Selling house and buyer had mortgage rejected due to doubling ground rents

ijones8784

Hi. Just hoping someone out there can help shed some light on an issue we’re having. It’s a very long story but I’ve tried to cut it short!

We’re currently selling our flat in London. We were supposed to exchange last week then suddenly heard the buyer’s mortgage was rejected. Because our ground rent will double in 25 years, from £200 a year to £400 a year. His solicitor has now told us that our flat is unmortgageable. My solicitor says that’s nonsense, there will be a mortgage out there. But we’re also looking at asking the landlord for a deed of variation. Can anyone (brokers etc) help me understand how £200 on 25 years is seen as untenable?

Also, any idea of rough time frame / cost of deed of variation?

Also any opinions welcome as to whether or not we truly are unmortgageable and if we need to look to put it back on the market and purely look for a cash buyer.

I’ll be honest, I don’t teallt know what I’m asking, I just feel hopeless and helpless and I feel like I need to do something.

Thank you in advance

Nobbie1967

Does it double every 25 years?

ijones8784

It does yes. Currently £200, so in 25 years it will be £400

Mutton_Geoff

Millions of leasehold properties have rent escalations. Yours is very modest. The current issue is with new builds that have high initial rents that double every 10 years.

I doubt the story you're hearing is entirely true.

aneary

I got a mortgage in April with doubling ground rent every 25 years mine started at £150.

ijones8784

Thanks for replying - we are really starting to think that there’s something else going on. All the horror stories I’ve read recently about leases have been about ground rent doubling in 10 years, and all on new builds. Not sure what our next move is. Of course I didn’t bother to mention the full chain above us, but there will come a point when our purchase wants to pull out and find someone else.
I feel like it’s a lot of Chinese whispers right now between solicitors and estate agents. My solicitor certainly is adamant this shouldn’t be a problem. But apparently theirs is adamant there is. We feel stuck

aneary

Ground rent is not the reason for the mortgage rejection.

What is your service charge like I only ask because my mortgage was reduced due to the service charge and with you hearing third hand it's possible the two have been confused.

ijones8784

Sorry if you get this twice, I don’t think it posted the first time! [ok I realised its because I tried to post a link to a story about mortgage lenders rejecting on the grounds of doubling ground rents and I’m not allowed to paste a link)

The doubling ground rent issue has been gaining a bit of press recently, sounds like since May. Nationwide is apparently one of the worst, though everything i read relates to new builds and ours is a Victorian conversion!

buglawton

Looking at 1st post, I challenge OP to get that rejection reason in writing, as it simply isn't true. The buyer got cold feet, is obfuscating, who knows.

da_rule

In terms of a deed of variation, you're not likely to get it, as why would the freeholder voluntarily give up some of their income? If you do then you're probably looking at the lost ground rent income plus their legal costs, plus anything else they want to throw in.

How long is left on the lease? Have you thought about going down the statutory lease renewal process as this removes ground rent from the lease.

As everyone else has said, this raise is quite modest, so probably not the true reason.

AdrianC

ijones8784 wrote: »

It does yes. Currently £200, so in 25 years it will be £400

So it's literally only just doubled from £100 to £200?

Because if not, then you're already part-way through that 25yrs, and the doubling to £400 is going to be a lot sooner.