HCA Creates Shared Ownership Lease Model

A new model shared ownership lease aimed at creating more certainty for lenders and more clarity for purchasers of New Build HomeBuy property has been created by the Homes and Communities Agency (HCA).

The revised model lease, which will be adopted by all lenders and housing providers, will come into force from 6 April.

While the existing industry lease has been adapted over the years, changes to create the revised lease are more wide-ranging, using clearer English and incorporating amendments to 'fundamental' clauses that provide greater certainty of the rights and obligations of lenders, affordable housing providers and customers.

The changes also increase the protection offered to mortgage lenders in the shared ownership lease.

The HCA believes the lease will not only simplify and speed up the home buying process but, at a time of financial caution, will assure existing lenders of shared-ownership mortgages. As economic conditions improve the revised lease should help to encourage new lenders into the shared ownership market.


Jamie Ratcliff, Head of intermediate Markets for the HCA said: "New Build HomeBuy is an important route for helping first time buyers get a foot on the property ladder. However, we have listened to the concerns of some lenders and also acted to ensure purchasers are clear about their obligations. Our revised shared ownership lease works for both lenders and purchasers by spelling out responsibilities and liabilities more clearly."

The lease has been developed in conjunction with CLG (Communities and Local Government), the Council for Mortgage Lenders, the National Housing Federation and a number of leading mortgage lenders and providers of affordable housing.

Jackie Bennett, Head of Policy for the Council of Mortgage Lenders, added: "Shared ownership lending is more complex than mainstream mortgage products and requires a good level of communication and awareness from all parties involved.

"We welcome this much-improved lease which has been the result of close working between the CML, lenders, the HCA, the National Housing Federation and representatives from the housing sector.

"The mortgage market is likely to recover only slowly, however, as the flow of lending improves these recent changes to the shared ownership lease should help sustain this type of lending."

(CD/BMcC)