Missing Lease Title on Freehold property

Pinkfluffygem

Hi, my husband and I are 8 months into trying to buy a 1920's terrace house (both us and the seller are not in a chain).  The house is being sold as Freehold however our solicitor discovered a middle leasehold title that is missing (full breakdown below) and had to report this to our mortgage lender HSBC to check they were still okay with the valuation. I should also note here that the seller is taking out an indemnity policy to cover the missing lease. After weeks of waiting, HSBC declined the mortgage based on the missing lease stating they were concerned about the saleability of the house.

We're now in a position where we're going to try another high street lender (Natwest) and as guided by our solicitor it will (technically) be a Leasehold property rather than Freehold.  My question here is how much of a risk is this to us when we a) want to remortgage and b) when we come to sell the property? I'm of the opinion that if Natwest give us the mortgage, then it's a positive and indicates low risk to us but I'm wondering if anyone else has found themselves in this position? Thanks in advance - summary from our solicitor below:

The seller owns the Freehold under title numbers No1 and No2 and is included in the purchase.

From the Freehold a Leasehold title is granted No3 under a Lease dated 27/081896 for 999 years from 24/12/1894 which the seller also owns and is included in the purchase.

From title No3 an Underlease was granted dated 02/11/1986 for a term of 990 years from 24/12/1894. This title is unregistered and the Lease is not available. 

From the unregistered title a further Underlease was granted under title number No4 by an underlease dated 23/12/1921 for a term of 990 less 1 day from 24/12/1894 which the seller also owns and is included in the purchase.

In absence of the Lease dated 02/11/1896 for a term of 990 years from 24/12/1894 the seller has provided an indemnity policy for missing lease. 

On completion the buyer will own the freehold, leasehold and one underlease titles however will not own the unregistered title between 3 and 4.

Please note the remaining term is 859 less 1 day remaining under the underlease which our client will own on completion. We understand the seller has not been called upon to pay any ground rent during their ownership.

In practice as they own the freehold they would effectively end up paying themselves.

Any input is much appreciated as we're just a bit undecided if this is a walk away situation or we should pursue this house that we really like

sgthammer

From title No3 an Underlease was granted dated 02/11/1986 for a term of 990 years from 24/12/1894. This title is unregistered and the Lease is not available.

Is this a typo? The intermediate leaseholder is much more likely to be a going concern if the claim is only 40 years old rather than Victorian.

Pinkfluffygem

Hi @sgthammer
yes sorry, it's a typo - it should read 1886.  it looks like it was granted retrospectively

Pinkfluffygem

Pinkfluffygem said:

Hi @sgthammer
yes sorry, it's a typo - it should read 1886.  it looks like it was granted retrospectively

sorry, 1896

sgthammer

Okay, so the chain goes:

Freehold 1&2 – Lease 3 to 2893 – Lease to 2884 (missing) – Lease 4 to 2884

The 1920s house was presumbly built by the original No4 Leaseholder. Given there's no gap in the title numbers and the contract is 25 years retroactive, could this simply be an eventual formalisation of the lease that was never registered?

Do any of the leases identify the contracting parties by name?

It tickles me that the original No3 Leaseholder clearly thought "My heirs in the 29th Century will definitely want some time to restore the land to its original condition before handing it back to His Lordship; better shorten the sublease by 9 years." They played a long game in those days!