Home ownership handbook

viridianhousing.org.uk
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Home ownership handbook - Viridian Housing

Home ownership

handbook

viridianhousing.org.uk


Contents

Definitions 5

1 Introduction 9

Who do I contact? 9

2 Your lease 11

General terms in your lease 11

Your responsibilities 12

Gardens 13

Subletting 13

Our responsibility 13

Access to information about you 14

Complaints 14

Formal complaints 14

The law 15

Landlord and Tenant Act 1985 and 1987 15

Leasehold Reform Act 1993 16

Housing Act 1996 16

Property Misdescriptions Act 1991 16

3 Rent and service charge 17

Financial difficulties 17

How we work out your rent 18

Rent reviews 18

What happens to the rent if you buy further

shares in the property 19

Rent statements 19


Contents

Service charges 19

Service charge accounts

0

Paying your service charge

0

Cyclical maintenance and the sinking fund 21

How we set service charge budgets

1

Other payments for your home


Council Tax


Water charges, gas and electricity


4 Managing agent service 23

What does a managing agent do?

Buildings insurance

Contents insurance

Shared areas

Consultation


4

5

5

5

5 Repairs and maintenance 27

Defects (problems)

The first 12 months

Your responsibilities

Our responsibilities

Cyclical maintenance

7

8

0

1


6 Your home 33

Security

Improvements

Cable reception

Vermin

Condensation

Buying extra shares

Resale


4

5

5

6

6

7


Definitions

What various legal and technical words mean

Audit

This is an examination, usually of financial accounts.

However, it can mean any examination. A management

audit is when an independent, professional person examines

the way we are looking after you and your property.

Completion date

The date when the property legally transfers to your

ownership.

Cyclical maintenance

Maintenance work that needs to be done regularly, for

example, roofing or painting the outside of a building.

Deficit

This is a shortfall. For example, when we have not collected

enough money through service charges to cover all the

repairs, or an expense that is needed.


Definitions

Demise

A legal name for the area of property that someone leases

or owns. Your lease describes the physical area covered

by your property, and defines the boundaries of the shared

areas.

Equity

The value of your share of the property less any mortgage

you have taken out on your share of the property. For

example, if your share is worth £50,000 and your mortgage

is £45,000, the equity would be £5,000.

Excess

An excess on an insurance policy is the cost the policy does

not cover. You are probably familiar with car insurance

where you pay, for example, the first £25 of any claim. In

these cases, if the damage costs £50 to repair, you’d have

to pay the first £25 and the insurance company would pay

the rest. It is the same with buildings and other insurance.

The excess on our buildings insurance may vary from year to

year as a result of market conditions, and will also depend

on the sort of claim you are making.

Forfeit or forfeiture

This means your home is taken away from you because,

for example, you have broken a condition of your lease.

Forfeiture is very serious and can only happen after a court

has granted us a judgement.

Freeholder

The owner of the land or property.


Hearing

When you have a complaint or any other matter heard by

an independent person (or people), it is called a hearing.

Home ownership team

Your main point of contact with us and the people

responsible for anything to do with managing your home.

Lease

This is a legally binding document which sets out the terms

on which a property has been bought, sold or transferred.

Lessee

The lessee owns the right to live in the property as specified

by the lease. Leases are usually for 99 to 125 years.

Lessor

The lessor is the person who controls the property and who

may grant a lease.

Managing agent

The managing agent manages rent accounts, arranges

buildings insurance and arranges and manages contract

services like gardening and cleaning estate services.

Negative equity

This happens if the value of your share of the property is less

than your mortgage on your share of the property.

Responsive repairs

Repairs we carry out when things go wrong, as opposed to

routine maintenance.


Definitions

Service charge

This refers to the money you pay us to cover the costs of

maintaining and servicing the property. It also includes

other costs, for example, insurance and ‘sinking fund’

contributions.

Service charge accounts

The record of the service charges we have received from

lessees and the money we have spent for maintaining the

property.

Shared ownership lessee

A shared ownership lessee is someone who has been

granted a lease which allows them to live in the property

while buying a share.

Sinking fund

This is money we collect and hold in trust to cover the cost

of cyclical maintenance and replacing items which have

reached the end of their life.

Staircasing

This is the process where you buy further shares in your

property.

Subletting

This is when a lessee lets a room out for profit.

Surcharge

An extra payment which we ask for when we have had to

spend more than the budget for service charges.


Introduction

Who do I contact?

Your first point of contact with us is the home ownership

team, based at our Balham office. This is your point of

contact if you have any questions about your lease or

anything else that you need to discuss.

Contact details

Home ownership team

Viridian Housing

Aura House

53 Oldridge Road

Balham

SW12 8PP

Phone: 0330 123 0220

Fax: 020 8333 6001

Email: homeownership@viridianhousing.org.uk

Web: viridianhousing.org.uk


Introduction

If you have any questions, need help understanding

this information or want it in another language or format

(for example, in large print or on audio tape), please

contact us.

10


Your lease

You have bought a property through shared

ownership. This means you have a lease on your

property and are known as a lessee. Your lease sets

out the rights and responsibilities of the lessee (you)

and the lessor (us). This handbook does not cover

all the detailed information set out in your lease,

which your solicitor or adviser should have told

you about before you bought your home. Instead

it offers general information to help you in most

circumstances. Contact the home ownership team

if you need more help.

11


Your lease

General terms in your lease

The lease for your property sets out the following.

• The boundaries of your property and any associated

parts of the development which have been transferred

with your property (for example, parking space). It also

describes the shared areas and grounds

• The amount of rent and service charge you pay. It also

explains how we review your rent and how often

• How you must pay your rent

• The type of expenses your service charge covers

• What your responsibilities are

• What our responsibilities are

• How you can buy more of your property, this is known as

staircasing

• How you can sell your equity in your property, this is

known as resale

Your responsibilities

Under your lease you have the following responsibilities.

• You must pay your rent and service charge on time.

• You must keep your property in reasonable condition

inside and outside.

• You must carry out all repairs which are your responsibility.

• You must get our permission before carrying out any major

alterations.

• You must tell us if you want to sell your property we will tell

you about our resale procedure

• If you live in a flat, you must not keep animals without our

permission

12


Gardens

If you have a garden, your lease will say whether it is just for

you to use or if it is shared. If it is your private garden, you

must keep it reasonably tidy. Please do not use your garden

to dump rubbish.

Please make sure that bushes and trees are regularly

pruned. Overgrown trees and bushes can cut out the light

from neighbours’ properties and may cause structural

damage to your own home.

Subletting

Under the terms of your lease you may not sublet your

property. This is set out in your lease. If you are having

financial difficulties, please speak to the home ownership

team.

Our responsibility

• To manage and maintain the shared areas of the

development.

• To maintain the structure of the building

• To provide relevant information about rent and service

charge.

• To collect service charge and ground rent

• To insure the building.

13


Your lease

Access to your information

Under the Data Protection Act 1998, you have the right

to check any details we hold about you on our computer

records.

As part of housing people, we receive private information

about people’s lifestyles. We promise that we will not make

confidential information available to anyone without a

good reason. However, we will co-operate with some

organisations (for example, the Police, the benefits agency

and the Department for Work and Pensions) to prevent

and detect crime, or to help in processing a claim. Shared

owners can see their personal files, to do so, please contact

the home ownership team to arrange an appointment.

Complaints

If you are not happy with the level of service or not

happy with something we have done or failed to do,

contact us. To begin with, we deal with most complaints

informally, as what appears to be a complaint may be a

misunderstanding. The person you complain to will make

sure that you get a reply. For more details on how we deal

with complaints, please ask us. If you are still not happy, you

can make a formal complaint.

How to make a formal complaint

You can get a copy of our complaints procedure by

contacting us. These complaints are dealt with by senior

managers. You can complain to the senior manager about

the level of service you have received or the behaviour of a

member of staff.

14


If you want to make a formal complaint, it is best to put it in

writing and clearly mark it as a formal complaint.

When complaining, it is useful if you can set out what has

gone wrong and what you feel could be done to put the

problem right.

Wherever possible, we will do our best to put the problem

right. However, there may be circumstances which are

beyond our control or where our standards have in fact

been met.

The law

As well as the terms of the lease, you are also protected by

legislation and law.

Landlord and Tenant Acts 1985 and 1987

These acts:

• explain the phrases ‘service charge’ and ‘relevant cost’

• say that we can only use the service charge to cover

reasonable cost

• set the amounts we can spend through the service

charge

• ask us to provide a summary of how we have used

the service charge so that you can inspect and copy

invoices, and

• ask us to provide a written summary of our insurance, if

you ask for one.

15


Your lease

Leasehold Reform Act 1993

This act:

• allows the Government to enforce codes of practice for

managing leasehold properties

• gives you the right to buy the freehold of your property in

certain circumstances

• gives you the right to a management audit.

Other acts and regulations may also come into force.

Housing Act 1996

This act added to the procedures for forfeiting leases and

gave a role to local leasehold valuation tribunals to set

service charges.

Property Misdescriptions Act 1991

This makes it an offence to provide misleading information

to people who want to buy a property.

16


Rent and

service charge

Your home is at risk if you do not pay your rent and

service charge. You must pay your rent and service

charge in advance every month (for the month to

come) by standing order or direct debit. Under

your lease you must pay your rent on the first of

each month.

Financial difficulties

If you are having financial difficulties and problems paying

your rent or service charge, please contact the home

ownership team urgently. We may be able to offer advice

and help.

If you are having difficulties, we will contact you as soon

as you fall behind with your payments. This will give you a

chance to check your records, and to make up what you

owe. You must tell us that you intend to pay within seven

days of receiving our letter or speaking to us. We expect

you to pay off your debt as soon as possible.

17


Rent and service charge

If you fail to contact us or miss further payments, we will

tell your mortgage lender and take the necessary steps

to recover the debt. You may send a cheque to pay off

your debt or increase your standing order payments to an

agreed amount.

How we work out your rent

Your rent is set out in the terms of your lease. This will

normally be a percentage of the initial value of the equity

we still own.

Value of the property Your share (50%) Equity we own

£100,000 £ 50,000 £ 50,000

Rent is set at, for example, 4% of unsold equity (this

percentage may vary from development to development,

and you should confirm what percentage applies for

yourself).

In the example, rent is 4% of £50,000 = £2000 a year. We will

charge this at £166.67 each calendar month.

You have to pay service charge on top of rent.

Rent reviews

We review rent each year, normally in October. The rent

increases in line with the terms of the rent review clause

in the lease. This is generally based on the RPI (retail price

index). We will send you a notice if we are going to increase

your rent.

18


What happens to the rent if you buy further shares

in the property?

If you buy a further share in the property, we will reduce

your rent in proportion to the share. Once you have bought

100% of the property, you will no longer have to pay rent.

Rent statements

We will send you a rent statement every three months which

sets out the charges and payments we have received.

You should check this thoroughly and query any problems

immediately.

Service charges

Here are examples of the items covered by service charge:

• Cleaning shared areas

• Renting and repairing entry phones

• Renting and repairing shared TV aerial

• Maintaining fire alarms

• Maintaining and redecorating shared areas

• Buildings insurance

• Electricity and lighting supplies

• Water

• Contribution to the sinking fund and cyclical

maintenance

• Any other charge that is specific to the development

We work out service charges for each property in the

development in line with the terms of the lease. You must

pay your service charge in full no matter what share of your

home you own.

19


Rent and service charge

Service charge accounts

At the beginning of each year, we will tell you the

estimated amount needed to cover the cost of running the

development for the coming year.

Six months after the end of the financial year you will

receive a statement showing our actual spending

compared to the estimate. If the amount we have spent

is more than the budget figure, we can ask our tenants to

pay this amount. If we have spent less than the budget, we

will pay a refund into your account.

We may spend more or less than the budget for a number

of reasons – for example, the amount of electricity used

may have been less than in previous years, or unexpected

maintenance may have been needed. Wherever possible,

we will tell you before we carry out any major unplanned

work so that you can plan for this cost.

Paying your service charge

You must pay your service charge each month with your

rent. As a result, it should be included in your standing order

or direct debit payment. You will receive statements every

three months showing payments we have received within

that three-month period.

20


Cyclical maintenance and the sinking fund

We pay for the sinking fund using money we have received

from service charges. We use the sinking fund to pay for

work we usually carry out every five years, such as painting

outside windows and doors. This helps to spread the costs

and means that lessees do not have to budget for this type

of spending themselves.

The sinking fund also pays for replacing major building items

as they reach the end of their useful life (for example, roofs

and door-entry systems).

We hold sinking funds in trust and add interest to them each

year. We will send you a statement of funds each year.

How we set service charge budgets

We will send you a budget for the coming year.

This estimates the amount of money we need for the year

and sets out how much service charge you will pay. It will

take account of how much we have had to spend recently

and anticipate any large amounts of spending that are not

covered by the sinking fund.

We will arrange meetings if necessary to discuss service

charge budgets.

21


Rent and service charge

Other payments for your home

You will also need to pay the following charges:

Council Tax

You pay Council Tax straight to your local council. The local

valuation office sets which band your property is in.

Water charges, gas and electricity

When you move in, you must register with your chosen

supplier and record meter readings.

The gas, electricity and water companies will need notice

that you want to be connected. You may need to provide

evidence that you own the property.

Some companies may need a deposit.

If you sell the property, you must tell the gas, electricity and

water companies, and take meter readings so you only pay

for supplies you have used.

22


Managing

agent service

We provide a managing agent service for leaseholders

and shared owners. The fee for this is part of

the service charge. We charge a fixed fee for this

work (which we review from time to time) and believe

that this is a fair representation of the costs involved in

managing the services, collecting money and so on.

What does a managing agent do?

• Arranges for the services (cleaning, gardening

maintenance for example) to be carried out.

• Makes sure that the bills for services are paid and properly

accounted for.

• Makes sure that the costs are shared among residents in

line with the lease.

• Recovers bad debt and enforces other lease conditions

when necessary.

• Consults residents about any major work we are going to

do, changing contractors and other matters that relate to

the managing agent’s role.

23


Managing agent service

Buildings insurance

Under the terms of your lease, we arrange buildings

insurance for all our shared ownership properties. Your

lender may offer you buildings insurance with the

mortgage. However, you do not need this as cover is

provided through our policy. The buildings insurance policy

covers risks such as fire, flood and storm damage. It does

not cover damage to the contents of your home.

A copy of the policy or schedule is sent directly to you

every October. You need to get your own contents

insurance and we recommend strongly you insure your

contents and belongings.

If you need to make a claim on our buildings insurance

policy, you need to contact the insurers directly on the

numbers provided on the policy. They will guide you

regarding their process.

Important points to remember when making a claim:

• You must tell the insurance broker as soon as possible.

If you do not know who the broker is, please contact us.

• You must give the insurers all the relevant information,

getting two estimates of the costs of repairs

• There is no guarantee that the insurers will pay the claim

until you have provided all the information they need.

• You will have to pay the policy excess.

• It may take up to six weeks or longer to deal with

your claim.

We have the right to amend the terms of the buildings

insurance cover. We will tell you about any significant

changes to the terms of the policy.

24


Contents insurance

Buildings insurance will not cover damage to the contents

of your home such as furniture. This is your responsibility and

we recommend that you adequately insure your contents

and personal belongings.

Shared areas

The shared areas are parts of the development which

everyone can use for example, the entrance halls, landings

and gardens. We are responsible for maintaining the shared

areas in blocks of flats. We pay the cost of doing so through

the service charge. You can get details of the services

provided and the contractors who supply them from us.

Please remember that shared halls and stairs are the means

of escape if there is a fire. Do not leave anything in the

hallways or stairs which could block the way. This applies

especially to bicycles, prams and so on. You must not use

the shared areas for storing anything.

Consultation

We consult leaseholders on major issues which affect the

estate they live in and how it is managed. This consultation

will normally relate to repair, redecoration and improvement

schemes. Although we always try to take account of

residents’ views, it is not always possible to do what you

would like us to. If you have any questions on any matter

relating to the estate or your lease, please contact us.

We regularly monitor how contractors deliver our services.

However, we cannot always be aware when something

has happened.

25


Managing agent service

You should tell us as soon as possible if our service is not up

to standard and about repairs that are needed. We deal

with complaints promptly and will take the necessary steps

to remove contractors who consistently fail to perform. We

will always give contractors a chance to improve.

We can only end a contractor’s contract after we have

allowed them to do so.

We are not able to give you a refund even if a contractor’s

performance has not been entirely satisfactory. We will deal

with responsive repairs to the structure and shared areas in

line with our repairs targets.

26


Repairs and

maintenance

Defects (problems)

New properties will usually be sold with a guarantee from

the National House Builders Union or a similar organisation.

If you are the first person to buy your home, your solicitor

should give the guarantee when the sale goes through.

Please keep it safe, as it is a valuable document.

This guarantee covers faulty material and workmanship

related to the structural element of the building, and will be

in force for ten years.

If you are aware of any problem, please contact us first.

27


Repairs and maintenance

The first 12 months

The contractor has a responsibility for defects in the work

within the first 12 months from when the building was

completed (practical completion) and handed over to us,

not the first 12 months from your completion date.

You should tell us about any problems you identify in your

property within the first 12 months. We will then tell the

contractor, who will contact you direct.

We expect the contractors to deal with these items in the

following timescale:

Emergency – within 24 hours

Urgent – within five days

Not urgent – 28 days or it may be left to the end of the

12 months if it is reasonable to do so.

Most new properties will have some minor problems.

This is normal. They may show up before the inspection.

If so, you must tell us, we will arrange for the builder to

put things right.

28


Some of the problems arising within the first 12 months may

not be the builder’s responsibility. This may include normal

shrinkage cracks and damage caused while you were

moving furniture.

If you are not satisfied with work carried out during the first

12 months, you may take this matter up with the National

House Builders Union (or the organisation that issued the

certificate). At the end of the first 12 months we will contact

you to ask about any problems you may have. We will then

inspect your property for faults which have shown up.

The inspection involves looking at the inside of your

property. Please make sure that someone is there on the

day of the inspection.

This is the final inspection we will carry out. If you have not

arranged access or contacted us, we will assume there

are no problems. This is your final opportunity. After this, you

must put right any problems yourself.

29


Repairs and maintenance

Your responsibilities

You are responsible for repairing and maintaining the inside

of your home. Here are some examples:

• Central heating, including having it serviced once a year

• Water tanks

• Inside walls, floors and ceilings

• Doors, door frames, door hinges and skirting boards

• Window catches, sash cords and locks

• Glass in windows

• Chimney stacks and flues

• Plasterwork

• Decoration

• Staircases

• Kitchen units

• Air vents

• Sinks, baths, toilets and showers

• Electrical and plumbing installations

• Fuses, tap washers and light bulbs

• Clearing rubbish from a private garden

• Repairing walls and fences which are identified as your

responsibility

• Adding extra security

• Any damage caused by you or your visitors

This list is a guide only

30


We do not normally recommend contractors. However,

if you are having difficulties finding an appropriate

contractor, please contact us, we can try and put you in

touch with a suitable firm. If you contact the contractor it

is your responsibility to say what work is needed and agree

the price. By providing you with a contractor, we do not

guarantee the quality of the work. You are responsible for

paying the contractor and for settling any disputes that

may arise.

Our responsibilities

Unless your property is a house, we will repair the outside

and structure of your home. You pay for this through your

service charge.

We will repair and maintain:

• the roof

• outside walls, doors and sills

• gutters and outside pipes

• outside drains

• shared garden walls and fences

• paths and steps

• shared areas inside the property

• shared TV aerials

• fire alarms in shared areas

• any other area or installation that is specific to the shared

areas of the development.

If a repair is needed and it is our responsibility, please report

this to us.

31


Repairs and maintenance

Cyclical maintenance

To make sure that the external and shared areas are

maintained in good order, we carry out a programme of

cyclical maintenance every five years or so.

The service charge you pay includes a contribution

for cyclical maintenance and renewals. We pay this

contribution into the sinking fund, which builds up

over a number of years to cover this type of spending.

Contributing to the sinking fund allows lessees to spread

the costs over a number of years and makes sure that all

leaseholders contribute.

If the money in the sinking fund is not enough to pay the

cost of the work, you will have to make an extra payment

to meet the shortfall. We will consult you before we carry

out any major work. As part of the consultation, we will give

you a summary of the work needed and the quotes we

have received, and recommend which quote we should

accept. We will also tell you if the sinking fund will meet this

and if you need to pay an extra contribution.

We will give you a date to respond by. If you do not

respond, we will assume that you have accepted the

proposal. It is in everyone’s interest to make sure that the

property is properly maintained, as the value of a poorly

maintained property is reduced.

32


Your home

Security

Your property will already have a suitable lock on the front

door. You may want to fit more locks on doors and windows

for extra security. You can do this without our permission.

Within blocks of flats the main entrance doors will all be

fitted with a lock and an entry phone system. You must not

put a deadlock on these doors because of fire regulations.

The locks fitted to the main entrance meet fire regulations.

You must not change or fit extra locks.

You cannot make your home completely burglar-proof,

but if you follow these simple rules you can discourage

most thieves.

33


Your home

• Make sure all windows are closed and that doors to the

outside are locked when you go out.

• Do not leave keys under mats.

• If you go out at night, draw the curtains and leave a

light on.

• Do not let people in through the entry phone system

unless you know them or they have identification.

If you want to fit a burglar alarm, you may do so without our

consent. You must get your own specialist advice.

If you want advice on protecting your home, contact the

local crime prevention officer at your nearest police station.

If you get locked out or lose your keys, it is your responsibility

to arrange for someone to change the locks. We do not

keep keys to your property. We give all keys to you when

you move in.

Improvements

If you want to carry out improvements or alterations to your

home, you must ask for our permission in writing before

starting work. We will normally give our permission but

we will want to be sure that these improvements will not

damage the structure of the property and that you have

received appropriate approvals from the local authority.

We may have to employ a professional to give us advice,

and we will pass the costs to you.

34


We recommend that you have the work done by an

experienced contractor. You must find a contractor, say

what work needs to be done and pay for this yourself.

If you carry out improvements such as fitting showers,

central heating and so on, these become fixtures and you

cannot take them away with you if you sell the property.

Cable reception

Not all new properties will be covered by a cable service

provider.

Most blocks of apartments will have a shared TV aerial or

a connection to the local cable network. New properties

will normally include ‘trunking’ (the connections needed

for cable TV). You will need to contact your local cable

company for details.

Vermin

Vermin and pests can carry disease. If you suspect

that there are vermin in your building, please tell the

environmental health service at your local council. Please

also tell us. If necessary, we will employ a contractor to

deal with these problems and add the costs to the service

charge.

You can help prevent vermin by carefully getting rid of

household waste. Please make sure that your rubbish sacks

are properly sealed.

35


Your home

Condensation

Condensation is caused when warm air hits a cold surface.

It is most noticeable in bathrooms and kitchens, but it can

affect other rooms.

Experts agree that, with proper ventilation and heating,

condensation can be avoided. One symptom of

condensation is black mould or mildew. This kind of mould is

not a sign that the building is damp. You can wash it off with

diluted bleach. This may need several treatments to get rid

of the problem. For a factsheet, please contact us.

During the first 18 months after your home has been built,

condensation can be more common. This is due to the

building drying out. It is important that you follow the

guidance included in the NHBC documents.

Buying extra shares

You can buy extra shares in your home at any time 12

months after the date your sale goes through. This is called

staircasing. The smallest share you can buy is 25% of the

equity that is left. When you apply to buy extra shares,

the price will be based on the current market value of the

property at that time.

If the first staircasing does not result in you owning 100% of

your home, you can buy more at any time.

Your rent will reduce in proportion to the percentage you

have bought. However, you still have to pay the full service

charge no matter what percentage you own.

36


Resale

If you want to sell your property, you must tell us as we may

be able to help you. The home ownership team will give

you details of our resale procedure.

If you want to take advantage of this service, you cannot

enter into an exclusive arrangement with anyone else.

If you have bought 100% of your home, you can sell your

property on the open market. Please contact the home

ownership team, who will give you more information on this.

37


Notes

38


April 2010

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