Shared Ownership : Frequently Asked Questions

What is Shared Ownership and am I eligible?

Read our introduction to what shared ownership is and hear from some of our home buyers about their experience. Take a minute to review our Eligibility Quick Check alongside our full eligibility check.

How can I sell my Shared Ownership property?

It is possible to sell your property at the current market value of your share, first by obtain a current valuation and then finding a suitable buyer. L&Q are given the first opportunity to re-sell your property to another Shared Ownership buyer. Please refer to our in-depth information about selling your Shared Ownership home here.

What is Staircasing?

Staircasing is the process of buying more shares in your property, up to 100%. You can read more about Shared Ownership staircasing on our dedicated information page.

What is the new Shared Ownership model?

You may have seen in the media about a new type of model, this is reliant on funding that a scheme uses and will be phased in gradually.

L&Q do not currently have any properties being sold that are funded for this new model, nor are we likely to have any in the near future as these things take time to come on board.

The differences between the schemes are minor, under the current programme we are offering you can still staircase and we offer a two-year new build warranty as for any new build.

What is a service charge? How is it calculated?

Our service charges are maintenance fees determined by the upkeep cost of the communal areas and services at our developments. Services covered include maintaining communal gardens, regularly servicing lifts, and cleaning and performing repairs in communal areas and more. Building insurance is also included in the service charge.

At the beginning of each financial year, we estimate the cost of communal services and charge you your share of that estimate. These estimates are worked out using information from our contractors and by analysing past costs. Service charge fees will vary from home to home and development to development depending on the services delivered. For example, if your home or development is serviced by a caretaker who maintains your communal garden, your service charge will be different to that of a development without a communal garden.

More information on service charges, sinking funds and management fees can be found on our Group website or speak to a sales associate.

How do I get more detailed information on the actual costs that are included within my service charge?

You can speak to our Sales Team, who will be able to provide more detail on what your service charge would cover for an individual home. When the financial year has ended, we work out the actual costs that we have paid on your behalf for communal services during the year. This is how we make sure you pay the actual cost of the services you have received for your Shared Ownership property.

What happens if the estimate for service charge is lower or higher than the amount we have been charged?

We write to you by the end of September each year to tell you the actual service charge costs. We also tell you if you need to make an extra payment because the actual costs were higher than the estimate. Alternatively, we’ll let you know if we need to refund you some money because the actual costs were lower than the estimate.

If we need you to make an extra payment for a deficit balance at the end of the year, we will apply the balance to your account, and our income team will be available to discuss payment terms for those who need assistance.

What is the Management Fee and how is it calculated?

If you pay a service charge to us, we collect a management fee as part of that charge. This is a fixed fee (exceptions may exist) calculated each year and contributes towards our costs for managing the services that you receive, collecting payments and issuing you with information about your charges.

This means you will know exactly how much the management fee will cost every year. We think this is a fair and consistent approach, and this is best practice according to the Royal Institute of Chartered Surveyors. In most cases, our management charges are in line with, or lower than, those of other housing providers and management companies.

How is the rent calculated for Shared Ownership properties?

Rent is calculated based on the percentage owned by L&Q. The amount of rent you pay on your Shared Ownership property will vary for each home depending on the share bought and the value of the property when you buy it. The higher the percentage share owned by the resident, the lower the rent paid to L&Q. As well as a significant discount on the rent compared to the open market (on average 40% less), our shared owners benefit from the security of being a leaseholder.

Shared Ownership rent increases yearly in line with the RPI inflation rate, along with an uplift usually between 0.5% and 2%*. Details of this increase are explained in the lease.

*Correct at the time of posting. All details will be confirmed in your lease

What is a sinking fund and why do I pay for it?

In property, a sinking fund is a long-term savings account that homeowners (shared owners, leaseholders and some freeholders) contribute to every month through service charges. This builds up every year and is used to pay for cyclical decoration of communal areas, or replacement of high cost items like windows, roofs, fire protection components or lifts. Contributions made are not refundable when a flat or a house is sold.

Under Section 20 of the Landlord and Tenant Act 1985 we must consult with you for any single item of works that will cost more than £250 per property. All sinking fund contributions are held by us and accounted for separately. Interest from the bank is earned on the money and is added to the sinking fund balance for the specific development every year.

What does my ground rent cover?

Ground rent is a fee paid to your freeholder and/or head lease as a condition of your lease for the land your home is on. It is usually an annual fee and is specified within your lease. Most ground rents are payable in April, unless your lease states otherwise.

Why do I pay for 100% of repairs when I only own part of my home?

Shared ownership is an ‘intermediate product’ to help buyers get onto the property ladder, and have the same experience of homeownership as they would buying on the open market. To make this possible, L&Q subsidises the rent owed on the share not purchased, and the shared owner is responsible for maintenance and repairs of their Shared Ownership property.

L&Q has a list of recommended independent financial advisors and solicitors who can help explain how the shared ownership product works to customers during the sales process. We also sign-post people to independent websites such as Which? so they can make informed choices.

How long is the repairs warranty on my new build home?

All new build properties have an insurance policy that protects L&Q and the buyer against poor construction for a period of ten years. These certificates are given to the homeowner when the property is purchased.

The defect warranty period on all of L&Q’s new homes is two years, within which time all defect repairs will be covered by the developer of the building. Residents can report any issues directly to the Aftercare team. Deliberate or accidental damage is not covered by the defect warranty, and any charges for such issues will be included on the residents’ service charge statement at the end of the financial year. More details on warranty periods and terms will be set out in your lease.

Is L&Q not the freeholder of all of its buildings?

No, L&Q is not always the freeholder of the homes they are selling. This can be because a variety of reasons, one being that L&Q has purchased a block of homes from the master developer, who retains freehold of the entire development. Your lease agreement will clearly set out who the freeholder of the building is, the ground rent payments and the terms of your lease. You can read more about the L&Q lease and what it covers on our Group site.

Is L&Q not the management agent of its buildings?

No, L&Q does not manage all of their buildings, we sometimes appoint property management agents to look after repairs and maintenance within our buildings, and in the case where we are not the freeholder, the freeholder may also do the same.

The lease agreement will set out the legal structure between the building freeholder, any intermediate landlord and the flat owner, along with the obligations regarding provision of services and payment of charges.

Why is the lease on my Shared Ownership home only 99/125 years?

Some leases are granted for either 99 or 125 years, but most are available for 250 years – it can depend on the development. Most lenders will require a minimum lease length of 80 years in order to provide a mortgage, so you should look at extending your lease before this point. If the years on the lease run out, the property would return to freeholder. More details can be found on our Group website.

How can I extend my lease?

As a shared owner, you can apply to extend your lease directly with L&Q. Administrative fees vary from £130-£225* and more details can be found on our Group website. In addition to administrative fees the shared owner would pay for a valuation report and the premium for the lease extension, amongst other costs. The offer to extend your lease is subject to following our lease extension process, where all decisions to extend your lease are at our discretion.

*Correct at time of posting. Subject to change according to the lease in question. Refer to L&Q’s homeowner administration fees for latest prices.

What is an EWS1 certificate and why is it important?

EWS stands for External Wall System, which is made up of the outside wall of a residential building – including elements such as external wall cladding, insulation and fire break systems. The EWS1 form is a fire safety certificate confirming that the EWS has been assessed by a suitable expert.
EWS1 forms are mostly requested by mortgage lenders for buildings over 18 metres in height which may have combustible material on their external walls or on their balconies, however lenders may ask for a completed form for buildings that are below this height if they have a specific concern.

You can read more about why this is happening and what L&Q are doing about this on our Group website.

How do I know if the property I am interested in has an EWS1 certificate?

Not every building requires an EWS1 form – please speak to your mortgage lender or surveyor who will be able to provide more information on whether this is required for a specific property.