Ground Rent - Deed of Variation - Selling issue

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    Ground Rent - Deed of Variation - Selling issue

    Please help, we are desperate!

    We own as Leasehold apartment, the property is now 12 years old. In 2018 {name removed} wrote to us with an offer to pay for a Deed of Variation as we had the “doubling ground rent” issue. We thought that this was a good idea as we were hoping to sell within the following 2 years and also they would pay solicitor fees

    We instructed a local Solicitor who handled the DofV, this took approximately 3 months. We were called into the office to sign paperwork and were told that the ground rent had been negotiated with the Landlord from £200 per annum (but would have doubled that year to £400) to £270....this was the extent of any advice given.

    We decided to put apartment on market in Feb this year, instructed a local agent who had sold an apartment in our block, usual questions were asked about difficulty of selling, no real concerns and we advised that ground rent was £270. First people that viewed offered and instructed conveyancer, also informed them of ground rent being £270.

    Sale proceeded well considering lockdown started not long after. 2 months down the line pack from landlord was sent to buyers solicitor, that’s when issues arose as we were told that as ground rent was above £250 and fell under the Housing Act we would need to provide indemnity insurance or get a new deed of variation.

    After many, many weeks of back and forth between solicitors we were told that buyers Lender will not lend because of the amount of ground rent! Our sellers would not wait for us to do this, sale has now fallen through.

    My question is, should the Solicitor that did the DofV have informed us of the implications of it being above £250? What do we do now as everything I have read seems to suggest that the landlords do not have to agree to another DofV and we may have to go down the lease extension route? Obviously this is not guaranteed and also has a cost an time issues.

    We just need some guidance on what to do next, we are gutted!

    #2
    Make a complaint to your local MP and ask him/her to join the APPG for leasehold reform.

    Comment


      #3
      I think you were just unlucky with a picky solicitor trying to scam some extra cash out of the indemnity.
      The housing act line is not a huge issue and I have known dozens of sales go through seamlessly with ground rents over this figure.
      But you could always get a valuation for a statutory extension if you want to be safe (, but the buyer could have asked you to serve section 42 notice and purchased with it's benefit if they were serious)

      Comment


        #4
        Leases with ground rent doubling up every 10 years makes the flat unsellable. Nationwide Building Society will not offer mortgage if the ground rent increase by more than double within 21 years.

        If your flat was built by Taylor Wimpey, they have set aside over £100 Mil for amending the lease.

        Comment


          #5
          Many lenders will not lend if the ground rent is over 0.1% of property value (or over £250 outside London/£1000 in London). It's a fairly recent development.

          Comment


            #6
            Originally posted by michelle230 View Post
            Many lenders will not lend if the ground rent is over 0.1% of property value (or over £250 outside London/£1000 in London). It's a fairly recent development.
            If this is now the norm, then this makes all those leaseholders with the above lease terms unable to sell to anyone that requires a mortgage. I cannot see the government being able to apply these rules retrospectively to already granted leases - without having to pay hefty compensations to freeholders ...

            The OP may have an action against the solicitor that did the deed of variation. It was this solicitor's duty to inform the OP of any negative implications that there may have been to accepting a ground rent of £270.00 pa ...

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