HSBC Mortgage on a property with estate rentcharge

JADDY15

Hi,
We were due to exchange this week for completion before Christmas on a property built 3 years ago and were advised by our solicitors that the property has an estate rentcharge. Our solicitors have advised that this can potentially delay our completion as our lender, HSBC is known in the industry to have very stringent requirements when it comes to estate rentcharge. If the management company (rent owner) cannot satisfy HSBC requirements then we would either have to change lenders or find another property to buy. The solicitors have reached out to both the management company and lender to get their respective criteria. 
Has anyone had any experience dealing with HSBC on a property with estate rentcharge and how flexible (or inflexible are they)?
Completely stressed out at the moment thinking about this!

K_S

@JADDY15 One of my clients did purchase a freehold with a rentcharge recently (not HSBC, another mainstream lender) but the mortgage only went ahead after the developer agreed to vary the terms of a rentcharge that the lender had confirmed was unacceptable.

Your solicitor should also have detailed to you the pitfalls of rentcharges (if not, do ask) so in this case, HSBC is doing you a good deed. I know it probably doesn't seem like that though!

MWT

@JADDY15 - Have you seen the details of the estate rentcharge?

From what I've seen elsewhere, HSBC have a particular concern about any 'right of entry' included in it, but a number of lenders have limits on what they consider reasonable in the escalation of charges over time, and that is something you should be concerned about anyway...

JADDY15

Thanks for the response.
I have spent the whole weekend reading up on estate rentcharge and its implications.
The rentcharge itself is £1.00 per annum for the rest of the properties life.
My solicitor has raised the following points with the management company:
1- confirm that a 21 day notice to be issued before enforcement of any remedies in case of rentcharge being not paid.
2- the management company is prohibited from creating lease incase of non-payment and in case a lease is created it is immediately surrendered once the dues are clear.
3- no premium to be charged inorder to surrender the lease.
They have not asked anything about the right to entry. So should I get my solicitors to clarify this point?
From my research online it seems like we can take out indemnity insurance to protect ourselves or we can even pay lumps amount and redeem the rentcharge forever. Not sure how practical these solutions are.
I am yet to see what are HSBC actual requirements and whether the above mentioned points will satisfy their requirements. 

KB228

@JADDY15 - How did this go with HSBC? They are my lenders too and we have just been told that the property we are buying has rentcharge, which our sellers have not paid/been requested to pay since living there.  I hope everything went alright, it would be great to hear how HSBC responded.  Thanks

JADDY15

Hi @KB228,
Surprisingly HSBC were fine with it. My solicitor couldn't believe the response when she heard back from HSBC has she was confident that HSBC would reject. 
We moved into our new home in December last year. I'm sure it will be all fine with yours as well. All the best.

verde78

This post gives me hope.
We have just found out at the 11th hour that there is a positive covenant on the property we are buying with a rentcharge of £11 a year attached to the freehold. Our solicitor has had to refer it back to the nationwide and has told us he thinks they may refuse to lend against it. Totally stressed out as we are in a chain that has took 6 months to reach this point. Hopefully they will take a view on it. Can’t find anyone on the internet complaining that their mortgage has been refused because of it so keeping my fingers crossed.

Ridiculous that the government doesn’t do away with these archaic rent charges. It’s pathetic really. 

somerlouise

Hi,
We have a similar problem- about to exchange when our solicitor says that our lender HSBC are not happy about a £3 / annum rent charge on the leasehold of the house we are trying to buy. 

Our sellers have never paid and don’t in fact have any idea who the leaseholder is. Their solicitor suggested an indemnity policy buy HSBC are insisting that they need to know who exactly the rent charge is payable to. 

It is beyond frustrating that we could lose the house for such a small amount of money. £3 a year...

JADDY15

@KB228, @verde78 & @somerlouise how did it go with your lenders? Good news i hope?
Indemnity insurance does put the lenders at ease so not sure if you had it taken out?

Natbag

HSBC seem to be tightening their rules as I'm stuck in a chain where they are refusing to lend at all unless a deed of variation can be granted, even with an indemnity policy in place.
Does anyone know if it's possible to get a mortgage still on properties subject to these fees, and which ones might be a bit more relaxed in their approach? Having to find a new lender at the 11th hour after so many delays and anxious buyers and sellers isn't ideal, but might be the only resolution
@KB228 @verde78 @somerlouise - any update would be helpful please!

kamix101

@Natbag did you finally find lender? Or you had to deal with Deed of Variation? 

I have same issue now.