Lawyer specialising in problem leasehold properties

Louize74

Hi, can anyone recommend a lawyer to help us with our Leasehold flat?

We are having trouble selling, it seems there is a loophole which wasn't an issue 4 years ago when we bought it but is now causing issues with many lenders. Partly lease length and partly the cost. 

The lender wants a deed of variation but our landlord won't issue one so I may have to seek legal advise so will need a good solicitor.  

Thanks

user1977

Why do you think a specialist solicitor would help? Has your current solicitor told you they're out of their depth? Generally freeholders have discretion about whether or not they want to enter into a variation - that's got nothing to do with how clever your lawyer is.

eddddy

What is the issue with the lease?

Louize74

Our mortgage advisor says it looks like our lease that was acceptable when we bought the property but is now no longer acceptable to the lender.

Our ground rent is over £250 and so the lender wants a deed of variation which our landlord won't provide. 

It's looking like we may have a property we can't sell, so may have to take legal action against our landlord/house builder so would want a solicitor who could advise us on this who has good knowledge. 

eddddy

Louize74 said:

It's looking like we may have a property we can't sell, so may have to take legal action against our landlord/house builder so would want a solicitor who could advise us on this who has good knowledge. 

Taking legal action against your landlord or the house builder is probably not going to succeed - it doesn't sound like they've done nothing wrong.

(Unless perhaps you bought the property direct from the house builder, and they told you something misleading. That might be a breach of consumer protection legislation.)

In theory, you might have a case against your solicitor for failing to advise you about the implications of ground rent over £250. But that still sounds like a bit of a long-shot.


More realistically, I believe many mortgage lenders would lend if the buyer takes out indemnity insurance. Is your buyer refusing to accept Indemnity Insurance?




Edit to add...

Or does your lease say something like ground rents will double periodically, as well?

That might make your property unmortgageable, and the CMA is putting pressure on house builders to change those leases.

user1977

Louize74 said:

It's looking like we may have a property we can't sell, so may have to take legal action against our landlord/house builder

What would the grounds for such legal action be? You willingly signed up to the lease terms. At a push you might have a case for action against your solicitor at the time if they failed to give you proper advice about it - but as you've said, it was probably considered acceptable at the time, they couldn't have predicted what future lending criteria might be.

K_S

Louize74 said:

Hi, can anyone recommend a lawyer to help us with our Leasehold flat?

We are having trouble selling, it seems there is a loophole which wasn't an issue 4 years ago when we bought it but is now causing issues with many lenders. Partly lease length and partly the cost. 

The lender wants a deed of variation but our landlord won't issue one so I may have to seek legal advise so will need a good solicitor.  

Thanks

@louize74 I appreciate that you don't have a lot of control over what lender your buyer wants to go with, but this could equally be a matter that is lender specific rather than something fundamentally wrong with your lease.

Every lender has different criteria with respect to leases and ground rent so there's no universal approach to it. The GR > £250 being an issue outside London is not a universal policy across lenders either.

Summer of the aspects that matter are the property value, ground rent, lease length, any doubling clauses that is less than 21 years, etc. From experience, it's only in rare cases that a leasehold is completely unmortgageable.

Would you be able to initiate a lease extension and then hand it over to the buyer? That's sometimes a way out of this to get rid of pesky GR clauses and lease length issues, obviously coming at a cost.

Alternatively, if you do end up having to remarket, perhaps consider disclosing the pertinent lease info upfront so it can be placed with an appropriate lender (if at all possible).

Louize74

From reading between the lines it's probably not impossible to sell but certainly difficult.  It could well be just this lender. Our landlord has said the below but at the moment the lender is not agreeing to it.  It just seems unfair we should struggle to sell now when we didn't have an issue 4 years ago.  

If we lose our buyer we just want to avoid going through this again.  If this is unreasonable we feel it shouldn't be acceptable and that we have to put up with it. Not really understanding all this we wanted to maybe speak to a solicitor expert in this field for advice hence my request for recommendations.

"We are aware of the technical issue with ground rent in excess of £250 p/a and Schedule 2 of the Housing Act 1988. We do not accept that the issue is of real significance, or acts as a bar to sale or lending if the protections available to the lender are properly explained.

Irrespective of whether the lease requires service of a Notice seeking Possession or advance notice before proceedings are issued on a lender, the lender is always entitled to be served with possession proceedings under Practice Direction 55A of the CPR 1998, and can at any time avoid mandatory possession by paying the outstanding ground rent into Court or to the Landlord under Section 138 of the County Courts Act 1984.

We do not see any realistic likelihood of Landlords using the Housing Act possession route instead of standard forfeiture to enforce rent arrears given the clear advantages of the latter, including recovery of costs. This is borne out by the lack of examples of such cases in the residential long leasehold sector to date. Furthermore, we have specific instructions from our client landlord not to pursue this type of possession proceedings.

The issue at hand also formed part of the DCLG discussions. These discussion have been finalised and the Government’s comments on this particular issue were as follows:

“The Government is aware that, where ground rents exceed £250 per year or £1,000 per year in London, a leaseholder is classed as an assured tenant. This means, for even small sums of arrears, leaseholders could be subject to a mandatory possession order if they were to default on payment of ground rent. The Government will take action to address this loophole and ensure that leaseholders are not subject to unfair possession orders.”

If consideration is had to the above statement by government and the academic nature of this issue, it is clear that any potential risk relating to this technical point will be mitigated by forthcoming legislative changes. As this loophole will be closed, we are of the view that there is no risk to a lender and that this point should not act as a bar to sale or lending. We therefore believe that any variation would be a waste of time and money and is not necessary.

As a reasonable landlord, and on the specific understanding that we do not believe this to be necessary, should you maintain that a variation is required, our client will offer to insert the following into the lease by way of variation:

The Landlord hereby confirms that it will not seek possession of the [property*] on the basis that this lease has created an Assured Tenancy under any of the grounds set out in Schedule 2 to the Housing Act 1988."

 

eddddy

Louize74 said:

As a reasonable landlord, and on the specific understanding that we do not believe this to be necessary, should you maintain that a variation is required, our client will offer to insert the following into the lease by way of variation:

The Landlord hereby confirms that it will not seek possession of the [property*] on the basis that this lease has created an Assured Tenancy under any of the grounds set out in Schedule 2 to the Housing Act 1988."

That sounds like it solves the problem - but the buyer will want their solicitor to confirm that.

But most mortgage lenders seem to accept indemnity insurance anyway, even without that variation.

Are all your worries based on the comments of one mortgage adviser?  Maybe you should speak to a different mortgage adviser, or even a 'standard' conveyancing solicitor.


As an example, here Santander confirm that an indemnity policy is acceptable:

Ground Rents
1. Where ground rent provisions cause (or, during the term of the mortgage, are likely to cause) the lease to be treated as an Assured Shorthold Tenancy under the Housing Act 1988, this need not be reported to us if either:

a. the Lease can be varied to restrict the ground rent below the statutory level; or

b. a suitable indemnity policy is put in place to protect us (but please notify us about the policy in accordance with the Indemnity Insurance instructions)

See what other mortgage lenders say here:  https://lendershandbook.ukfinance.org.uk/lenders-handbook/englandandwales/question-list/1852/

user1977

Louize74 said:

Not really understanding all this we wanted to maybe speak to a solicitor expert in this field for advice hence my request for recommendations.

This isn't a particularly obscure or complicated point. Any property solicitor ought to be able to give you advice about it, you don't need to go hunting for some sort of specialist.

But like I said, you can't "take action" against the landlord simply because you've changed your mind about the terms you signed up to, in the same way that your landlord cannot unilaterally change the terms of the lease.