Shared Ownership in Protected Areas
Registered providers (RPs) of new affordable shared ownership dwellings in rural areas of England, have some cause for frustration.
In order to prevent such dwellings being acquired outright by shared owners, local planning authorities (LPAs) often impose planning restrictions in s106 agreements restricting shared ownership to no more than 80% equity share (restricted equity leases).
To plug a loophole in earlier legislation which inadvertently permitted lessees owning less than a 100% equity to acquire their houses outright ( i.e. enfranchisement), legislators issued two Measures in 2009 to deal with this and to help retain those houses as affordable.
One Measure lays down conditions which RPs must meet when granting shared ownership leases in Protected Areas, to prevent enfranchisement. The other designates numerous rural areas in England as Protected Areas. It is now a condition in such areas that RPs must choose either to grant restricted equity leases or ,if the RP wants to permit more than 80% ownership, it must covenant to buy-back all the acquired equity at market value whenever the lessee decides to sell (mandatory buy-back).
The HCA subsequently made it clear that there is no guarantee of grant availability to fund these mandatory buy-backs .Now, following the Comprehensive Spending Review, it seems even less likely that grant for this purpose will be available. As it happens, some LPAs still insist on restricted equity leases for new shared ownership dwellings in such areas, thus depriving RPs of that choice anyway!
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