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Homes & Communities Agency - Changes to shared ownership lease will assure lenders and buyers

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 2010.

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.  The lease can be adapted by housing providers and lenders to suit individual situations, but there are fundamental clauses that must be included in any new lease, and these are clearly signposted.

Lucy Thornycroft, investment leader of the National Housing Federation, welcomed the launch of the lease saying. 'This considerably strengthens existing protection for lenders who provide mortgages. We hope that these changes, combined with the very low levels of repossession of shared ownership properties, will encourage lenders to commit greater mortgage funds for this key product that has helped ten of thousands of families buy an affordable home.'

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.'

Jamie Ratcliff will be speaking in detail about the changes to the model lease at the National Housing Federation’s Shared ownership mortgages conference on 9 March 2010.

For further information: Anne Kerin, HCA press office on 020 7881 1653 or email anne.kerin@hca.gsx.gov.uk 

Notes to editors

A copy of the new model lease along with further explanatory documents can be downloaded shortly from the HCA website at http://cfg.homesandcommunities.co.uk/model-leases-for-housing-association-use-from-april-2010.htm Further details of the NHF conference on Shared ownership mortgages can be found at www.housing.org.uk/events or by calling 020 7067 1066.

The Homes and Communities Agency (HCA) is the single, national housing and regeneration delivery agency for England.  Our role is to create opportunity for people to live in high quality, sustainable places. We provide funding for affordable housing, bring land back into productive use and improve quality of life by raising standards for the physical and social environment.

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