Improving your home
If you want to carry out alterations or improvements to your home, you must get our permission before any work starts. This is a requirement of your lease.
We will not unreasonably withhold permission but we may need to carry out inspections or investigate further before we can make a decision and we may make a charge to recover costs incurred in handling your request.
Details of our charges are available by emailing email@example.com. For a full list of charges please see page 23 of your Homeowners’ Handbook.
For some work, such as extensions and alterations to the property, you may need to obtain other approval such as planning permission or building regulations approval in addition to our permission. You will need to speak to your local council for further advice.
Selling your property after you have made improvements
If you’ve carried out improvements to your home and wish to either sell it or buy further shares, as long as Paradigm gave permission for the improvements, any improvement value will be considered as follows:
In accordance with the lease, an independent valuation of your property must be carried out by a surveyor who is an associate or fellow of the Royal Institute of Chartered Surveyors. The chartered surveyor will determine if any improvements add value to your property.
Please see the examples below for further information.
The following examples are based on owning a 40% share of a property valued at £300,000. If you disregarded the value added by any improvements, the property’s value would be £265,000.
Buying further shares
You can buy further shares in your home from a minimum of 10%. In the case of this example, further shares will be based on £265,000 (disregarding the value added by improvements) and so a 10% share would be valued at £26,500.
Selling the property
As a shared owner, you can either sell your share to a new shared owner or sell 100% of your home on the open market.
Selling the Share
- The share value will be based on £300,000 (open market valuation)
- The 40% share is therefore valued at £120,000
You would not be able to sell for any more than the value of your share but you could accept less.
Paradigm will give their permission for their share to be sold at the same time as your share and so you won’t need to increase your mortgage; payment for Paradigm’s share will come from the proceeds of the sale.
- The value of Paradigm’s 60% share will be based upon £265,000 (disregarding the value added by improvements), plus a 60% share of any additional money achieved over £300,000 (open market valuation).
- If the sale achieves £300,000 or less Paradigm will expect the valuation of their share to be based upon £265,000.
Note: All transactions are subject to the terms of the lease. For more information regarding the process and any fees involved, all shared owners should contact the sales team on 0845 337 4877
Shared Ownership - Additional borrowing
The Housing and Communities Agency’s model shared ownership lease does not prohibit additional borrowing; however, it is subject to conditions contained in the shared ownership lease and in particular the Mortgagee Protection Clause.
The Mortgagee Protection Clause is a fundamental clause of grant-funded shared ownership leases.
Leaseholders should be aware that even if the value of their share has increased lenders may not be prepared to provide additional borrowing if they cannot rely on the Mortgagee Protection Clause to protect the additional sums loaned.
Paradigm’s written approval is required regarding the mortgage lender and the terms of the mortgage. Without this, the lender does not have the benefit of the Mortgagee Protection Clause and so is unlikely to advance any borrowings.
In addition to the requirement for provider approval, only certain loans are protected under the Mortgagee Protection Clause.
- The premium lent to purchase the initial share
- Further borrowing to enable the purchase of additional shares (staircasing)
- Further borrowings to comply with the leaseholder’s covenants in the shared ownership lease, such as essential repair
- Further borrowing to allow one leaseholder to buy out another leaseholder’s interest (in the same property)
Additional borrowing can only be permitted if the premium and any further borrowing do not exceed the market value of the leaseholder’s share in the property.
Further borrowing may be used to allow for repairs to the property, but not for improvements. Repairs might include works to correct wear and tear to bring the property back to at least the same standard when originally purchased, for example to replace a broken boiler. However, the addition of a conservatory, extension or loft conversion would be classified as an improvement and so not covered by the mortgagee protection clause.
Whilst some home improvements might result in an increase to the property value, further borrowings for this purpose are not covered by the Mortgagee Protection Clause. If a lender was prepared to provide a further advance for home improvements it would be for the provider to:
- Agree to the improvements being undertaken – possibly including how they were to be undertaken and by whom
- Approve the terms of any further borrowing
Covenants under the lease would not allow additional borrowing to fund the purchase of a new car, holiday, or to clear other debts etc.
For Paradigm to consider a re-mortgage we require the following:-
- A redemption figure of the existing mortgage.
- A copy of the new mortgage offer.
- Full detail of the purpose of the re-mortgage.
- Official Copy of Register Entries of the shared owners.
- A current valuation of the property; the lenders valuation will suffice, however we reserve the right to call for an independent valuation if the figures warrant it.
- Payment of our Admin Fee £70.00 + VAT irrespective of whether the matter proceeds to completion or not.
Once we are satisfied that the re-mortgage meets with Paradigm’s approval we will provide our consent, we will also sign and return any Undertakings. Our Fee for Consenting to the Mortgage is £70.00 + VAT which is payable before we will issue it.
Once the matter has completed by way of a copy of the Notice of Charge, we will then update our records accordingly. Our charge receipting the notice is £40.00 + VAT.
Note: All fees quoted are subject to change.