Housing Act 1985

The right to a shared ownership lease E+W

143 Right to be granted a shared ownership lease. E+W

(1) Where a secure tenant has claimed to exercise the right to buy and—

(a) his right has been established and his notice claiming to exercise it remains in force,

(b) he has claimed the right to a mortgage but is not entitled, or treated as entitled, to a full mortgage, and

(c) he is entitled to defer completion,

he also has the right to be granted a shared ownership lease of the dwelling-house in accordance with the following provisions of this Part.

(2) Where the right to buy belongs to two or more persons jointly, the right to be granted a shared ownership lease also belongs to them jointly.

Valid from 02/09/1993

[F1 143A Right excluded by entitlement to housing benefit. E+W

(1) The right to acquire on rent to mortgage terms cannot be exercised if—

(a) it has been determined that the tenant is or was entitled to housing benefit in respect of any part of the relevant period, or

(b) a claim for housing benefit in respect of any part of that period has been made (or is treated as having been made) by or on behalf of the tenant and has not been determined or withdrawn.

(2) In this section “the relevant period” means the period—

(a) beginning twelve months before the day on which the tenant claims to exercise the right to acquire on rent to mortgage terms, and

(b) ending with the day on which the conveyance or grant is executed in pursuance of that right.]

Textual Amendments

F1 Ss. 143, 143A, 143B substituted for s. 143 (2.9.1993 so far as confers on Secretary of State a power to make orders, regulations or declarations, 11.10.1993 in so far as it is not in force) by 1993 c. 28, s. 108; S.I. 1993/2134, arts. 2, 3, 4(b) (with saving in Sch. 1 para. 4(1)).

Modifications etc. (not altering text)

C6 Ss. 143-151 amended (11.10.1993) by 1993 c. 28, s. 107(c); S.I. 1993/2134, arts. 2, 4(b) (with saving in Sch. 1 para. 4(1)).

Valid from 02/09/1993

[F2 143B Right excluded if minimum initial payment exceeds maximum initial payment. E+W

(1) The right to acquire on rent to mortgage terms cannot be exercised if the minimum initial payment in respect of the dwelling-house exceeds the maximum initial payment in respect of it.

(2) The maximum initial payment in respect of a dwelling-house is 80 per cent. of the price which would be payable if the tenant were exercising the right to buy.

(3) Where, in the case of a dwelling-house which is a house, the weekly rent at the relevant time did not exceed the relevant amount, the minimum initial payment shall be determined by the formula—

where—

P = the minimum initial payment;

R = the amount of the weekly rent at the relevant time;

M = the multiplier which at that time was for the time being declared by the Secretary of State for the purposes of this subsection.

(4) Where, in the case of a dwelling-house which is a house, the weekly rent at the relevant time exceeded the relevant amount, the minimum initial payment shall be determined by the formula—

where—

P = the minimum initial payment;

Q = the qualifying maximum for the year of assessment which included the relevant time;

E = the amount by which the weekly rent at that time exceeded the relevant amount;

M = the multiplier which at that time was for the time being declared by the Secretary of State for the purposes of this subsection.

(5) The minimum initial payment in respect of a dwelling-house which is a flat is 80 per cent. of the amount which would be the minimum initial payment in respect of the dwelling-house if it were a house.

(6) The relevant amount and multipliers for the time being declared for the purposes of this section shall be such that, in the case of a dwelling-house which is a house, they will produce a minimum initial payment equal to the capital sum which, in the opinion of the Secretary of State, could be raised on a 25 year repayment mortgage in the case of which the net amount of the monthly mortgage payments was equal to the rent at the relevant time calculated on a monthly basis.

(7) For the purposes of subsection (6) the Secretary of State shall assume—

(a) that the interest rate applicable throughout the 25 year term were the standard national rate for the time being declared by the Secretary of State under paragraph 2 of Schedule 16 (local authority mortgage interest rates); and

(b) that the monthly mortgage payments represented payments of capital and interest only.

(8) In this section—

• “net amount”, in relation to monthly mortgage payments, means the amount of such payments after deduction of tax under section 369 of the M1 Income and Corporation Taxes Act 1988 (mortgage interest payable under deduction of tax);

• “qualifying maximum” means the qualifying maximum defined in section 367(5) of that Act (limit on relief for interest on certain loans);

• “relevant amount” means the amount which at the relevant time was for the time being declared by the Secretary of State for the purposes of this section;

• “relevant time” means the time of the service of the landlord’s notice under section 146 (landlord’s notice admitting or denying right);

• “rent” means rent payable under the secure tenancy, but excluding any element which is expressed to be payable for services, repairs, maintenance or insurance or the landlord’s costs of management.]

Textual Amendments

F2 Ss. 143, 143A, 143B substituted for s. 143 (2.9.1993 so far as confers on Secretary of State a power to make orders, regulations, or declarations, 11.10.1993 in so far as it is not in force) by 1993 c. 28, s. 108; S.I. 1993/2134, arts. 2, 3, 4(b) (with saving in Sch. 1 para. 4(1)).

Modifications etc. (not altering text)

C7 Ss. 143-151 amended (11.10.1993) by 1993 c. 28, s. 107(c); S.I. 1993/2134, arts. 2, 4(b) (with saving in Sch. 1 para. 4(1)).

Marginal Citations

M1 1988 c. 1.

144 Tenant’s notice claiming to exercise right to shared ownership lease. E+W

(1) A secure tenant claims to exercise the right to be granted a shared ownership lease by written notice to that effect served on the landlord stating the initial share which he proposes to acquire.

(2) The notice may be withdrawn or varied at any time by notice in writing served on the landlord.

(3) On the service of a notice under this section, any notice served by the landlord under section 140 or 141 (landlord’s notices to complete purchase in pursuance of right to buy) shall be deemed to have been withdrawn; and no such notice may be served by the landlord whilst a notice under this section remains in force.

(4) If on the service by the tenant of a further notice under section 134 (claim to exercise right to a mortgage) he becomes entitled, or treated as entitled, to a full mortgage, he ceases to be entitled to exercise the right to be granted a shared ownership lease; and any notice of his under this section shall be deemed to have been withdrawn.

(5) Where a notice under this section is withdrawn, or deemed to have been withdrawn, the tenant may complete the transaction in accordance with the provisions of this Part relating to the right to buy.

145 Tenant’s initial share. E+W

(1) The tenant’s initial share in the dwelling-house shall be a multiple of the prescribed percentage and shall not be less than the minimum initial share.

(2) The prescribed percentage is 12.5 per cent. or such other percentage as the Secretary of State may by order prescribe.

(3) The minimum initial share is 50 per cent. or such other percentage as the Secretary of State may by order prescribe.

(4) An order under this section—

(a) may make different provision with respect to different cases or descriptions of case, including different provision for different areas, and

(b) may contain such transitional provisions as appear to the Secretary of State to be necessary or expedient.

(5) An order under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

146 Landlord’s notice admitting or denying right. E+W

—Where a notice under section 144 (notice claiming to exercise right to shared ownership lease) has been served by the tenant, the landlord shall, unless the notice is withdrawn, serve on the tenant within four weeks a written notice either—

(a) admitting the tenant’s right, or

(b) denying it and stating the reasons why, in the opinion of the landlord, the tenant does not have the right to be granted a shared ownership lease.

Valid from 11/10/1993

[F3 146A Tenant’s notice of intention. E+W

(1) Where a notice under section 146 has been served on a secure tenant, he shall within the period specified in subsection (2) serve a written notice on the landlord stating either—

(a) that he intends to pursue his claim to exercise the right to acquire on rent to mortgage terms and the amount of the initial payment which he proposes to make, or

(b) that he withdraws that claim and intends to pursue his claim to exercise the right to buy, or

(c) that he withdraws both of those claims.

(2) The period for serving a notice under subsection (1) is the period of twelve weeks beginning with the service of the notice under section 146.

(3) The amount stated in a notice under subsection (1)(a)—

(a) shall not be less than the minimum initial payment and not more than the maximum initial payment, and

(b) may be varied at any time by notice in writing served on the landlord.]

Textual Amendments

F3 Ss. 146A, 146B inserted (11.10.1993) by 1993 c. 28, s. 111; S.I. 1993/2134, arts. 2, 4(b) (with saving in Sch. 1 para. 4(1)).

Modifications etc. (not altering text)

C8 Ss. 143-151 amended (11.10.1993) by 1993 c. 28, s. 107(c); S.I. 1993/2134, arts. 2, 4(b) (with saving in Sch. 1 para. 4(1)).

Valid from 11/10/1993

F4 146B Landlord’s notice in default. E+W

(1) The landlord may, at any time after the end of the period specified in section 146A(2), serve on the tenant a written notice—

(a) requiring him, if he has failed to serve the notice required by section 146A(1), to serve that notice within 28 days, and

(b) informing him of the effect of this subsection and subsection (4).

(2) At any time before the end of the period mentioned in subsection (1)(a) (or that period as previously extended) the landlord may by written notice served on the tenant extend it (or further extend it).

(3) If at any time before the end of that period (or that period as extended under subsection (2)) the circumstances are such that it would not be reasonable to expect the tenant to comply with a notice under this section, that period (or that period as so extended) shall by virtue of this subsection be extended (or further extended) until 28 days after the time when those circumstances no longer obtain.

(4) If the tenant does not comply with a notice under this section the notice claiming to exercise the right to acquire on rent to mortgage terms shall be deemed to be withdrawn at the end of that period (or, as the case may require, that period as extended under subsection (2) or (3)).

Textual Amendments

F4 Ss. 146A, 146B inserted (11.10.1993) by 1993 c. 28, s. 111; S.I. 1993/2134, arts. 2, 4(b) (with saving in Sch. 1 para. 4(1)).

Modifications etc. (not altering text)

C9 Ss. 143-151 amended (11.10.1993) by 1993 c. 28, s. 107(c); S.I. 1993/2134, arts. 2, 4(b) (with saving in Sch. 1 para. 4(1)).

147 Landlord’s notice of initial contribution, etc. E+W

(1) Where a secure tenant has claimed to exercise the right to be granted a shared ownership lease and that right has been established (whether by the landlord’s admission or otherwise), the landlord shall, within eight weeks, serve on the tenant a written notice complying with this section.

(2) The notice shall state—

(a) the amount which, in the opinion of the landlord, should be the amount of the consideration for the grant of the lease on the assumption that the tenant’s initial share is that stated in the notice under section 144; and

(b) the effective discount on an acquisition of that share for that consideration,

determined in each case, in accordance with section 148.

(3) The notice shall state the provisions which, in the opinion of the landlord, should be included in the lease.

(4) Where the landlord is not a housing association, the notice shall state any variation in the provisions which, in the opinion of the landlord, should be contained in the deed by which the mortgage is to be effected.

(5) Where the landlord is a housing association, the landlord shall send a copy of the notice to the [F5 Corporation], and the [F5 Corporation] shall, as soon as practicable after receiving the notice, serve on the tenant a written notice stating any variation in the provisions which, in the opinion of the [F5 Corporation], should be contained in the deed by which the mortgage is to be effected.

Textual Amendments

F5 Words substituted by Housing Act 1988 (c. 50, SIF 61), s. 140(2), Sch. 17 Pt. II para. 106

148 Tenant’s initial contribution and effective discount. E+W

(1) The consideration for the grant of a shared ownership lease (the tenant’s “initial contribution”) shall be determined by the formula—

and the effective discount shall be determined by the formula—

where—

• C = the tenant’s initial contribution,

• E = the effective discount,

• S = the tenant’s initial share expressed as a percentage,

• V = the value of the dwelling-house at the relevant time, determined in accordance with section 127, and

• D = the discount which if the tenant were exercising the right to buy would be applicable under sections 129 to 131.

(2) In determining the value of the dwelling-house for the purposes of this section, the assumptions to be made under section 127 (which vary according to whether it is the freehold or a lease which is to be acquired) are those applicable in relation to the dwelling-house for the pruposes of the right to buy.

149 Change of landlord after notice claiming to exercise right to shared ownership lease. E+W

—Where the interest of the landlord in the dwelling-house passes from the landlord to another body after a secure tenant has given notice claiming to exercise the right to be granted a shared ownership lease, all parties shall be in the same position as if the other body had become the landlord before the notice was given and had been given that notice and any further notice given by the tenant to the landlord and had taken all steps which the landlord had taken.

150 Duty of landlord to grant shared ownership lease. E+W

(1) Where a secure tenant has claimed to exercise the right to be granted a shared ownership lease and that right has been established, then, as soon as all matters relating to the grant and to the amount to be left outstanding or advanced on the security of the dwelling-house have been agreed or determined, the landlord shall grant the tenant a shared ownership lease of the dwelling-house in accordance with the following provisions of this Part.

(2) If the tenant has failed to pay the rent or any other payment due from him as a tenant for a period of four weeks after it has been lawfully demanded from him, the landlord is not bound to comply with subsection (1) while the whole or part of that payment remains outstanding.

(3) The duty imposed on the landlord by subsection (1) is enforceable by injunction.

151 Terms and effect of grant and mortgage. E+W

(1) A grant of a shared ownership lease in pursuance of this Part shall conform—

(a) with Schedule 8 (terms of shared ownership lease), and

(b) subject to that, with Parts I and III of Schedule 6 (terms of lease granted in pursuance of right to buy);

and part IV of Schedule 6 (charges) applies to a shared ownership lease as it applies to a lease granted in pursuance of the right to buy.

(2) The secure tenancy comes to an end on the grant of the shared ownership lease, and if there is then a sub-tenancy section 139 of the M2 Law of Property Act 1925 (effect of extinguishment of reversion) applies as on a merger or surrender.

(3) Where the transaction is duly completed the sum of [F6 £150] deposited by the tenant with the landlord in pursuance of section 142 (deferment of completion) shall be treated as having been paid towards the tenant’s initial contribution.

(4) A deed by which a mortgage is effected where the tenant exercises both the right to a mortgage and the right to be granted a shared ownership lease shall, unless otherwise agreed between the parties, conform with—

(a) Schedule 7 (terms of mortgage granted in pursuance of right to a mortgage), and

(b) without prejudice to that, with Schedule 9 (right to further advances).

Textual Amendments

F6 “£150” substituted by Housing and Planning Act 1986 (c. 63, SIF 61), s. 24(1), Sch. 5 Pt. I para. 5(2)(3)(4)

Marginal Citations

M2 1925 c. 20.

Valid from 11/10/1993

[F7 151A Redemption of landlord’s share. E+W

Schedule 6A (which makes provision for the redemption of the landlord’s share) shall have effect; and a conveyance of the freehold or a grant of a lease executed in pursuance of the right to acquire on rent to mortgage terms shall conform with that Schedule.]

Textual Amendments

F7 S. 151A inserted (11.10.1993) by 1993 c. 28, s. 117(1); S.I. 1993/2134, arts. 2, 4(b) (with saving in Sch. 1 para. 4(1)).

Valid from 11/10/1993

[F8 151B Mortgage for securing redemption of landlord’s share. E+W

(1) The liability that may arise under the covenant required by paragraph 1 of Schedule 6A (covenant for the redemption of the landlord’s share in the circumstances there mentioned) shall be secured by a mortgage.

(2) Subject to subsections (3) and (4), the mortgage shall have priority immediately after any legal charge securing an amount advanced to the secure tenant by an approved lending institution for the purpose of enabling him to exercise the right to acquire on rent to mortgage terms.

(3) The following, namely—

(a) any advance which is made otherwise than for the purpose mentioned in subsection (2) and is secured by a legal charge having priority to the mortgage, and

(b) any further advance which is so secured,

shall rank in priority to the mortgage if, and only if, the landlord by written notice served on the institution concerned gives its consent; and the landlord shall so give its consent if the purpose of the advance or further advance is an approved purpose.

(4) The landlord may at any time by written notice served on an approved lending institution postpone the mortgage to any advance or further advance which—

(a) is made to the tenant by that institution, and

(b) is secured by a legal charge not having priority to the mortgage;

and the landlord shall serve such a notice if the purpose of the advance or further advance is an approved purpose.

(5) The approved lending institutions for the purposes of this section are—

the Corporation,

a building society,

a bank,

a trustee savings bank,

an insurance company,

a friendly society,

and any body specified, or of a class or description specified, in an order made under section 156.

(6) The approved purposes for the purposes of this section are—

(a) to enable the tenant to make an interim or final payment,

(b) to enable the tenant to defray, or to defray on his behalf, any of the following—

(i) the cost of any works to the dwelling-house,

(ii) any service charge payable in respect of the dwelling-house for works, whether or not to the dwelling-house, and

(iii) any service charge or other amount payable in respect of the dwelling-house for insurance, whether or not of the dwelling-house, and

(c) to enable the tenant to discharge, or to discharge on his behalf, any of the following—

(i) so much as is still outstanding of any advance or further advance which ranks in priority to the mortgage,

(ii) any arrears of interest on such an advance or further advance, and

(iii) any costs and expenses incurred in enforcing payment of any such interest, or repayment (in whole or in part) of any such advance or further advance.

(7) Where different parts of an advance or further advance are made for different purposes, each of those parts shall be regarded as a separate advance or further advance for the purposes of this section.

(8) The Secretary of State may by order prescribe—

(a) matters for which the deed by which the mortgage is effected must make provision, and

(b) terms which must, or must not, be contained in that deed,

but only in relation to deeds executed after the order comes into force.

(9) The deed by which the mortgage is effected may contain such other provisions as may be—

(a) agreed between the mortgagor and the mortgagee, or

(b) determined by the county court to be reasonably required by the mortgagor or the mortgagee.

(10) An order under this section—

(a) may make different provision with respect to different cases or descriptions of case, including different provision for different areas, and

(b) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.]

Textual Amendments

F8 S. 151B inserted (11.10.1993) by 1993 c. 28, s. 118; S.I. 1993/2134, arts. 2, 4(b) (with saving in Sch. 1 para. 4(1)).

152 Landlord’s first notice to complete. E+W

(1) The landlord may, subject to the provisions of this section, serve on the tenant at any time a written notice requiring him—

(a) if all relevant matters have been agreed or determined, to complete the transaction within a period stated in the notice, or

(b) if any relevant matters are outstanding, to serve on the landlord within that period a written notice to that effect specifying the matters,

and informing the tenant of the effect of this section and of section 153(1), (2) and (4) (landlord’s second notice to complete and its effect).

(2) The period stated in a notice under this section shall be such period (of at least 56 days) as may be reasonable in the circumstances.

(3) A notice under this section shall not be served before the end of the period of [F9 three years] after the service of the tenant’s notice under section 122 (notice claiming to exercise right to buy) or, if later, nine months after the service of the notice under section 135 (landlord’s notice of terms and amount of mortgage).

(4) A notice under this section shall not be served if—

(a) a requirement for the determination or re-determination of the value of the dwelling-house by the district valuer has not been complied with,

(b) proceedings for the determination of any other relevant matter have not been disposed of, or

(c) any relevant matter stated to be outstanding in a written notice served on the landlord by the tenant has not been agreed in writing or determined.

(5) In this section “relevant matters” means matters relating to the grant and to the amount to be left outstanding or advanced on the security of the dwelling-house.

Textual Amendments

F9 Words substituted by Housing and Planning Act 1986 (c. 63, SIF 61), s. 24(1), Sch. 5 Pt. I para. 5(1)(3)(4)

153 Landlord’s second notice to complete. E+W

(1) If the tenant does not comply with a notice under section 152 (landlord’s first notice to complete), the landlord may serve on him a further written notice—

(a) requiring him to complete the transaction within a period stated in the notice, and

(b) informing him of the effect of this section in the event of his failing to comply.

(2) The period stated in a notice under this section shall be such period (of at least 56 days) as may be reasonable in the circumstances.

(3) At any time before the end of that period (or that period as previously extended) the landlord may by a written notice served on the tenant extend it (or further extend it).

(4) If the tenant does not comply with a notice under this section, the notice claiming to exercise the right to be granted a shared ownership lease and the notice claiming to exercise the right to buy shall be deemed to have been withdrawn at the end of that period (or, as the case may require, that period as extended under subsection (3)).

(5) If a notice under this section has been served on the tenant and by virtue of section 150(2) (failure of tenant to pay rent, etc.) the landlord is not bound to complete, the tenant shall be deemed not to comply with the notice.