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Shared Ownership – Midland Heart with benefit of transcript


The earlier post on this shared ownership possession case, Richardson v Midland Heart Ltd, (November 2007 Birmingham) attracted a lot of comment, some of it excitable and ill-informed (and much of that from me). Nearly Legal now has a copy of the judgment, and the benefit of time and reflection to go on.

Before we start, this was a County Court case, and apparently the appeal in this case is due to be heard on 5 & 6 November 2008. Also, apparently Midland Heart has not made the ‘voluntary payment’ of initial premium less arrears and costs (so not a lot) that was touted in previous press reports. (Thanks Michael Paget.)

The facts are largely as previously mentioned. Ms Richardson paid a premium of £29,500 for a 50% shared ownership lease in 1995. The freeholder was Focus Two, later Midland Heart Ltd The lease gave a rent of £1,456 per annum (with indexed increases). There were staircasing provisions to enable Ms Richardson to acquire further shares up to 100%, each time with a reduction in rent. Once she had acquired 100% of the shares, she could acquire the freehold. Ms Richardson did not exercise the staircasing provisions.

In 2003, Ms Richardson had to leave the property, following threats to her family. For a while housing benefit paid the rent on the property and her refuge place, but after a year this ended in Feb 2005. Arrears built up. At the end of Aug 2005, Ms Richardson decided to sell the property. Evidently Midland Heart, who would most likely have had the right of first refusal or to refuse, agreed to a sale and valued the property at £151,000. The property did not sell. In October 2005 (some two months later!) the HA issued possession proceedings, having served Notice on 15 Sept 2005 (a fortnight after agreeing to the sale!).

The Claim was under ground 8 Sch 2 HA 1988 and in Jan 2006 an outright order made on the basis that Ms Richardson was an assured tenant. In Dec 2006, Ms Richardson brought proceedings for a declaration as to the extent of her interest in the property and an order for sale or account for 50% of the proceeds of sale.

Ms Richardson, via Counsel Michael Paget argued that:

She had two tenancies, a long leasehold, subject to forfeiture, and an assured tenancy, protected by (and subject to) Housing Act 1988. The possession proceedings had terminated the assured tenancy, but not the lease. No notice under s.166 Commonhold & Leasehold Reform Act 2002 had been served and ‘forfeiture’ was not ticked on the claim form, so there was no proper procedural termination of the lease.

The Court did not accept the ‘two tenancies’ argument. There was one – of term certain – which fall under HA 1988 as an assured tenancy. No exceptions applied. As an assured tenancy, possession via forfeiture is ruled out – possession can only be under one of the grounds of the act. However, for possession for rent arrears, the HA 1988 provides that it is sufficient for the lease/tenancy to include provision for forfeiture for arrears, which Ms Richardson’s lease did.

S.166 & 167 CLRA 2002, on the requirement of a prescribed sum for arrears before forfeiture was possible did not apply as the definition of a ‘long lease’ in s.76 required a ‘total share’ of 100% for shared ownership leases. Ms Richardson’s was only 50%. In any case, the arrears were too large for s.167 to halt forfeiture. Additionally, there was no need to tick the forfeiture box on the claim form , as this was, strictly, a claim for possession.

There was no mortgage at the time of the possession hearing, so the requirements of  Practice Direction 55.2.4 on identifying mortgagees, etc. did not apply.

Secondly Ms Richardson argued that there was a trust. She conceded it was not a trust of the leasehold, but argued that the freehold was held on trust by the Housing Association for itself and Ms Richardson.

The Court did not pay much attention to this, stating simply that there was no foundation for the argument. The relation was simply that of landlord and tenant, with an option to obtain the freehold via staircasing, which was not exercised.

The Court said it was troubled by its own finding, particularly given the windfall that resulted for the Housing Association, and in view of the Housing Association’s actions at a time when they knew Ms Richardson was attempting to sell and were supposedly pursuing that sale on her behalf (and look again at the time scale above, two weeks after agreeing to sell there is service of Notice and a possession claim brought at the earliest opportunity after that. Some might consider that cynical behaviour, given that the HA ended up with a property worth £151,000). But that was the law.

I have noted in comments before that the apparent threat to a mortgagee’s security raied by this case is mitigated by the usual form of these leases which requires a lender to be notified by the landlord prior to any possession/forfeiture proceedings being brought for rent arrears. Thus the lender can pay off the arrears, secure the interest and either add the arrears to the loan or bring repossession proceedings against the tenant themselves. So that is cleared up. But this does still mean that the tenant’s interest, and the significant premium paid for it, can simply disappear with no remedy or recourse in the face of Ground 8 proceedings.

On reflection, I am not wholly convinced by the Court’s dismissal of a trust argument. I have no strong counter argument as yet, but there are a number of factors that go against the ‘simple relationship’ of landlord and tenant that the Court found. For instance, the Land Registry registers the lease with a ‘no sole disposition’ restriction, typically entered for ‘tenants-in-common’ trusts. If a shared ownership property is sold, then the division of equity is in accordance with the ‘share’ (I believe), and so on. It will be very interesting to see what the appeal brings up.

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts.


  1. Cait

    Has anyone had wind of the appeal outcome on this case yet?!

    • NL

      When last I heard (December), the appeal had been adjourned. I don’t know if it has been heard yet, but it should be any day now.

  2. Anthony

    I too have fallen for this when I paid for a share of property (or so I was led to believe) from a company called Assettrust Housing Limited (Owner Giles Mackay – Times Online Rich List) who claim to be helping provide social housing.

    They are citing the Richardson versus Midland Heart case as grounds for retaining all the equity I purchased.

  3. Cait

    Thanks NL – I shall wait with baited breath then (or bated?)


  4. Cait

    Any news yet?
    (I’ve just had a case it could apply to sort of)

  5. Marcin

    My initial thoughts on the trust argument are that one ought to have regard to what the parties are taken to have intended in the circumstances when they purchased the property.

    If the HA purchased the property with the money arising from the premium, the purpose of the premimum being to fund the purchase of the premises, then I think there is an argument for a trust.

    I guess the other avenue for redress is against the purchaser’s own solicitors, if they did not explain that she never would never really own the property until the end.

  6. NL

    Marcin, anecdotally, I’ve heard of a few nervous conveyancers on the second issue you raise.

  7. Alan Lodge

    Now in the CA list for 3/4 March 2010. So we will know the result before long.


    • NL

      We’ll see…

  8. chief

    The rumour is that this has been shelved, due to the appellant’s public funding being pulled. Does anyone know for definite? Although it’s still in the case tracker it hasn’t appeared on the cause list for either today or tomorrow.

  9. Cait

    Public funding was pulled?
    That’s scandalous as it has significant ramifications.

    Im obviously too naive but phoooieee if that’s the case.

    Still waiting with the whole baited breath thing.


  10. chief

    @Cait – it is just a rumour, so I’m open (hoping even) to correction. It may be that on its facts it was not the best case to deal with the ramifications.

    On your previous question about bated/baited, old Shylock has the answer – (bated) – although if you’re going to wait for the Court of Appeal to sort this out you’ll probably end up pretty blue in the face and thus baited might be better.

    Now be honest, you didn’t expect a housing law blog to be doing that today, did you?

  11. dave

    Chief: Just out of interest, why do you say that it may not have been the best case on its facts? It seemed a very good one to me, illustrating the manifest absurdity of these types of relationships. The only reason why it may not have been was because Midland Heart – out of the goodness of their, well, heart – apparently made an “ex gratia” payment of the amount Ms R had put into the property in the first place, but even then it seems to me to be a perfect case. I shall abate your response.

  12. Cait

    I understood that they hadnt actually *paid* the ex gratia payment though?

    and yay on the bated thing :)


  13. chief

    @Dave – now you’re just baiting me ;-)
    Anyway, it was really just idle speculation on my part.

  14. landlord's boy

    without wanting to put words into `chief’s’ mouth, it may be due to the rarity of cases where the `tenant’ has paid for their 50% share outright, rather than borrowing the monies. i was at a conference recently and put a question on the case to jan luba qc – his answer was precisely that there were only a tiny handful of similar cases (re outright purchase of the 50%) as set against numerous `mortgaged’ examples. but as we know, the mortgaged examples tend to get sorted out by the mortgagee paying off the arrears and then staircasing out. although i’ve recently had a case in which the mortgagee did/said nothing for months and the RSL i act for was on the brink of issuing after having `threatened’ the mortgagee with `midland heart’ repeatedly…

    as we know with `weaver’ the CA and the SC are not mad fans of academic/paper appeals on interesting points to them and i’d be surprised if there are many `midland heart’ types outcomes that are appealable, but maybe so?

  15. Don't Get Done, Get Dom

    Hi Everyone,

    I’m working for the BBC1 program Don’t Get Done Get Dom, and trying to find new cases for our sixth series.

    We would like to do a programme about Shared Ownership and pitfalls related to it, as in the case of Ms Richardson. If anyone has any case studies or points they would like to share with us, then please get in contact with us at:

    Best wishes,
    Dom Team

    • NL

      Keen though Dom’s legal insights surely are, you could try contacting us rather than asking people to contact you (twice, I’ve deleted the other one).



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