Deed of Variation - leasehold

Surfshopper22

I have been in the process of buying a house since October 2021, I am now in the final stages, all the chain are ready and waiting for my solicitor. I have signed the necessary documents including the contract & have paid my deposit. I was told a few dates by my solicitor that have now come and gone, I was assured that I would be exchanging contracts Friday 28th Jan 2022 at the latest ready to get the keys 3rd of Feb, which is now also not going to happen. My Solicitor has informed me he is waiting on a deed of variation due to the leasehold terms on the property as the payments are over £250. Apparently because the review period is every 5 years, the bank will not lend me the money unless this is changed to 10 years. Shouldn't this have been raised near the start when I got my mortgage offer? The sellers solicitors need to contact a company called Homeground to ask if they will give a deed of variation. How long will this take and how likely are they to agree to change the review from 5years to 10? The whole purchase of my house is depending on this being done ASAP as some people in the chain have been waiting for 9 months are saying they will pull out if not sorted soon. I should add the prices go up in relation to RPI, I do not have the double price issue some people have. 

propertyhunter

The time it takes to get a deed of variation can be months long depending on how cooperative the freeholder is and the specific circumstances of your transaction. Ask your solicitors to ask the seller's solicitors for a timeline. However, I'm not sure how you got to this point so far down the line and it only being discovered as an issue now. You can't have a mortgage offer in place by the sounds of it so there's no way exchange can happen anytime soon. 

eddddy

So Homeground is the freeholder's management company.

The first stage is to ask Homeground whether their prepared to do the variation, and how much money they want for it.

• Do you know if Homeground have agreed?
• Has a price been agreed?

Some management companies might start off asking for a 'silly high price' - especially if they know it's holding up a sale.

If the seller agrees to pay the 'silly high price', things might happen more quickly.  If the seller tries to negotiate the price down, that might take days, weeks or months (or never happen).

Then it's a case of how quickly the management company gets their solicitor or legal team moving.

Surfshopper22

Eddddy, thanks for your reply. At the moment the sellers solicitors have contacted homeground via email to ask regarding the deed of variation and are waiting for a response, so no talk of price as of yet...

I have noticed on their website it says they are open to allowing deeds of variation with leases that have the double ground rent charges, so I would imagine they would be willing to change the review period from every 5 years to 10. I am under the impression as the price goes up with RPI, after the 10 years ( if they change it) they will only up the price in line with inflation and can't just change it to whatever they want? This is something I will need to discuss more with my solicitor as I do not want to get stuck paying something that when the review time comes, the price shoots up to whatever they feel like charging me.

I have been doing some research and it seems that Homeground do not seem like a trustworthy company to say the least! Sending invoices for ground rent late and then demanding extra money for missed payments. 

I do not understand how this was spotted by my solicitor one day before exchange, as my mortgage offer was accepted back in October I thought it would have been all sorted back then. 

Surfshopper22

propertyhunter said:

The time it takes to get a deed of variation can be months long depending on how cooperative the freeholder is and the specific circumstances of your transaction. Ask your solicitors to ask the seller's solicitors for a timeline. However, I'm not sure how you got to this point so far down the line and it only being discovered as an issue now. You can't have a mortgage offer in place by the sounds of it so there's no way exchange can happen anytime soon. 

Thanks for your reply, I do not know how I got this far with it only just being spotted... I had the mortgage offer back in October, I am absolutely baffled. My solicitor said it is because we are still in the "enquiry" stage, even though I was assured I would be exchanging contracts last Friday ready to move in this week! Safe to say people in the chain are not too happy about this, hence the threats to pull out. I will have to just wait and see how quickly the sellers solicitors and Homeground can get this resolved... Hopefully it will be weeks rather than months! 

penners324

My leasehold flat is on a 10 year rpi increase (changed by deed 2 years ago), just been told as the ground rent will be above £250 at some point in future this can for an AST and no mortgage company will touch it.

So either another deed of variation to stop the rent going above £250 or indemnity insurance