Estate rent charge - last minute sale issue

anni_

hello 
its 03:42 and I’m awake and worrying 🤦‍♀️😂.

I thought my house sale was all good and I even had in an email from my solicitor that I was waiting just on my purchase who had three outstanding enquiries. I’ve been chasing them weekly and was considering breaking the chain as was worried about potential future restrictions and dont want to lose my buyers. 

Yesterday the solicitor phones to say my buyer has a concern about an estate rent charge. Essentially my freehold house is ex HA has a contact clause to pay 1:100 of the cost of upkeep of communal areas (mostly parking). I get that the concern is not the cost of the rent charge but that if you don’t pay the HA can make your freehold a leasehold and this can be a worry to lenders. 

My solicitor is proposing to them an indemnity insurance as I’ve never had any request for any payment and she said to get the documents and amendments they want from the HA would take 3-6 months. She said they will have to go back to their lender to ask permission. It’s a buy to let mortgage they are getting. I’ve been Googling and can see this might all go very wrong now. 

 I only brought my house a few years ago and I know I wasn’t made aware of this. The solicitor said it only came to light in last 3 years with case law. 

My question is, has anyone experienced this and do you think the indemnity insurance will be acceptable to the buyer and lender? 

If it’s not what do I do long term to resolve this so I can find a new buyer? Do you think this effects the value of my house?

Feeling so deflated and worried. It’s only a house and some people have real problems but not being able to move makes my childcare and commute so hard and I was so excited for it all to be changing ☹️. My sellers will hate me for all my chasing and now I’m not going to be ready 🙈.

If anyone has had similar or could reassure me at all I’d be very grateful. 

Thanks

GDB2222

Clearly, home owners have to pay for maintenance of the communal areas, and that’s not really an issue. Particularly, as there has been no actual cost for some time. 

However, rent charges are a draconian way of implementing the obligation, and it is a bit unfortunate that this has been done. It works both ways, as it means that the other 99 owners are unlikely to drag their heels when it comes to paying. So, if the car park starts to break up, the work can be done quickly.

Many lenders are happy with an undertaking from the freeholder that the lenders will be informed of any unpaid rentcharges before enforcement action is taken. They will pay the charge and add it to the mortgage, thus avoiding trouble.  I am not clear whether they all require a change in the rentcharge itself or will accept a separate undertaking.

anni_

Thank you so much for replying. 
Sorry, I’m a little confused by the texhnical terms who is the freeholder? My house is freehold so me? Or you mean the housing association? Have you ever heard before of indemnity insurance being used in place of something from the HA. My solicitor as I say seems to think anything involving the HA is going to take months to achieve. 

Thank you again 😊

GDB2222

I mean the housing association. If your buyers and their lenders are happy with an indemnity policy, that sounds like a good solution. Presumably the cost is in the low hundreds of pounds? The legal fees involved in sorting it out with the HA would be significant, so a policy may be the cheapest solution.

I expect that the law will be changed eventually, to make the penalties for late payment less severe. But, in the meantime, just work round it if you can.

anni_

It’s £50 for the policy. I’d happily pay £500 right now! 

Thank you very much for your help. I will just have to wait and see what the buyers and their lenders decide. 

Thanks again

davidmcn

£50 because the risk of anything bad happening (although theoretically possible) is almost nil. 

anni_

@davidmcndavidmcn said:

£50 because the risk of anything bad happening (although theoretically possible) is almost nil. 

That’s what I thought when I heard the price. Just really hope everyone else sees it like that. 

Of course my solicitor has annual leave next week!!!!

GDB2222

anni_ said:

@davidmcndavidmcn said:

£50 because the risk of anything bad happening (although theoretically possible) is almost nil. 

That’s what I thought when I heard the price. Just really hope everyone else sees it like that. 

Of course my solicitor has annual leave next week!!!!

He/she won’t be going far!

badger09

anni_ said:

@davidmcndavidmcn said:

£50 because the risk of anything bad happening (although theoretically possible) is almost nil. 

That’s what I thought when I heard the price. Just really hope everyone else sees it like that. 

Of course my solicitor has annual leave next week!!!!

Your main problem will be whether your buyers' mortgage lender will accept an indemnity policy.

When we were trying to buy a fairly new house on estate with an Estate Rent Charge, our solicitor said many lenders refuse to lend on those properties. As we didn't need a mortgage, we weren't affected. Hopefully the existence of this Rent Charge hasn't just surfaced and the lender will accept your indemnity policy.

davidmcn

badger09 said:

anni_ said:

@davidmcndavidmcn said:

£50 because the risk of anything bad happening (although theoretically possible) is almost nil. 

That’s what I thought when I heard the price. Just really hope everyone else sees it like that. 

Of course my solicitor has annual leave next week!!!!

Your main problem will be whether your buyers' mortgage lender will accept an indemnity policy.

When we were trying to buy a fairly new house on estate with an Estate Rent Charge, our solicitor said many lenders refuse to lend on those properties. As we didn't need a mortgage, we weren't affected. Hopefully the existence of this Rent Charge hasn't just surfaced and the lender will accept your indemnity policy.

It will depend on the terms of the rent charge. Here are the various lenders' policies:
https://lendershandbook.ukfinance.org.uk/lenders-handbook/englandandwales/question-list/1865/

anni_

I think it’s all going to go wrong with this buyer. 

Unless I’m lucky and their lender accepts an indemnity policy the time scales will push everyone out of the stamp duty holiday. Looking at that list plenty of lenders won’t accept an indemnity policy

It seems like the issue is because I didn’t even know it existed or was a problem? If I’d known in good time I could of got terms and conditions from the HA? It looks like they can amend their terms to say they won’t invoke a lease without informing the lender? Is that right? Should my solicitor have picked up on it as part of my sale? She said she was surprised they were making a fuss out of it. Lots of the stuff I read relates to new builds but my house was built in the 80’s and first brought from the HA in 1991. There were two owners before us.

If it all falls apart I’ll feel so guilty for the whole chain ☹️.