On 1 April, the Government issued its response to the consultation confirming the new model will proceed with (1) a 10% initial share, (2) 1% annual staircasings for a minimum of 15 years, (3) 10 year free repair period (of up to £500 per year), and (4) Right to Shared Ownership.
The Government provided further details, including:
- Key Information Document requirement for prospective purchasers setting out responsibilities, processes and costs;
- Local Authority HPI valuations on an annual basis to aid 1% staircasing;
- Minimum 990 year lease term;
- Transitional arrangements for current planning applications although a written ministerial statement is awaited;
- Unsecured lending will be permitted; and
- Further details in relation to the Free Repair period including clarifying that wear and tear, deliberate disrepair and failure to carry out routine servicing will not be covered.
Whilst RPs wait for the true impact, it may be practical to consider preparation:
- Accurate record keeping in connection with repairs, staircasings and valuations;
- Automated systems for the monitoring of units exercising the Right to Shared Ownership;
- Reviewing S.106 Agreements;
- Reviewing Shared Ownership caps in existing loan agreements;
- For future funding arrangements consider the impact this may have on security portfolios; and
- Consider tenure mix of planning applications.
Please click here to view our recently published report on Shared Ownership.