Deed of variation - share of freehold - lease extension

Reflex24

Hi all, looking for some help here as my solicitor seems to take a year to reply to anything

In the process of selling my flat in a victorian house compromised of 2 flats. We both have a share of the freehold. My underlying lease has 84.5 years left, his has a few months more than that. 

I'm mortgage free, the other freeholder isn't (if that matters). He's currently out of the country for work which is providing it's own issues, but I've managed to get him to sign the TR1, LPE1 and as he's not represented by a solicitor, the buyers have asked for an id1 completed. As he's out the country, I've paid for the id1 with id5 service to get that bit done. 

My solicitor has emailed saying the buyers solicitor require a deed of variation and it's not mortgagable with under 85 years left. I honestly didn't think this would be an issue until it was 80 or below but I guess that's my own fault.

Questions:

What does a deed of variation to extend the lease involve and how much does it cost?

Can the Co freeholder sign it remotely?

Will the fact he's still got a mortgage affect anything?

Is there any other way to appease the buyer that's better?

Thanks in advance! 

eddddy

Just as background info - here's what mortgage lenders say about minimum lease length. It's correct that some require 85 years, but other lenders say they will accept shorter leases:

https://lendershandbook.ukfinance.org.uk/lenders-handbook/englandandwales/question-list/1846/

• A Deed of Variation is a document that needs to be signed and witnessed by all parties to the lease. (So it could probably be sent to the co-freeholder by email, printed out, signed/witnessed, and couriered back.)

• The co-freeholder could ask you for a 'premium' (i.e. payment) for your lease extension. But often both co-freeholders would extend their leases at the same time, so instead of both paying each other, you just agree to extend each other's lease for free.

• (TBH, arguably, the co freeholder should either extend their lease at the same time as you, or charge you a 'premium' - otherwise they could end up giving you a lease extension for free, but the new owner of your flat makes your co freeholder pay for a lease extension later.)

• If the co-freeholder does decide to extend their lease, they need will their mortgage lender's consent - and their mortgage lender will require them to use a solicitor

• If it's only your lease being extended, the co-freeholder's mortgage lender only needs to be involved if they have a charge on the freehold title

I've known solicitors charge £1k to £1.5k for drafting and dealing with a Deed of Variation.

But you'll need to see if you can find a solicitor who will represent 'everyone at once' - i.e. you have to convince them that you are both agreed on everything, and there will be no conflict of interest.

Otherwise, I've heard of solicitors suggesting that 3 solicitors need to be involved (which would ramp-up costs)...

• One to represent you and look after your interests as a leaseholder
• One to represent your co-freeholder and look after their interests as a leaseholder
• One to represent the co-freeholders jointly - and look after their joint interests as freeholders

Reflex24

Thank you! What an absolute faff. Is there any other way to sell this place without jumping through all these hoops? Normally my Co freeholder is accessible but sods law he's not when I'm trying to sell. 

eddddy

Reflex24 said:

Is there any other way to sell this place without jumping through all these hoops? 

If you check the link I posted, there are a number of mortgage lenders who say they accept less than 85 years:

• Halifax group (including Lloyds Bank, Bank of Scotland, Birmingham Midshires) all say "Minimum 70 years from the date of the mortgage."

• Barclays Bank say they might: "Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office."

• TSB say: "Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption."

• Santander: 82 years

• Nationwide say "Our minimum unexpired lease term is 55 years, except where lending is over 85% of the purchase price/valuation on a second hand flat, in which case our minimum unexpired term is 90 years."

So you could ask your buyer if they'd consider applying to a different lender - maybe with a price reduction to cover their extra costs (and the hassle).

If they've "set their hearts" on your flat, I guess they might agree.  But equally, the situation might scare them off.