Indemnity policy for ground rent

ciarmc123

Hi im just wondering if anyone could advise or has been through something similar. 

We are at the final stages of buying a house due to complete on Friday. 

However our solicitor has informed us that due to the property being leasehold and the landlord being unknown ground rent hasn’t been collected, the solicitor has set up indemnity insurance to cover this , this has been sent to NatWest for approval however we have not heard back of them and contracts can not be exchanged until then. The worry is that now NatWest will reject this and the mortgage withdrawn. ?? Can anyone help

TripleH

No guarantee, but this is not not the only leasehold property with an absentee landlord.

How much rent is owed per annum?

If its small (eg £16/yr) then that won't set off too many alarm bells.

I have read that they can only chase so many years (think 7??) uninvoiced rent.

user1977

ciarmc123 said:

The worry is that now NatWest will reject this and the mortgage withdrawn. ?? Can anyone help

No, they're not going to reject it if the indemnity policy covers the risk adequately. You'll just need to wait for the answer.

NameUnavailable

Ground rent is only payable if you are sent a legally correct demand by the freeholder or their agents. I'm assuming that the sellers haven't had such demands, if so it's not an issue (although the freeholder could appear at any time and demand 6 years back rent).

If the ground rent has been demanded but the current owners haven't paid then that could be quite a serious issue although I would expect that your solicitor understands and has advised you? ....

eddddy

You should also consider any other implications of an absentee landlord.

In simple terms, read the lease to see what obligations the freeholder has - and bear in mind that nobody will fulfil those obligations.

And if you're required to get freeholder consent for anything (e.g. alterations, extensions), you won't be able to get it. That might worry a future buyer (or you) - as there's a risk (probably a small one) that a freeholder will turn up at some point, and enforce the terms of the lease.

user1977

eddddy said:

And if you're required to get freeholder consent for anything (e.g. alterations, extensions), you won't be able to get it. That might worry a future buyer (or you) - as there's a risk (probably a small one) that a freeholder will turn up at some point, and enforce the terms of the lease.

Which is the point at which you hand things over to the insurers. Who are only covering the risk because it's minuscule.