Estate rent charge - last minute sale issue

kamix101

anni_ said:

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 ☹️.

Hi Anni

Did your "sale story" finished well? Indemnity policy was enough for lender? I have same issue now, luckly my solicitor obtained insurance, awaiting now for lender to come back...

Thanks!

mwbrown85

Hi @kamix101 @anni_

Did either of you resolve this issue, I am in a similar position and have contacted the rent charge owner which in my case is Tower Hamlets Council. 

Thanks

Matt

Kalim2

mwbrown85 said:

Hi @kamix101 @anni_

Did either of you resolve this issue, I am in a similar position and have contacted the rent charge owner which in my case is Tower Hamlets Council. 

Thanks

Matt

I've just been hit by this whilst going through my re-mortgage. I've done some research just to get clued up on things, I'll try to list what I've gathered below (thoughtcrimes bear with me as I tend to babble!:

• The Rent Charge is something from a Rent Owner, in my case this is separate from the Ground rent and Service charge that I pay annually. However I believe it's covered under one of those payments
• It's typically in the region of £10-£20PA
• If you fail to pay it the Rent owner has the right to re-enter, and to lease the freehold
• If you own the freehold you can redeem (own) the rent charge for around 16-17 times the annual charge. I haven't read anything to suggest that leaseholders can do this

I purchased my new build, leasehold coachhouse 7 years ago. I took out a 5 year fixed mortgage, then a 2 year fixed, and now I'm going through a re-mortgage with Nationwide.

Nationwide it seems is more stringent on it's lending, and requires an Indemnity policy in place before they will offer you a mortgage (though my paper work to sign is sitting on my desk so I'm not sure about that - I have yet to buy a policy yet I can sign the mortgage now?).

Anyway, the Indemnity policy is something that apparently some lenders require so that if you (the leesee of the freehold) fails to pay the Rent charge, it prevents the Rent owner from effectively seizing the asset (your house), so that the lender isn't out of pocket. For example, if you had no policy, and you failed to pay, the Rent owner *could* take the land back, including anything built on it (your house) and not only you would be out of somewhere to live, but the lender would be out of pocket too. This is what I'm led to believe *could* happen. I haven't gone as far to review any cases such as this, however to me the wording seems to imply it.

My new mortgage is with Nationwide. I've read that Barclays and Nationwide are more on top of these things and require an indemnity policy before they lend to you. From what I can tell this seems to be a recent thing in the last couple of years, which may explain why I was never hit with this before. My previous lender, Natwest, either isn't fussed or two years ago it wasn't a big an issue that it is now.

In summary, it's really irritating. You already pay a Rent charge, yet you now need insurance *because* you pay this charge. The result is you're shafted on both sides. The policy is pretty quick to set up, but it's still a cost (mine's looking to be £150). However, I'm aware that it's an annual policy and will of couse need to be factored into any re-sale (along with the Rent charge, ground rent, service charge).

Buying a house is fun, honest...

Small edit, I've found this the details which lenders require certain things: https://lendershandbook.ukfinance.org.uk/lenders-handbook/englandandwales/question-list/1865/