Mortgage declined twice because of ground rent on flat

contento123

NameUnavailable said:

I'm wondering how your mortgate broker has negotiated the ground rent. It is set by the freeholder within the terms of the lease. Solicitors would need to be involved to vary the lease and I expect that the freeholder would want financial compensation as well as the legal fees paid (and this would done by the current leaseholder).

I'd check exactly what is going on here.

If it IS agreed at £250 today yes it will still increase in the future so is likely to still be an issue for the lenders.

I did wonder how she was able to negotiate a lower price but I didn’t really question it, maybe she knows the developer directly? She did say during our phone convo that she explained to the landlord that the flat had been declined twice and if he wanted to sell they would have to lower. She also didn’t mention any costs that I might incur for the landlord lowering the ground rent. I’ll email her tomorrow to clarify. 

If lenders have an issue with the ground rent being £310, then how has the landlord managed to sell other flats in the complex? Unless all these buyers have negotiated down the price of the ground rent? She also said that another MA in her company has managed to complete on a few properties in this complex, so why didn’t she use the same lenders as him if she knew that these lenders didn’t have an issue with the ground rent? 

I’m a tad confused by it all. 

ChloeManoey

contento123 said:

NameUnavailable said:

I'm wondering how your mortgate broker has negotiated the ground rent. It is set by the freeholder within the terms of the lease. Solicitors would need to be involved to vary the lease and I expect that the freeholder would want financial compensation as well as the legal fees paid (and this would done by the current leaseholder).

I'd check exactly what is going on here.

If it IS agreed at £250 today yes it will still increase in the future so is likely to still be an issue for the lenders.

I did wonder how she was able to negotiate a lower price but I didn’t really question it, maybe she knows the developer directly? She did say during our phone convo that she explained to the landlord that the flat had been declined twice and if he wanted to sell they would have to lower. She also didn’t mention any costs that I might incur for the landlord lowering the ground rent. I’ll email her tomorrow to clarify. 

If lenders have an issue with the ground rent being £310, then how has the landlord managed to sell other flats in the complex? Unless all these buyers have negotiated down the price of the ground rent? She also said that another MA in her company has managed to complete on a few properties in this complex, so why didn’t she use the same lenders as him if she knew that these lenders didn’t have an issue with the ground rent? 

I’m a tad confused by it all. 

Very good question, one you should ask her I think! Were they sold recently? I know lenders have tightened up on this kind of thing in the last couple of years especially.

Usually if you want the ground rent clause changed or the amount capped, you'd need a deed of variation. The landlord would charge for this as of course it means them losing income of potentially £100+ a year for 100+ years and they aren't gonna give that up for nothing 

princeofpounds

If you want to check the ground rent on the other flats, you can download their titles at the land registry for a few quid. Assuming it's been long enough that they are registered, you'll see it.