Deed of variation leasehold property

[MrsHf]

We’re selling our house which is a leasehold property, about 2 weeks away from completion and our buyer’s solicitor has just emailed to say their lender will not give them the mortgage without a deed of variation! We had this conversation 2 months ago where we offered indemnity insurance which the buyer’s solicitor accepted and we thought that was the end of the problem. From my understanding the lenders didn’t actually get back to the solicitor until this week where they said they would only accept a deed of variation, where we were lead to understand that the lenders had accepted the indemnity insurance months ago.
How long do deeds of variation take usually and how much do they cost? I think the difference they want is our current ground rent is increased 5 yearly but the lenders will only accept 10 yearly. Is this something that would be acceptable to the leaseholder in anyone’s experience?
So frustrated and filled with anxiety that the whole sale is about to fall through.

Just the legal fee for sorting the deed would be £1k+Vat, freeholder needs to approve it, but then it’s up to how long it takes solicitors to sort this out

Thank you! That’s not as bad as I was expecting, just hope it doesn’t take months and months 😭

Sorry to hear you're going through this. Selling a leasehold property is so frustrating. We had this a year ago except that our buyers lender requested the DoV early in the process instead of right before exchange. I have also heard that sometimes lenders issue a mortgage offer fairly easily but undertake further checks right before exchange and this is when they can start asking about DoVs etc. It's a bit crap because it would make more sense to get all this sorted at the same time as other enquiries etc.

Our DoV would have been around £1100. I'm told it would take around 10 days to do but our freeholder took weeks to respond to any of our solicitors emails so it went on and on. Tbf our solicitor was shit and she didn't do much chasing or answer her phone or read emails so no wonder it took ages. Hopefully yours gets sorted quickly!

Also remember the freeholder doesn't have to agree to it as it in effect devalues his property

It is unlikely to be quick or cheap.

It is likely to cost multiple thousands, because the feeeholder will lose out. There is no obligation to agree and it can take months for freeholders…they can walk further valuations and to engage specialist lawyers who work out their losses through agreeing to such a change and then require you to compensate heftily.

Sorry.

But also, a 5 yearly increasing round rent is terrible. It’s not surprising the buyers solicitor wants it changed and in all liklihood you will struggle to sell with that ground rent. You might lose your buyer and if you do, I’d look into dealing with the ground rent issue before looking for another or same thing likely to happen again. Bear in mind, any increasing ground rents are not popular now and the law will be changing…but not yet. A lease extension which give zero ground rent might be what you need, but takes months.

@BabyPotato Thank you, hopefully our freeholder will reply 🤞🤞😭 Our solicitor has been pretty good so far so hopefully can get it sorted but not holding my breath from the sounds of it!

@WombatChocolate that’s good to know, if it all falls through will definitely look at a lease extension. Not likely to try and resell until the summer if it does fall through so hopefully can sort the ground rent sorted by then.

I'd do the same as @WombatChocolate if the ground rent ends up being a problem. If you have had the property for two years you can start the lease extension process and pass it on to your buyer. That way you don't have to wait for months and months for the extension to go through so you can sell the place when the extension process is ticking away in the background.

But obviously hopefully your deed of variation works out!

How did this all pan out in the end? Same situation here

@c307 We got the deed of variation approved for 10 years but by the time it came through our buyer had already pulled out and found another property. Found a new buyer pretty quickly that had no issues with deed of variation but had a problem with the accounts for the management company not being up to date and also pulled out. We ended up keeping the house and renting it out in the end.