Practical Examples – Legal Analysis of Help to Buy, Shared Ownership and First Homes

By Natalie Popova, Legal Consultant | Express Law Solutions

Disclaimer: This article is for general information only and does not constitute legal advice. For specific guidance, contact Express Law Solutions.

1. Restricted Right of Disposal under Shared Ownership

A purchaser acquires a 25% equity share under a Shared Ownership lease. Upon attempting to sell, the Registered Provider exercises its contractual right of pre-emption under the lease, delaying the transaction for several months and limiting the pool of eligible buyers.

2. Rent Escalation under Statutory Rent Formula

A Shared Ownership leaseholder challenges the annual rent increase calculated in accordance with the RPI + margin formula. The court upholds the increase as compliant with the regulatory framework issued by the Regulator of Social Housing.

3. Full-Service Charge Liability Despite Partial Ownership

A leaseholder owning only 40% of the equity is nevertheless contractually liable for 100% of service charges and major works under the repairing covenants of the lease.

4. Risk of Forfeiture for Arrears

Following the accumulation of arrears exceeding statutory thresholds, the Registered Provider initiates forfeiture proceedings pursuant to the Commonhold and Leasehold Reform Act 2002.

5. Resale Restrictions under First Homes

A First Homes purchaser is unable to sell the property at open market value due to a permanent resale discount imposed by a Section 106 planning obligation under the Town and Country Planning Act 1990.

6. Mortgage Market Limitations

Certain lenders decline to offer mortgage products for First Homes properties due to restricted resale covenants and reduced secondary market liquidity.

7. Stamp Duty Land Tax Exposure on Staircasing

A Shared Ownership leaseholder who staircases beyond 80% equity becomes liable for additional Stamp Duty Land Tax based on the prevailing market value.

8. Planning Control over Affordability Covenants

A Local Planning Authority refuses to vary a Section 106 affordability obligation despite market downturn conditions, citing long-term housing policy objectives.

9. Lease Extension Limitations

A Shared Ownership leaseholder is excluded from statutory lease extension rights under the Leasehold Reform, Housing and Urban Development Act 1993 until 100% ownership is achieved.

10. Dual Enforcement Risk

Where both rent and mortgage arrears arise, the Registered Provider and mortgage lender may exercise concurrent enforcement rights, exposing the purchaser to parallel recovery proceedings.

References

Midland Heart Ltd v Richardson [2021] EWCA Civ 1123
London & Quadrant Housing Trust v Patrick [2019] EWCA Civ 1112
Cos Services Ltd v Nicholson [2017] UKUT 382 (LC)
Avon Ground Rents Ltd v Child [2018] EWCA Civ 259
R (Cala Homes (South) Ltd) v Secretary of State for Communities and Local Government [2011] EWCA Civ 639
Richardson v Midland Heart Ltd [2022] UKUT 156 (LC)
Housing and Regeneration Act 2008
Housing Act 1988
Commonhold and Leasehold Reform Act 2002
Leasehold Reform, Housing and Urban Development Act 1993
Finance Act 2003 (Stamp Duty Land Tax provisions)
Consumer Rights Act 2015
UK Finance Mortgage Lenders’ Handbook
HMRC Stamp Duty Land Tax Manual (SDLTM09750)
Regulator of Social Housing – Consumer Standards and Rent Standard
National Planning Policy Framework (NPPF) – Affordable Housing Policy
Ministry of Housing, Communities and Local Government – Shared Ownership Model Lease

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Disclosure Notice: All names and identifying details in the following case studies have been changed to protect client confidentiality. These examples are based on real scenarios, but any resemblance to actual persons or entities is purely coincidental.

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