Secured loan for an 85yr old?

veggieblob

I'm hoping someone here can help my neighbour.  We live in an over-55s development of flats and the windows are having to be replaced.  His contribution will be £4500 and he just doesn't have the capital.  His flat is worth about £160k.  He wants to pay and has offered a payment scheme, which may or may not be accepted.  He has been told by Aviva that he is too old for equity release and also, apparently, for a loan from his bank (NatWest).  Can anyone suggest where he might turn for a loan please, without it costing him an unmanageable amount of interest.  Many thanks in advance.

MEM62

At that age any loan is unlikely.  He will need to speak with the lease-holder, explain his circumstances and see what, if any, agreement can be worked out.   

veggieblob

MEM62 said:

At that age any loan is unlikely.  He will need to speak with the lease-holder, explain his circumstances and see what, if any, agreement can be worked out.   

Unfortunately, that is not going too well.  Thanks for replying though.

retiredbanker1

Ultimately if he has not got the funds then he cannot pay.

I wonder if the lease holder can put a legal charge on his property which can be redeemed on his passing when it is sold?

MEM62

veggieblob said:

MEM62 said:

At that age any loan is unlikely.  He will need to speak with the lease-holder, explain his circumstances and see what, if any, agreement can be worked out.   

Unfortunately, that is not going too well.  Thanks for replying though.

Oh I have no doubt that the leaseholder will not like it and will make it difficult.  However, ultimately, they cannot take what he does not have so they will be compelled into a conversation.  I would advise your friend to check their lease in any case - just to understand what powers the lease-holder may have in these circumstances.        

veggieblob

MEM62 said:

veggieblob said:

MEM62 said:

At that age any loan is unlikely.  He will need to speak with the lease-holder, explain his circumstances and see what, if any, agreement can be worked out.   

Unfortunately, that is not going too well.  Thanks for replying though.

Oh I have no doubt that the leaseholder will not like it and will make it difficult.  However, ultimately, they cannot take what he does not have so they will be compelled into a conversation.  I would advise your friend to check their lease in any case - just to understand what powers the lease-holder may have in these circumstances.        

Ultimately eviction!  We have just had a 90min call with LV and it looks as if we may have some success re equity release, although for a larger amount.  I will update just in case anyone else is searching for something similar.  Thanks for feedback.

eddddy

Just a clarification on terminology - the neighbour who owns the leasehold flat is "the leaseholder".

The person asking for the £4500 is probably the freeholder (or the freeholder's managing agent).

The £4500 will be classed as a "leasehold service charge". If the neighbour doesn't pay their £4500 service charge, ultimately the freeholder can apply to court to have the lease forfeited.

In simple terms, that means the neighbours lease would be terminated - and they would lose their whole £160k flat, with no compensation.  Then, as the neighbour no longer owns the flat, they might be evicted.


But I would have hoped that the freeholder of an over 55 retirement development would be more sympathetic, and not taken those kind of draconian measures.


Perhaps the most important thing is for the neighbour not to be tempted to "stick their head in the sand" and ignore the problem. People who do that tend to end up losing their flats.

veggieblob

Absolutely correct.  This is why all avenues are being explored.  Our freeholder is not known for an empathetic approach!

silvercar

The freeholder or their agent, is forced into working with the leaseholder. If they pursue the line of repossessing if the leaseholder can’t pay, it will take many months, possibly a couple of years, until they get to the point where they could repossess and sell the property in order to release funds to do the work. Presumably the work needs doing, so it isn’t desirable to go down this route. The publicity attached with this also won’t attract new buyers to an over 55 block.

eddddy

silvercar said:

The freeholder or their agent, is forced into working with the leaseholder. 

That's absolutely not the case.

(I have personal experience of a fellow leaseholder not paying the service charge for some major works.)

Typically, the freeholder will simply delay replacing the windows until everyone has paid up. It's no skin off the freeholder's nose.

And the freeholder will explain to the other leaseholders that the delay is because somebody hasn't paid. And the other leaseholders might get angry with the non-payer, because they've paid their money, but they're not getting new windows.  (And perhaps the costs will increase in that time, meaning that everyone has to pay more.)


In the meantime, a typical freeholder would...

• Send reminder letters to the non-paying leaseholder - and charge the leaseholder £40+ for each letter sent
• Instruct a solicitor to start legal action - and charge the solicitor's fees to the leaseholder (Probably hundreds of pounds)
• Start the legal process towards forfeiture of lease - and charge the legal fees to the leaseholder (Which could now amount to thousands of pounds.)

Relying on the (desperate) hope that the freeholder won't do this because of bad publicity would be very dangerous.


That would be like the leaseholder saying "I'm willing to bet my £160k flat that my freeholder won't take legal action against me".





Edit to add...

Plus, if any leaseholder decides to sell their flat, the Leasehold Information Form (which goes to the buyer) will ask:

5.8 Is the seller aware of any difficulties encountered in collecting the service charges from other flat owners? If Yes, please give details:

That's likely to make other flats in the block more difficult to sell - so other leaseholders might be even more annoyed at the non-payer.

theoretica

Perhaps it would be worth speaking to a broker who knows about equity release/lifetime mortgages?  Other companies may have different requirements and not find him too old.