Leasehold house - Doubling of ground rent every 25yrs

ironlady2022

The leasehold house is mine and what I'm selling.

My Buyer has a mortgage offer on the table but believe after a review (last min by their sol), she has had to flag this back to the Lender.

With everything in the news, the Lender is wanting the Freeholder Adriatic Land to agree to a deed of variation. An email was issued to request for this today.

If ok, then they use a specific Sol to draw this up for everyone to sign. They want a fee if £130+vat so small in grand scheme of things. 

Top of the chain was willing to go into rented and now just waiting on us at the bottom. I'm really frustrated as to why this was not reviewed earlier. 

Has anyone had any experience or advice?

My EA is very good. She's currently selling a house on same estate and she's advised that they are going through the same palarva. Except the timelines are dire. Sold in Jan SSTC, found out in March about variation request and only got it through a month ago. EA has direct contact with the Sol so she's hoping it can be expedited.

In the last 10 days, it's gone from 0-100mph, right down to 20!

sidneyvic

When does the mortgage offer run because that is when you are screwed ?

eddddy

If I'm understanding your post correctly, essentially you're asking Adriatic Land to accept a lower ground rent in future years. (i.e. the Deed of Variation is to stop the ground rent doubling.)

Adriatic Land don't have to agree to this - they don't even have to reply to your request.

If they do agree, they'll almost certainly ask you to pay a lump sum in return. You can either agree to whatever amount they ask for, or try to negotiate a lower amount. But if you try to negotiate, obviously that will delay things.


If you have a contact phone number for Adriatic Land, you can phone them and try to get to speak to somebody who deals with Leasehold Deeds of Variation. They might tell you how quickly they might reply, how likely they are to agree, etc. You can try asking how much they would charge - but I doubt they'll be able to tell you that straight away.

ironlady2022

eddddy said:

If I'm understanding your post correctly, essentially you're asking Adriatic Land to accept a lower ground rent in future years. (i.e. the Deed of Variation is to stop the ground rent doubling.)

Adriatic Land don't have to agree to this - they don't even have to reply to your request.

If they do agree, they'll almost certainly ask you to pay a lump sum in return. You can either agree to whatever amount they ask for, or try to negotiate a lower amount. But if you try to negotiate, obviously that will delay things.


If you have a contact phone number for Adriatic Land, you can phone them and try to get to speak to somebody who deals with Leasehold Deeds of Variation. They might tell you how quickly they might reply, how likely they are to agree, etc. You can try asking how much they would charge - but I doubt they'll be able to tell you that straight away.

They don't have a phone number:/

I know they don't have to agree.

My Sol said that he's read up they will accept a deed in variation as it's been made illegal as this was 'snuck' in and was not explained properly by the Sol that they recommended me to use as they were in bed together. 

ironlady2022

sidneyvic said:

When does the mortgage offer run because that is when you are screwed ?

Their offer is apparently up in Dec

eddddy

ironlady2022 said:

My Sol said that he's read up they will accept a deed in variation as it's been made illegal as this was 'snuck' in and was not explained properly by the Sol that they recommended me to use as they were in bed together. 

OK - I think your solicitor is probably referring to this undertaking made by Adriatic Land to the Competition and Markets Authority:
https://assets.publishing.service.gov.uk/media/62335e53d3bf7f047160369d/220318_Adriatic_Land_3_Undertakings.pdf


It says that Adriatic Land will remove Doubling Ground Rent clauses from leases, if they double more frequently than every 20 years. And they should have written to every affected leaseholder in September/October 2021.

Unfortunately, your ground rent doubles every 25 years - so it isn't part of the undertaking, but it's definitely worth asking.


To be honest, it's a little bit surprising that your buyer's mortgage lender has a problem with ground rent doubling every 25 years - normally it's only a problem if it doubles every 5, 10 or 15 years (which matches with Adriatic Land's undertaking).

Do you know which mortgage lender your buyer is using?




Edit to add...

Who is your management company? (Is it Homeground?) You might be able to discuss this with them.

In fact, was it your management company or Adriatic Land that your solicitor emailed?


 

silvercar

We recently bought a property where there was some issue that the seller needed Adriatic Land to agree to something and they were helpful and quick to respond. Hopefully they will be obliging in your case. Initially we were concerned that they were a distant company in the Channel Islands and would be obstructive, but that didn’t prove to be the case.

ironlady2022

silvercar said:

We recently bought a property where there was some issue that the seller needed Adriatic Land to agree to something and they were helpful and quick to respond. Hopefully they will be obliging in your case. Initially we were concerned that they were a distant company in the Channel Islands and would be obstructive, but that didn’t prove to be the case.

Let's hope so

ironlady2022

eddddy said:

ironlady2022 said:

My Sol said that he's read up they will accept a deed in variation as it's been made illegal as this was 'snuck' in and was not explained properly by the Sol that they recommended me to use as they were in bed together. 

OK - I think your solicitor is probably referring to this undertaking made by Adriatic Land to the Competition and Markets Authority:
https://assets.publishing.service.gov.uk/media/62335e53d3bf7f047160369d/220318_Adriatic_Land_3_Undertakings.pdf


It says that Adriatic Land will remove Doubling Ground Rent clauses from leases, if they double more frequently than every 20 years. And they should have written to every affected leaseholder in September/October 2021.

Unfortunately, your ground rent doubles every 25 years - so it isn't part of the undertaking, but it's definitely worth asking.


To be honest, it's a little bit surprising that your buyer's mortgage lender has a problem with ground rent doubling every 25 years - normally it's only a problem if it doubles every 5, 10 or 15 years (which matches with Adriatic Land's undertaking).

Do you know which mortgage lender your buyer is using?




Edit to add...

Who is your management company? (Is it Homeground?) You might be able to discuss this with them.

In fact, was it your management company or Adriatic Land that your solicitor emailed?


 

I've been told that the Sol has to flag it back to the Lender as mortgage offer was issued previously. 

Homeground collect the ground rent and act as Agents, Sol has emailed them and written to Adriatic at the same time through post.

That is really strange from what you are saying as 25 years is not that bad.

I wonder if it is because the next doubling occurs in 2036. So they have counted from when the development had started in 2010 and not when the house was finished building in Dec 2014. Even so, that's still 14yrs away

eddddy

ironlady2022 said:

That is really strange from what you are saying as 25 years is not that bad.

It might be a 'half-bluff' by the buyer's solicitor. They would prefer it if the doubling clause was removed - so they're making an issue of it, and making you run around. But if it can't be removed, they might go ahead anyway.

But on the other hand, people are saying that mortgage lenders are getting fussier about ground rents.


Also, some people are threatening to sue their solicitors for not highlighting onerous doubling ground rents when they bought. So your buyer's solicitor might be 'making a bit of a fuss' about this, to make sure the buyer can't claim they didn't know about the doubling ground rent.

silvercar

The solicitor acts for the lender, so has to make them aware. If they can't get this changed then there is still every chance the lender will accept it.