The Metropolitan and Thames Valley Housing Association is not collecting ground rents, or ratcheting up marriage values on shorter leases and all lease extensions will be 990 years where it owns the freeholds.
These undertakings were made clear by Tim Millns, MTVH’s director of central customer services, to MPs at the All-Party Parliamentary Group on leasehold and commonhold reform on December 12.
Metropolitan has 58,000 homes under management including more than 9,000 shared owners – one of the highest proportions in the country and 7,800 leasehold and freehold property owners.
“When we looked at the dissatisfactions and issues affecting leaseholders they came back to the issues of ground rents, lease extensions and the confusions around the length of the lease,” said Mr Millns.
A new model lease has been adopted which means that all Metropolitan leases should – where possible – be 990 years long and have a peppercorn, that is zero, ground rent.
However, 25% of its sites are governed by headleases, typically 250 years, and flats in those properties will have to be sold with lease length no longer than the headlease.
“When we do a lease extension for shared owners we will cap that premium at the percentage of the share that they own,” said Mr Milnns. “In addition to that, we also do release extensions at 990 years for our existing leaseholders.”
But there would still be “two-tiered service” at sites where Metropolitan is not the freeholder.
Questions were raised about the housing association’s “fiduciary duty” to maximise revenues. But Mr Milnns replied that metropolitan would gain from the additional value embedded in shared leases which it would recoup at sale.
He added: “Since we’ve made this offer, we’ve seen a 40 per cent increase in the number of lease extensions that have been done.
“A model lease of 990 years was going to come out anyway, so do you sit tight and wait, or do you want to address some of those problems that that exist within that portfolio?”
Mr Milnns estimated the lost marriage value to Metropolitan at around £230,000.