Shared Ownership

‘Shared Ownership’ Tenant Loses Home Following Bankruptcy

So called ‘shared ownership’ – by which tenants steadily build up equity in their homes by overpaying their rent – is popular with first-time buyers as a means of getting onto the property ladder. However, as a tribunal decision showed, it is vital that tenants avoid taking on financial commitments they cannot meet.

A tenant was granted a 125-year lease on a flat by a social housing provider (the landlord) after paying a £70,500 premium, all but £3,600 of which was raised by way of mortgage. She was, however, subsequently declared bankrupt and her trustee in bankruptcy disclaimed the lease. The landlord was granted a possession order on the basis that the lease had come to an end and the tenant was evicted.

The case came before the First-tier Tribunal (FTT) after the landlord applied to the Land Registry for closure of the leasehold title. The tenant felt that she had suffered a great injustice and argued, amongst other things, that her lease conferred an assured tenancy. On that basis, it was submitted that the tenancy did not form part of her bankrupt estate and that the trustee’s disclaimer was thus invalid.

The FTT noted that the disclaimer had not been challenged before the Bankruptcy Court and had not been revoked. It was therefore conclusive evidence that the lease had been terminated. The tenant’s defence to the landlord’s claim was struck out and the Land Registry was directed to give effect to the landlord’s application.