Deed of variation required to sell

S66PAL

Hi All! I’m at the very last stage of seeking my flat finally however the buyers lender has asked for a deed of variation or lease extension to be able to complete the sale. This is due to my ground rent being over the annual average at £283 instead of £250. The flat is 11 years old so the lease is quite long anyway. It’s a huge development and the freeholder is Sainsbury’s. I’m having a last minute panic as my solicitor says they may not agree to a deed of variation as they will sell to retrieve the extra money somewhere. The letter went out yesterday to freeholder but does anyone have experience of this? The other option of lease extension will cost me thousands I expect. What are my chances on a deed of variation? An indemnity policy was offered to lender but was turned down. Am I on a losing streak?? Please help

ReadingTim

Ask your solicitor - this is what you're paying them for.

GDB2222

If I were Sainsbury, the last thing I would want is a lot of little alterations to individual leases. It creates an administrative nightmare for them.

I'd suggest to your buyers they find a different lender, as it's unlikely you'll get the variation they are after. In any case, who's going to pay for this? Why should you?

S66PAL

I’m happy to pay for it to just close the sale, and the vendor won’t go to another lender. My solicitor is unsure what the outcome will be. I do know if it was a standard lender ie Santander that they would’ve accepted the indemnity policy.

Tom99

If it happens at all it will most likely take months to sort it out.
Have you specified in your letter exactly what you are asking for and how much you are prepared to pay?
If you have owned the property for 2yrs you could always offer to serve a statutory lease extension notice and assign this to your buyer to complete, that way there would be no delay.
The cost of buying out the £283pa ground rent could well be c£5,000 plus both sides costs, is that the sort of figure you are prepared to pay or are you looking to just reduce the ground rent a bit to say £200pa?

S66PAL

Thanks Tom99 that’s great info! I haven’t specified an amount, my solicitor wanted to try a deed of variation before lease extension but to be honest to save time maybe we should do what you suggested. Would I pay for the statutory lease extension? Tbh I’m happy to pay as just want to close the sale. Thanks for your help!

Tom99

S66PAL wrote: »

Thanks Tom99 that’s great info! I haven’t specified an amount, my solicitor wanted to try a deed of variation before lease extension but to be honest to save time maybe we should do what you suggested. Would I pay for the statutory lease extension? Tbh I’m happy to pay as just want to close the sale. Thanks for your help!

[FONT=Verdana, sans-serif]£283pa is not a particularly high ground rent I am sure there must be plenty of lenders who would not be put off. Are there ground rent reviews, if so are they particularly onerous?[/FONT]
[FONT=Verdana, sans-serif]I think I would tell the buyer they have 14 days or whatever to find another lender or you will put the property back on the market.[/FONT]
[FONT=Verdana, sans-serif]Re a statutory lease extension, this is likely to take at least 3mths and maybe 6mths or longer to complete. You have two main options:[/FONT]
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[/FONT][FONT=Verdana, sans-serif]1 – Find a buyer and offer to serve a section 42 notice after exchange of contracts and to assign that notice to the seller. The seller then takes over, pays all the costs, and gets an extended lease in a few months time so your sell price will have to reflect that the buyer is taking the risk on what price will eventually be agreed and paying for it. That does not solve the current buyers mortgage co problem though.[/FONT]
[FONT=Verdana, sans-serif]
[/FONT][FONT=Verdana, sans-serif]2 – You serve a section 42 notice and start to follow through the process yourself. You will be liable for both your costs and the freeholders costs even if you later pull out. Be prepared for it to take say 6mths but you can always assign your right to an extended lease to a buyer at anytime before then. You could do this but keep your informal negotiations going at the same time.
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