As a homeowner, you don't own the building in which your flat is located. This is owned by the landlord, or freeholder, and leased to you. There are certain rights and responsibilities set out in your lease.

What is leasehold?

'Leasehold' refers to any property where a lease has been issued by the owner of the land (the freeholder) that allows another party (you, the homeowner) to occupy part of a property, such as a flat.

What is a lease?

When you bought an MKCC leasehold or shared ownership property, you purchased a (residential) lease. A lease is a tenancy agreement for a term of 21 years or more. It grants you, the leaseholder, the exclusive right to occupy your home for a set term (usually 99 or 125 years), provided you comply with the conditions, known as 'covenants', it contains. It also sets out the freeholder’s and your obligations to one another. For example, it includes the terms of payment of your service charge and the freeholder's repair responsibilities. A lease gives you more security of tenure than renting privately on a standard tenancy.

Obligations

You should read your lease carefully so you understand what you have agreed to. Under most leases the leaseholder must:

• Keep the flat in a good state of repair.
• Take out their own contents insurance.
• Pay the service charge and rent (where applicable) on time.
• Give contractors access to carry out works to the shared parts or a neighbouring flat.
• Get the landlord’s permission before carrying out home improvements and alterations.

Under most leases the leaseholder must not:

• Damage, or make alterations to, the building’s shared parts.
• Do anything that may affect the buildings insurance.
• Disturb or cause a nuisance to others.
• Carry out any structural alterations.

Shared ownership has become a widely used term, but it really refers to the fact that the equity in your home is shared. It does not mean that the responsibility for your home is shared.

A shared ownership lease will be mainly the same as any other type of lease, but it will include extra conditions relating to staircasing (purchasing a greater share of the property), selling the lease and paying rent.

Rent

There are typically two types of rent that you may have to pay.

Shared ownership rent

If you got your lease through shared ownership, you will pay rent for the remaining share of the home. Your lease will state how and when your shared ownership rent may be increased. Usually the rent is increased every April.

Ground rent

This is a rent for the land your property is built on. This would be set at the start of the original lease. Ground rent is usually due for payment on 1 April unless your lease specifies another date. We will send you a payment demand to remind you to pay the ground rent.

Service charges including major works

As a home owner, under the terms of your lease or transfer document, you have a responsibility to contribute towards the cost of work and services provided by the Council to your block and your estate.

The annual service charge includes services such as communal electricity, day-to-day repairs and other charges such as building insurance premiums and ground rent.

Major works are repair, replacement and improvement works (such as replacing lifts or windows) where the charge to any home owner is £250 or more.  We consult home owners about major works before they are carried out. We have a number of payment options for these works.

Ways to pay

Paying by Direct Debit

Over half of all our customers have now chosen to pay by Direct Debit. You too may also wish to change your payment method to Direct Debit which is the easiest and most convenient way to pay.

We offer two different monthly payment dates for you to pay, the 1st or 15th. By signing up to Direct Debit you will save time as your bank pays the bill without you having to do anything, your bill will always be paid on time and it is also very simple to set up. All you have to do is complete our Direct Debit Mandate form and send it to us.

Online

You can pay online through our website. Payments can be made 24 hours a day. You will need your credit or debit card and the 9-digit reference number beginning with 80, which can be found on your statement

Telephone

You can make debit or credit card payments by phone at any time, day or night, using our 24‐Hour automated payment line. Simply call on 01908 253940. You will need your 9-digit payment reference (starting 80), which can be found on your statement.

During office hours (9am ‐ 5pm, Monday to Friday) you can also call the Home Ownership Team on 01908 253705.

Requesting our permission

If you are planning on carrying out any work, including alterations, redecoration or refurbishment to your property you must apply to Home Ownership for permission to carry out alterations to your property. You must apply even if you do not require or have already obtained planning permission. Permission must be sought prior to any work beginning.

If permission is granted, please think about the impact on your neighbours and show consideration by ensuring the following -

• Works are only carried out between 8am and 6pm Monday to Friday and 8am to 1pm on Saturdays.
• No work should be carried out on Sundays.
• Noise and dust must be kept to a minimum.
• No building materials or equipment can be stored in communal areas.
• Rubbish must not be left in communal areas and must be disposed of responsibly. Please refer to the council’s website for disposal of building materials.
• If you employ someone to carry out work for you, remember to check that they are suitably qualified and that they have appropriate insurance.

Costs involved

• We will charge a non-refundable administration fee to process your request for permission for alterations or improvements.
• If a surveyor needs to assess your application, you will also have to pay their costs.
• There may also be legal costs and fees involved. You cannot carry out any alteration or improvement until you have written permission from the appropriate person.
• If you need planning permission or other type of building consent, you must apply for and pay for that permission or consent.

When the work is finished

Please note, when you have finished the alteration or improvement, you will be responsible for maintaining and insuring it.

If the work caused any damage to the building or neighbouring properties, you will be liable for it.

Alteration Consent Application Form

The building you live in is owned by the Council and as a requirement of your lease your landlord is responsible for insuring it and the cost of doing so is recharged to you. The amount charged is based on the size of your property. The Building Insurance covers the communal elements of the building which are the Council’s responsibility to maintain. These include the structure, the exterior and the services and installations of the block.

Please note that this does not cover contents and therefore we would suggest that each homeowner obtain a home contents insurance policy as part of a private arrangement.

The current contract is with Aspen, if you need to make a claim then please contact the 24 hrs claim line on 0800 358 0172.

Shared Ownership Houses with Mortgages

If your property is a house and you have a mortgage then it needs to be insured through a company of your choice, making sure that your buildings insurance covers the whole rebuild cost and not just your share. The rebuild cost is not related to the value of the property and you should take professional advice on this cost.

Leasehold Properties

If you sub-let (rent out) your property, you must notify us. Your tenants must enter into a Deed of Covenant. This is a legal agreement which your tenants sign to say they will comply with the requirements of the lease.  Your tenants will not take on all your responsibilities as you will still be the leaseholder. This means you will be required to maintain the property and pay the service charges.

It is important you tell us if you sub-let your property. If you don’t, you will have breached your lease and your buildings insurance will not be valid.  Your lease says we can charge an administration fee to process your sub-let registration.

You do not have to pay our fee if you are extending an existing tenancy, but you must contact us to confirm the new tenancy dates. If new tenants move into your property, a new Deed of Covenant will be required, and you will have to pay the relevant fee.

There are important things you need to do about safety checks that are legally required if you sub-let your home. As a landlord, you are responsible for the safety of your tenants.  It is a criminal offence for landlords to provide an appliance or furniture that does not comply with the respective safety regulations.

The conditions of sub-letting are:

• To pay for the Deed of Covenant.
• To pay the Council admin fee.
• A formal tenancy agreement must exist.
• We recommend the consent of the mortgagee is obtained.
• Any necessary statutory approvals are obtained i.e. planning permission.
• The agreement must comply with the Lettings Agreement defined under the 1988 Housing Act – as modified by the Housing Act 1996.
• The property shall be let for no less than 6 months.
• Emergency contact numbers must be provided.
• If you take a deposit, you must register this in a government approved scheme.

A Gas Safe registered engineer must carry out the annual gas safety check if the property has gas appliances. It is your responsibility to ensure that all electrical installations are safe when the tenancy begins and are maintained in a safe condition throughout the tenancy.

Please contact Home Ownership on 01908 253705 to make the payment of the relevant fees. You will also need to complete and send to us a form to request our consent to sub-let.

Shared ownership leaseholders

Sub-letting of shared ownership properties is not permitted.

A lease is the document that gives the leaseholder (100% leaseholders and shared owners) the right to live in a property for a certain amount of time – usually 99 or 125 years. Once the time remaining on the lease drops under 80 years, the value of the leasehold interest will begin to decrease and the cost of extending the lease will increase. A shorter lease will make it more difficult to find a buyer for the leasehold interest in the property and it may make it difficult to re-mortgage. For these reasons leaseholders often feel it’s beneficial to look to extend the lease before it drops under 80 years.

Routes to Extension

The Council operates two routes to lease extension:

• An informal procedure (available to 100% leaseholders and shared owners).
• A formal (or statutory) process (available to 100% leaseholders only). The fees and charges may be higher using this route.

Informal lease extension process

An informal lease extension process is available, at the Council’s sole discretion, to 100% leaseholders and shared owners. The process of extending the lease usually takes between three and six months. This process can start as soon as the home purchase is complete or at any time during the lease.

An extension of 90 years on top of the current lease term will be offered with no ground rent. The Council may, at its discretion, require modernising terms to the existing lease as a condition of agreeing a lease extension.

Upon completion of the extension, the Leaseholder will continue to pay rent on any share not yet purchased (shared owners) and other sums (service charges and buildings insurance).

Download a Non Statutory Lease Extension Application Form

Formal lease extension process

This option is only available to 100% leaseholders who have owned their property for at least 2 years. This process usually takes between six and 12 months, however it can also be considerably longer. We ask that the leaseholder seeks legal advice in advance so that their solicitor can guide them through the process. The leaseholder will be responsible for the freeholder’s reasonable fees and charges, and these will be higher than with the informal process. As above, they will include legal, administrative and surveyor’s fees.

We willingly extend leases using the informal process outlined above, however the Leasehold Reform, Housing and Urban Development Act 1993 (‘the 1993 Act’) was established to protect lessees from unscrupulous landlords who refused to extend leases or provided unfair terms such as the addition of ground rent. This law allows a lessee to formally extend his/her lease by 90 years, in addition to the unexpired term of their lease at a peppercorn ground rent, and provides a framework for how this will happen. Some 100% owners will prefer this route, and we’re happy to proceed in either manner.

The leaseholder will need to instruct a solicitor and obtain a lease extension valuation. It’s advisable to choose a RICS or FRIC certified surveyor in case the matter needs to be referred to a tribunal to determine a premium.

The solicitor will serve a section 42 notice on the Council which establishes the right to a lease extension and provides a time frame.

Download a Statutory Lease Extension Application Form

Shared Ownership Staircasing

This is what we call it when shared ownership leaseholders buy a further share of their home, you can do this at any time.

To buy more shares, your home needs to be valued. The price of the share you buy will be calculated as a percentage of the full, current market rate.

What do new shares cost?

The cost of the extra share you buy will reflect the market value of your home at the time.

We will need to arrange for a qualified valuer (not an estate agent) to provide a valuation. They will tell us the current market value of your home and fix the price you will need to pay for further shares.

The valuer will ignore any improvements you’ve made to the home that increase its value. This is so that you will not pay again for the improvements. You will have three months from the date of your valuation to buy the increased share.

Example:

If you own a 50% share and the full value of your home is £100,000, the price of the remaining 50% share will be 50% of £100,000 = £50,000.

If you have made improvements that affect the value, they will be valued separately.

How will my rent change after staircasing?

Once you’ve bought extra shares, your rent will go down in proportion to the share you have bought. For example, if you increase your share from 50% to 75%, your rent will halve (you will pay rent on 25% of the property rather than 50%).

If you increase your share to 100%, you will stop paying rent.

Are there any other costs?

Yes. As well as paying for the extra share, you’ll have to pay some other costs. They include the following;

• The valuer’s fee
• Your solicitor’s fees
• The cost of your mortgage lender’s valuation if applicable.

Download a Staircasing Application Form

Collective Enfranchisement is when a group of leaseholders within a building group together to exercise their right to buy the freehold of the building from the council. In order to apply to buy the freehold, the following conditions must be met:

• At least two thirds of the flats in a building must be sold on long leases. This means at least 21 years long.
• The number of leaseholders applying to purchase the freehold must equal at least half of the number of properties in the building. For example, if there are 6 flats in the building at least 4 must be leasehold.
• At least 3 of those must join together to apply to buy the freehold.
• If there are only two properties in the building, then both must be leasehold.

Any leaseholder who does not wish to participate in the purchase would become a leaseholder of the new freeholder. The new freeholder would be required to grant a 999 year lease back to the Council for any tenanted properties in the building. This means the Council will become the leaseholder of the tenanted flats and the existing tenant would remain in the property. The tenants would retain their Right to Buy their home.

If you are interested in purchasing the freehold of your building you should seek your own professional advice. You will also need to employ a valuer and a solicitor. You can also obtain more information from the Leasehold Advisory Service.

If you buy the freehold of the building you will have to pay the Council’s fees which are variable. You will also have to pay all outstanding service charges before completion of the sale.

Sell-on pack

If you are thinking about buying or selling a property, we strongly recommend that you get a sell-on pack (this is also known as an assignment pack or pre-assignment enquiries). The pack contains all the information that potential purchasers usually want to know about the property including:

• The average service charge.
• Any outstanding service charges.
• The building insurance premium and what it covers.
• Details of any planned major works to the building/estate. Major works charges can vary from one contract to another (depending on the type of work undertaken and type of building) and in some cases can be for a substantial amount that may run to several thousands of pounds.
• Details of any major works to the building/estate that have been carried out but not invoiced yet. The owner of the property will be liable to pay the invoice, even if the work was carried out before they bought the property.
• A copy of the lease. 

There is an administration fee for the sell-on pack, for a response in 10 working days the fee is £75 and for a response in 5 working days the fee is £100. We recommend that requests for packs are sent as early as possible.

Normally the seller’s solicitor will ask for the pack and they will send it to the solicitors of any potential purchasers. We cannot provide the pack directly to a potential purchaser or their legal representative.

In addition to any planned works, you should be aware that you, as the owner, will be liable for a share of the cost of future works to the building.

Shared Ownership

Shared Owners are free to put their properties onto the open market. Once you have accepted an offer, you will need to contact the Home Ownership team at home.ownership@milton-keynes.gov.uk for a Consent to Assignment form. You will need to complete the first three sections and the buyer will need to complete the rest and return it to us.

The Council will not issue consent where a buyer already owns another property, is a firm or company, or they intend to rent it to other people.

Deed of Covenant

When you sell your property the buyer's solicitor must within 30 days of the sale serve two notices on the Council to enable us to transfer the property into their names. If this does not happen then the property will remain in your name until it does. The Council will insist on the new owners signing a Deed of Covenant, stating that they will abide by the terms of the original lease.

If you would like to request a Sellers Pack, please email home.ownership@milton-keynes.gov.uk