner with Bernicia Group.

Bernicia are committed to giving you clear and concise information about owning a leasehold property. However, this guide is not designed to be a substitute for your lease, which you should ensure that you are familiar with.


3. What is Shared Ownership?

4. The “lease” and your legal obligations

2. About Bernicia

Shared Ownership was introduced by the Government to assist people who would otherwise be unable to afford to buy a suitable home for their needs on the open market. Through the scheme you buy an initial share of the property and pay rent on the remaining share you do not own. If you wish to do so, you can buy further shares and in most instances, own your home outright.

When purchasing a shared ownership property you will enter into a lease agreement. The lease is a legal document that entitles you as the leaseholder (also referred to as the ‘lessee’) to occupy the property for a set number of years, usually a term of either 99 or 125 years. The lease also contains various covenants which set out the rights and obligations of both the leaseholder (you) and the freeholder/landlord (Bernicia).

It is important to note that when buying a property on a leasehold basis you do not own the bricks and mortar or the land which the building stands upon. However, your lease provides you with the right to occupy the property for a fixed period of time i.e. the term. The structure of the building and the land on which it is built, remains in ownership of the freeholder.

Bernicia Group owns and manages over 14,000 properties, and is developing new homes across a range of property types and tenures. We provide housing, care and support and services for single people, couples, families, older residents and those requiring additional support and assistance.


The main covenants contained in a shared ownership lease require you to:

• Pay Bernicia the rent, administration fee, buildings insurance premium and also a service charge, if applicable.

• Pay all outgoings relating to the property such as council tax, water charges, gas, electricity etc.

• If your property is a house to keep both the interior and exterior of the property in good repair and decoration.

• If your property is a flat to keep the interior of your property and any other part of your ‘demised premises’ in good repair and

decoration. To also repay Bernicia your proportion of the cost which we incur in keeping the structure of the block/building in good repair.

• Not to carry out alterations or structural additions to the property without Bernicia’s prior consent.

• Allow Bernicia to inspect your property or to allow access (if required) to enable Bernicia to complete repairs on any adjoining/adjacent properties in our ownership.

• Occupy the property yourself as your main residence and under no circumstances to sublet.

• Not to cause a nuisance or annoyance to other occupiers.

This lease requires us to:

• Insure the building.

• If applicable, provide services such as landscaping, cleaning etc.

• In the case of flats, to keep the structure of the block/building and any common areas in good repair.

• Allow you to purchase additional shares, known as staircasing. Subject to any maximum cap, which will also be set out in the lease.

• Allow you to assign (sell) the lease to another purchaser who also fits the shared ownership eligibility criteria and is approved following Bernicia’s further assessments.

If you do not adhere to the terms of your lease then you are considered to be in breach of it. If this happens, we will inform you of this and request that you remedy the breach. In all circumstanes, Bernicia will firstly allow you reasonable opportunity to rectify the matter without legal intervention.


Ultimately, if you still continue to breach your lease, we can inform your mortgage lender and/or apply to the County Court to have your lease forfeited. This means that your lease agreement will be terminated and full ownership will revert to Bernicia. If your lease is forfeited then you are not entitled to any compensation. However, you will have the right to apply to the court for ‘relief of forfeiture’ within a certain time period and providing you can demonstrate that the breach has indeed been remedied.

Under the terms of the lease you must pay rent on the portion of the property that is still owned by Bernicia. The amount of rent is determined by the percentage we own, so the higher a percentage you purchase, the lower the rent. In addition to the rent an administration, insurance fee and sometimes a service charge may be payable.

The lease allows us to review and increase the rent every 12 months and this review takes place on the 1st of April of each year. Bernicia will provide at least one month’s notice of any increases in the rent.

If rent arrears accrue we may ask your mortgage lender (if applicable) to add any rent arrears to the balance of your mortgage. If your lender refuses to do this, we may seek a court order to repossess your home. If we obtain a court order against you then this may prevent you from being successful in applying for credit in the future.

It is very important to keep up your payments of both rent and mortgage. If you fall behind with either then you could risk losing your home. If you are unable to maintain payments and are experiencing financial difficulty you are advised to contact your lender or the Citizens Advice Bureau as soon as possible.

We are sympathetic to Shared Owners who suffer financial hardship through no fault of their own. We will try and offer help or assistance wherever possible. Depending upon your circumstances, you may be able to claim housing benefit to meet some or all of the rent and service charge payments.

5. Rent and Other Payments


There are many ways to pay your rent or service charges...



Direct Debit (DD) DD payments are made directly from your bank account and can be made weekly, 2 weekly, 4 weekly, and calendar monthly and on any date in the month. Monthly amounts are the average of the balance of amounts due for the financial year.

If you wish to pay by DD please contact our customer contact team on 0344 800 3800.

Standing Order (SO)Monthly or weekly payments can be made directly from your bank account.

We will calculate your payments and send details on a form for you to present to your bank.

Request a SO from a customer contact adviser or by ringing 0344 800 3800.

Text PaymentTo use the service you must register online at www.allpayments.net

OnlineYou can pay Online using your debit card, by visiting www.allpay.net and following the online instructions or by telephoning 0344 800 3800. In addition to your rent reference number have your debit card details ready and the amount you need to pay.

By PostYou may also post your payment to Bernicia’s offices at:

Oakwood Way, Ashwood Business Park, Ashington, NE63 0XF

OR

Cheviot House, Beaminster Way East, Kingston Park, Newcastle upon Tyne, NE3 2ER

Do not send cash, cheques to be made payable to Bernicia Group

6. Ways to Pay RentYou can pay your rent and service charges at outlets displaying the following signs.

http://www.allpayments.net


7. Repairs, Maintenance and ImprovementsUnder the terms and conditions of your lease agreement you are solely responsible for both arranging and funding all necessary repairs and maintenance on your home.

Although we have an equity share in your home we are not liable for any cost of the repairs or maintenance of the property. The only exception to this is if your property is a flat, then typically Bernicia will have repairing responsibility of the structure of the building and any communal areas (subject to you re-paying your proportion of the costs we incurr in doing so).

If you have any private gardens included in the boundary of your property, then maintenance is your own responsibility. If you have the use of communal grounds, along with other residents, then we will maintain these areas and the cost we incurr will be payable as a service charge.

All shared owners will be responsible to arrange for a gas service to be carried out annually.

Once you have purchased your home you may wish to make some improvements or alterations to your property. You must write to us to request permission before you carry out any work and pay our reasonable administration fee. We will not unreasonably withhold permission, but obtaining our consent is an important condition under the terms of your lease.

If you intend to make structural changes to your property you will also need to provide detailed plans along with your request. You will also be responsible for obtaining your own building control and planning permission, if applicable. If you carry out works without permission, then you may need to pay the cost of putting things back as they were originally. Following consent and when the improvements or alterations are complete, any compliance certification should be sent to us for our records. We may also inspect the work before and/or after its completion.

Please note that UPVC doors are not suitable as front doors to flats, if your property is contained within a block via a communal hallway. If you wish to replace your flat door then please contact Bernicia with regard to the specification of the required fire resisting door. Once consent is provided and your door is fitted, we will also require the fire resistance certificate supplied by your installer.


These can include;

• Grounds maintenance

• Caretaking/cleaning

• Lighting

• Heating

• Reactive or planned maintenance

• Maintenance of private pumping stations, sewerage tanks etc.

An administration/management charge is also added to cover Bernicia’s reasonable costs of managing the buildings insurance, providing services and administrating your rent account.

8. Service Charges and Major RepairsSome Shared Ownership properties are subject to service charges which cover the day-to-day expenditure we incur in maintaining the building (if applicable), communal areas and other estate management costs.

9. Buildings InsuranceWe are obliged to insure your home i.e. the bricks and mortar as part of our obligations under the terms of your lease.

This insurance does not cover your contents. You are strongly advised to arrange your own contents insurance cover for your belongings e.g. furniture, electrical goods, carpets, personal effects etc.

The buildings insurance policy covers damage that may occur to the property due to an insured peril. Examples are storm, flood, fire, lightening, explosion, malicious damage etc. It will also cover the cost of rebuilding or reinstating the building if there were to be a major fire or other catastrophe. It is important to note that buildings insurance does not cover the cost of general maintenance or wear and tear to the property.


Further information can be requested from Bernicia.


As with any insurance policy there is an excess payable (this means an initial amount of a total claim, which the insurer will not cover). This means you will have to pay the applicable excess on any insurance claim you make. An up-to-date insurance schedule can be requested from Bernicia at any time.

If you wish to make a claim under the buildings insurance policy please contact Bernicia immediately. If there is a delay in making an insurance claim, this may reduce the amount of any money the insurers are prepared to pay in settlement.

It may also prove more difficult for the insurer to assess the damage caused by an insured peril, if your claim is made significantly after the incident date.

Many believe that the Bernicia buildings insurance policy will automatically insure furniture, belongings and decorations against fire, theft, vandalism or water damage such as bust pipes. This is not the case. Unfortunately some only realise this after the damage has been caused. We make it easy for you to insure your belongings under a special household contents insurance scheme.

The insurance is arranged with Royal Sun Alliance plc and is available only to Bernicia tenants or leaseholders.


• Violence, threats of violence or intimidation.

• Harassment, hate crime and domestic abuse.

• Intimidating groups taking over public spaces.

• Unreasonable and excessive noise.

• Criminal activities, including drug offences and the use of weapons.

• The misuse of fireworks.

• Reckless use of motor vehicles or bikes.

10. Keeping of Pets

11. Anti-Social Behaviour

If you own a shared ownership flat, then your lease may contain a covenant that you must obtain permission from Bernicia to keep a pet. Any requests should be made in writing. Please note that at certain developments, particularly those with internal communal areas, Bernicia reserves the right to prohibit the keeping of pets in the interests of good estate management.

If you own a shared ownership house then you are free to keep normal domestic pets in your home such as a cat or dog. However, your lease may contain restrictions on the keeping of unusual animals at the property. If you are intending to keep anything other than normal domestic pets then contact Bernicia in the first instance.

In all circumstances, your pets must not cause a nuisance or inconvenience to other neighbours.

Bernicia recognises the adverse effect that anti-social behaviour can have on our local communities and takes the issue very seriously.

Working with our residents and partners, we have a number of measures available to reduce the impact of anti-social behaviour on our communities.

Examples of what we would classify as anti-social behaviour may include but is not exclusive to:


If you are experiencing nuisance or anti-social behaviour, please contact our customer services team. If the incidents are serious, then contact the Police immediately. As each incident or problem is different, we assess the situation and then agree a suitable action plan with you to deal with it.

12. Subletting

The shared ownership initiative dictates that the property can only be lived in by the owner occupier. Your lease agreement therefore contains a fundamental clause which prevents you from subletting your home.

You are permitted to take in a lodger. This is not the same as subletting because a lodger lives with you and does not have security of a tenancy.

13. RemortgagingBernicia has a financial and legal interest in your home and if you have a mortgage, your lender also has an interest too.

As such, we are obliged to enter into an agreement with your lender to protect them, should they be required to repossess your property due to mortgage arrears. This agreement is referred to as the Mortgagee Protection Clause, which is documented in your lease. Due to this you must inform us of any changes to your mortgage so that we can consider our approval.

There are three scenarios:

• Remortgage with no further borrowing – this is where you negotiate a better deal with your current lender, or you move from your current lender to another without increasing the amount borrowed.

• Further borrowing – this is where you borrow more money but stay with your current lender.

• Remortgage and further borrowing – this is where you move from your current lender and also borrow more money.


Subject to the terms of your new mortgage offer, we will provide our consent if you are not increasing the amount borrowed. However, we will only agree to additional borrowing in limited circumstances. Examples of which are to enable you to staircase, to buy out another leaseholder or to comply with your covenants under the lease. We will not give our approval for you to borrow extra money against your property for other personal expenditure or to consolidate unsecured personal loans or debt.

If you default on your mortgage payments and your lender takes possession of your home, the Mortgagee Protection Clause allows them to recover any shortfall owed to them from Bernicia’s share of the property. This means in the case of repossession, Bernicia may need to cover your lender’s losses above and beyond any income they receive from selling your share of the property. This also includes their expenditure in bringing about the repossession, such as legal and professional fees. The more you owe to your lender, then the more Bernicia may be required to compensate them.

To approve additional lending we will require you to provide us with:

• A copy of your mortgage offer from your proposed lender.

• If applicable, written confirmation informing us why you wish to increase your borrowing. If the additional borrowing is for home improvements, details of the improvements you plan to make, together with quotes, invoices or receipts for work being carried out.


Please contact Bernicia for a copy of our “Staircasing Guide.”

14. StaircasingAs an existing shared owner you are able to increase the share you own in the property at any time during the term of your lease. This is known as “staircasing.”

The price paid for further shares is based on the open market value of the property at the time when you apply to staircase. The valuation does not take into account any increase in value to the property that is as a result of any improvements you may have made to your home.

In some cases there may be a restriction/cap as to the maximum percentage you can buy. Examples are shared ownership properties located in rural areas, properties

designated for older persons or any other scheme specific planning conditions which we are required to comply with. You should consult your individual lease agreement to see if this applies to your property.

Details of the staircasing requirements are set out in your original lease. If you are considering staircasing then please contact Bernicia for a copy of our “Staircasing Guide” which contains further advice and information.


15. Selling your HomeAs a shared owner looking to sell your share, the terms of the lease require you to offer the property to qualifying applicants as nominated by Bernicia.

If we are unable to nominate a suitable purchaser within 8 weeks, under the terms of the lease you will be able to sell your share of the property on the open market.

Whilst this is a standard clause in the Homes England model lease, Bernicia do not currently operate a waiting list for shared ownership. This means that subject to contacting Bernicia first, you will be able to advertise your share for sale with an Estate Agent of your choice rather than waiting 8 weeks to do so.

If you are contemplating selling your share, then please get in touch with Bernicia and we can provide further information and a copy of our Shared Ownership Resale Guide.

In view of our continuing interest in the property if anyone is interested in purchasing your available share, our consent must be sought. No sale must progress or offer be accepted until the applicant has been approved by Bernicia. We will only approve an application if the person meets the shared ownership eligibility criteria as set by the government. In addition, the applicant must satisfy Bernicia’s own verification and affordability assessments.

Both you and your buyer will be responsible for your own legal fees. Bernicia will charge an administration fee for the assignment of the lease.

Prior to marketing the property, an independent valuation to determine the market value must be established by a RICS qualified surveyor.


16. Varying a Shared Ownership LeaseThe terms of a lease this can only be varied by mutual agreement between you and Bernicia or through an order made by a court or tribunal.

There are specific procedures that need to be followed in these circumstances and you will need to obtain legal advice. Generally speaking, a lease would only be varied if it was deemed to be defective i.e. does not provide sufficient provisions in relation to a certain right or obligation of either party.

If the proposed amendment to your lease involves one of the clauses that Homes England considers to be fundamental to shared ownership, Bernicia will also need to obtain their agreement.

The following list does not cover every possibility but we would need their agreement to change:

• The basis of service charge calculations or apportionments;

• Rent review clauses;

• The landlord’s right of first refusal on resale;

• The clause that protects your mortgage lender’s interest in the property;

• Clauses affecting your right to staircase;

• Clauses setting out the procedure for selling;

• The clause that prevents subletting the property;

• Any other changes that have a knock on effect on the above.

As a shared owner, your lease gives you a number of rights and responsibilities. You should always seek appropriate independent advice, if you have any queries in relation to the document.


17. Lease Extension

As your lease term gets shorter, this can affect the value of the property. It may be highlighted when selling, as mortgage companies are often reluctant to lend on a lease with less than 75 years left on it.If you own a shared ownership lease, this does not qualify for the right to lease extension under the provisions of the Leasehold Reform Housing and Urban Development Act 1993. However, Bernicia (if we own the freehold) will normally agree to extend your lease on a voluntary basis if your remaining term is so short that it would affect the ability to mortgage the property. A shared ownership property will be valued as though you are a 100% owner but we will only charge you a percentage of the premium equivalent to the percentage of the property you own.

It will be necessary to have a valuation undertaken in order to determine the increase in value of the property from the current term to an extended lease term (an additional 90 years). Bernicia will arrange for a valuer to visit your property to determine this.

On receipt of the valuation we will notify you in writing of the amount that you will be required to pay on completion of the lease extension (the ‘Premium’). Once all parties agree the Premium, our solicitors will be instructed to proceed with the variation of the lease to extend the term.

You are required to pay for:

• Bernicia’s valuation costs.

• The Premium.

• Bernicia’s reasonable legal fees plus any disbursements.

• Your own legal fees.


Leasehold Information PackThe fee for this information is £160.00 plus VAT.

Should you require additional information, we may charge a further fee of

£80.00 plus VAT.Notice of Assignment/Transfer

The fee for acknowledging a Notice of Transfer/Mortgage is

£80.00 plus VAT per notice.

Consent to alterationsThe fee for providing this consent is

£40.00 plus VAT per application.


18. Administration FeesBernicia charge an administration fee to cover our costs when providing additional services or information to individual leaseholders.

This following list is not exhaustive and whilst correct at the time of print, may be subject to change. Should you require documentation such as the below, then please contact Bernicia for our up-to-date fees.


There are a number of ways you can make a complaint:

Telephone our Customer Service Team on 0344 800 3800

In writing to Bernicia, Oakwood Way, Ashwood Business Park, Ashington, NE63 0XF

By sending an email to [email protected]

19. ComplaintsWe always try our very best to deliver services to the satisfaction of customers but occasionally things can go wrong.

If you feel that things have not been dealt with properly or we have not provided you with the service you expect then you can make a formal complaint.

Bernicia Group is a Registered Society in England

and Wales under the Co-operative and Community

Benefit Societies Act 2014 No. 7711. Affiliated to the

Federation of Housing Associations. Registered under

the Housing and Regeneration Act 2008 No.4868.

Registered Office: Ashwood House, Oakwood Way,

Ashwood Business Park, Ashington, Northumberland,

NE63 0XF.

Registered office:

Oakwood Way

Ashwood Business Park

Ashington, NE63 0XF

Bernicia Group Ltd

Oakwood Way Ashwood Business Park Ashington Northumberland NE63 0XF

www.bernicia.com

T: 0344 800 3800 F: 01670 819844 E: [email protected]

All our publications can be made available on request in large print, braille, or audio and in other languages.

Our Home Ownership Team can be contacted directly on 0191 238 3919, by writing to use at Cheviot House, Beaminster Way East, Kingston Park, Newcastle upon Tyne NE3 2ER or by sending an email to [email protected]

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Shared Ownership - Bernicia Homes · Shared Ownership Guide Contents 1. Welcome 2. About Bernicia...

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