25 February, 2016
Whilst traditionally, most shared ownership leasehold properties were dealt with by Registered Providers of Social Housing (“Registered Providers”), now, private developers are also able to grant shared ownership leases.
As a result, an increasing number of shared ownership flats are being located in developments where the private sector freeholder owns the building rather than the Registered Providers. The knock on effect of this however is confusion over the responsibility for repairing obligations.
So whose responsibility is it for the structural parts of the building?
Difficulties can arise in enforcing repairing obligations directly on the freeholder where the head lease between the Registered Provider and the freeholder does not contain express obligations to enforce. This is often overlooked by the shared ownership tenant, who wrongly believes that they can enforce any repairing obligations directly against the freeholder when in reality they should approach the Registered Provider who is their landlord.
The predicament for a Registered Provider is that it only has indirect obligations against the freeholder, which are more complex to enforce than direct obligations. A Registered Provider may also require that in order for a shared ownership tenant to enforce their obligations, the Registered Provider is indemnified in respect of any costs to be incurred. This is potentially expensive for the shared ownership tenant to pursue.
Practically therefore, a shared ownership tenant could find themselves in the unfortunate position of having to contend with an unreceptive freeholder rather than an approachable Registered Provider whilst trying to enforce the repairing obligations. The private sector involvement in the shared ownership division highlights a potential problem for this model of home ownership and the ability to enforce repairing obligations.
The effect on Registered Providers of Social Housing
It is crucial that Registered Providers who grant shared ownership leases are aware of their responsibilities to the shared ownership tenant and how they are able to enforce their obligations directly upon the freeholder. Registered Providers therefore should be aware of the repairing obligation contained within their lease and that any future lease clearly defines the extent, nature and scope of the repairing obligations in order to minimise any risk of a dispute or nasty surprises occurring in the future.
The Real Estate Litigation team within the Dispute Resolution Team at Steele Raymond has a wealth of knowledge and experience in dealing with Registered Providers and Social Housing generally.
If you would like any further information on this subject, please don’t hesitate to contact Peter Rolph, a Partner in the dispute resolution team specialising in property litigation on 01202 204 535 or firstname.lastname@example.org.