Residential Management Group (RMG) Contract Vs Lender (HSBC)

Natbag

Has anyone successfully bought/is buying a property subject to a RMG estate management fee contract and been able to secure a mortgage?
HSBC will not lend at all, not even with an indemnity policy, unless there's a deed of variation - which the company is reluctant to agree to.
We are desperate to resolve this any way we can, whether it's change the company's mind or find an alternative lender, as we risk losing our house purchase/sale as do the other 5 parties in the chain below and we would not be in a position to try and buy again. There's also the fact that this house would be rendered unsaleable. 
Any help appreciated!

K_S

@natbag Have there been any recent sales on the estate for similar properties? Have you checked who the neighbours have mortgages with (don't necessarily have to ask them, can get this from Land Registry as well)?

RMG manages a large number of estates up and down the country, so I'd be surprised if the property were completely unmortgageable. If you have a broker, what are they suggesting as next steps if HSBC is a dead-end?

[Deleted User]

HSBC Policy on this:

HSBC will not lend on freehold properties where exists any estate charge obligations against the purchaser.

It's pretty cleacut so I would hope you dont have a broker as going to HSBC was the wrong choice right from the start. 
Thankfully they are in the minority as plenty lenders will consider subject to the terms of the rentcharge

ukri

I don’t think it’s the same company but I had this problem when buying a terraced house on a new Estate a few years ago. My adviser was able to sort out a bank at a very good rate.

To be fair to your adviser, rent charges sometimes do not come up until conveyancing as estate agents and vendors might not know what its called or might hide it.

Natbag

Deleted_User said:

HSBC Policy on this:

HSBC will not lend on freehold properties where exists any estate charge obligations against the purchaser.

It's pretty cleacut so I would hope you dont have a broker as going to HSBC was the wrong choice right from the start. 
Thankfully they are in the minority as plenty lenders will consider subject to the terms of the rentcharge

Jeeeez. They've said they'll lend, but only with a deed of variation. They've said they'll look at it, so we are just hoping they will also sign it. Fingers crossed. Wish that had been known beforehand though. Thank you.

smahon137

Can I ask if you got this sorted please? I am currently selling a property with the same issue. The buyers solicitor will not move forward without and rmg are taking forever to do anything. 

No one else on the estate has needed one to sell/buy their properties 

K_S

@smahon137 I think the OP got the vendor to do a deed of variation and then exchanged+completed on the purchase shortly after. Just tagging them here so they get a notification @Natbag

With regard to other folk on your estate not needing a DV - lenders have different approaches/policies to rent-charges that they are uncomfortable with. Some are ok with indemnity policies, some insist on a DV.

smahon137

Thank you. Everyone I have spoke to on the estate had not even heard of it and one said they got the indemnity insurance. 

Would you know who is liable to pay for the deed of variation? My solicitor says buyer as it is them requesting, their solicitor says us the seller. 

My solicitor also thinks it will cost thousands so I am trying to get a cost (rmg dragging heels) to determine whether to find another buyer who doesn’t need the deed

K_S

smahon137 said:

Thank you. Everyone I have spoke to on the estate had not even heard of it and one said they got the indemnity insurance. 

Would you know who is liable to pay for the deed of variation? My solicitor says buyer as it is them requesting, their solicitor says us the seller. 

My solicitor also thinks it will cost thousands so I am trying to get a cost (rmg dragging heels) to determine whether to find another buyer who doesn’t need the deed

@smahon137 At least in the first instance, I think it will be the vendor who pays for it as RMG will likely not deal with the buyer.

Personally, I would expect the vendor to bear the cost but like a lot of other things in the house buying process, I guess it boils down to who is more invested in the transaction going through to completion.

I imagine the bulk of the costs will be made up of whatever it is that RMG charges to make this happen.

smahon137

I have paid all the initial costs with rmg like the management pack to sell, the fee for the draft deed to be checked etc and now we are awaiting the actual quote from rmg. 

The buyer has got the house at a bargain price compared to others that have sold on the estate,I accepted less for quick sale which has now been ongoing for 6 months so at this point I’m willing to wait the extra and put it back on the market for the extra money if I have to pay a substantial amount for a deed no one else has had to pay for.

I’m hoping the op can tell me roughly what it cost and how long it took so I can make the decision to put it back on the market or wait for rmg. Although if she was the buyer im assuming she may not know this. 

ryanarrichards

I am also having the same issue, I am selling a freehold property that has an estate service charge (deemed the same as an estate rent charge) to a buyer who is using HSBC. HSBC want a deed or variation to exclude the section 121 clause or input a mortgage protection clause, but this is going to cost us £1,000. We have instead offered them an indemnity policy and currently await to see if they will accept this.

Does anyone know if HSBC accepts an indemnity for the estate management charge?  This would save us a couple of weeks waiting for their response.