Because lessees under shared ownership leases are assured Ts (in respect of the share of the property that they do not ‘own’), it follows that the normal rules on relief from forfeiture do not apply to mortgagees. So, if a mortgage has been granted to help with the lessee’s purchase of the share of property, that mortgagee will be at risk if the lessee defaults and L recovers possession because of rent arrears. In that situation, the mortgagee will not be able to apply for relief from forfeiture.

To address that problem, the Housing Corporation, the CML and the National Housing Federation require that registered providers of social housing undertake that they will give lenders prior notice if they are taking legal action for possession. If that happens, the usual result will be that the mortgagee pays off the arrears and costs before the hearing, so as to avoid a possession order being made. Having done that, the mortgagee will usually exercise the right to staircase up to 100%, and then sell the property. See article in [2009] 231 PLJ 9.