Bizarre seller behaviour - Would you pull out?

[oatleytap]

This, to me is bizarre, and I'm 95% sure I'm pulling out of buying this flat.

Just wondered what other sane people would do in this situation?

• Offer accepted March 28th
• End of May seller says their mortgage offer is expiring on 26th June
• I almost kill myself trying to push it through on my end by this date
• Get close to date and I say it's looking unlikely, can you get an extension on your offer
• Seller says ok, but HSBC will only give max 5 days (should be enough)
• 10 days later seller says HSBC want a letter from their solicitor to consider the extension and they're working on it
• Yesterday agent calls out of the blue and says seller has "double checked" their mortgage offer and it actually expires in July.
• Today I tell the agent I need the exact date and he gives me it saying "the seller is very sorry HSBC made a mistake"

How on earth could HSBC make a mistake with the expiry date? He's also forgotten he already told me the seller "double checked".

Feel like I've lost all trust in everyone and they've lied to try and push through the sale quickly.

Would you pull out?

@fancreek - it absolutely has everything to do with op

@oatleytap - the campaign against freehold has absolutely lots to do with you. You post there and people will tell you run. Rightly so. Your solicitor sounds shit.

because there’s been a lot of noise about reform the freeholders and their managing agents are upping the ante in screwing as much out of people as they can. This is why mortgage lenders becoming sniffing, you could buy it right now but could you then sell it.

I have a leasehold flat. Has 150 years left at £50 ground rent pa for the entire term. To me that’s worth more than your longer lease.

be careful.

If you have doubts, listen to them. You need to be certain about the lease.

Thanks @howrudeforme trying to figure out how to post there (I don't really do Facebook so I can't quite figure it out at the moment )

@howrudeforme oh yes my solicitor and the sellers solicitor have both been the drizzling shits.

Got the contract through the other day and they had my name completely wrong. 2 law firms that contract went through.

@oatleytap.
im pretty sure that once it goes over 1k a year ground rent then should you for whatever reason not pay it the freeholder has the right to repossess the property it. It’s why mortgage company often require a deed of variation of the ground rent

https://www.mplaw.co.uk/insights/news/the-ground-rent-issue/

https://www.facebook.com/groups/nationalleaseholdcampaign/permalink/2627224340758182/

thats the FB page

@howrudeforme.
i totally agree with you although others won’t
you even have quite a few leasehold houses that were built on big estate that have the same issue

so many people buy a flat and there is nothing wrong with that especially in London & the southeast where it can be the only option and they have no idea what they are buying

the law was changed in June last year so that new builds only have a peppercorn rent
but it couldn’t be changed for property built before this
when I look on rightmove in my city no flat that was built before June 2022 has sold lots are STC but most go back to last summer and I would bet that none of them will sell

my son was lucky that he read the contract word for word and asked why it said no GR but the lease did

in my sons flat ( he is living there atm ) the building manager confirmed only last week that none of the flats can be sold as the freeholders at the moment won’t change the ground rent . The freeholders are a massive massive company

I’ve seen one flat in a different block in another area with a deed of variation in place which the seller did but it’s still not sold

People are screaming about interest rates going up but I think in a year or so this will be much much bigger as people in flats can’t sell so you won’t have anyone able to move up the chain

and if you want to buy a flat you would buy a newbuild with no ground rent and a long lease

OP do your research and come back please and let us know what you do x
best of luck

@Im99912 - so true.

if outside London a ground rent of above £xxx renders it a glorified tenancy.

that is what leasehold is.

if buying leasehold I’d only consider if it was a converted house with freeholder living on premises.

my freeholder is huge company and has invoiced me £1.1 k for this year’s insurance. This is a one bed.

thats another issue have to factor in. You have little control over the maintenance unless you do RTM and even then you’re at the mercy of the competence of your fellow lessees (we can’t do it in my block of 4 flats as the the owners are clueless).

op - run. Sad your solicitors have been crap. This is common though.

Why did they lie? Because there’s too many useless and flakey buyers out there and they don’t want it going down to the wire. Is it clumsy and ill-conceived? Probably. But hardly worth creating drama over.

This word flakey that's getting thrown around is, frankly, absurd.

It's a business transaction, not a Tinder date.

Most buyers would feel nervous if the seller is behaving in a certain way. Lots of people will criticise you for it though, probably there's lots of shitty sellers on here!

You need to be certain about the lease.

This, personally I would try & avoid a flat with a lease. In this climate I would buy a house a bit further out as you need to future proof as much as possible

Exactly
I think it’s 1000 for London and 250 a year elsewhere
if you don’t pay it for whatever reason the freeholder has the right to repossess the property and there is nothing you or the mortgage company can do

its nothing more than an expensive rental with an AST

@op you aren’t being flakey at all

your solicitors are shit and they should have made you aware of this

@Im99912 @howrudeforme Spoke to my mortgage provider and they definitely view the ground rent as onerous, and require a "leasehold variation".

It's definitely against their lending criteria but they've offered me a mortgage and the underwriter has given approval to proceed to completion.

I know nothing of the solicitors obligations. Is it possible the bank should have been informed about this and haven't been?

And by the way, thanks so much to everyone who's replied on this thread - you've all given me much food for thought (every one of you)

@oatleytap
Banks should have been aware of the ground rent
but my sons mortgage was from Barclays and they were ok with the ground rent until they weren’t
but my son & my sons solicitors was more on the ball and wanted the ground rent changed to a peppercorn rent and the freeholders refused to do it

A leasehold variation for removing the ground rent nd changing it can take months and it’s down to the sellers to do it and the freeholders probably won’t agree or will want ££££.I’m taking thousands and the sellers have to pay both sides fees

It’s down to the sellers to do this and don’t agree to an informal deed of variation either

it’s on the sellers which is why they are being so sketchy and trying to rush it through

don’t agree to an indemnity policy either as that’s no good although you will be told it’s fine

Put it this way my son started in Sept last year
discovered in Nov a week before he was due to exchange about the GR and it’s taken till June for the freeholders to refuse

basically none of the flats 400 plus can probably not be sold in my sons building at the moment

@Im99912 Sent an email to my solicitor and they've immediately replied saying I need a variation or this indemnity thing. Why on earth they didn't tell me this two months ago I do not know! I've instructed them I won't be going ahead

I think you have done the right thing.

If only Scottish law was replicated in England and Wales when it comes to house sale/purchase.

The variation from my memory is done by the sellers
it won’t be cheap or quick and without it they will hit the same problem again when selling

it’s a massive problem that’s only coming to light since they change the law last summer with regards to ground rent on new builds
but it doesn’t apply to older leases

the indemnity policy is cheap probably around £200 maybe less but it doesn’t protect you only the mortgage company and a lot of mortgage companies won’t accept them anyway
so I wouldn’t accept that no matter what they say

The only way it’s worth you buying is if there is a deed of variation to put the GR ( ground rent at a peppercorn rent - this also has the advantage of restarting the lease again I think 🤔 but most freeholders don’t want to do this as they will lose the GR each year

honestly if you were my daughter I wouldn’t be letting you out of the house in case you signed for it because you need a place to live . 😂😂

my son was really lucky in that I have alway nagged him to “read the fucking small print” 😂 and then read it again and again

your solicitors are extremely shit if they didn’t pick up on this
if my son who has no legal knowledge and is dyslexic and spotted it and the difference in the contract
Then your solicitors definitely should have

Deed of VariationThe first and most preferred option is entering into a deed of variation of the lease. A deed of variation is an agreement between yourself and the landlord which allows the terms of the lease to be changed. With the landlord’s agreement, the ground rent can be reduced below the threshold and documented within the deed. A deed of variation can also deal with any other alterations that may be needed with regards to the lease.
Please note that the landlord may charge a premium (price) to compensate for the loss of rent moving forward and will also undoubtedly require their legal fees to be met.

Indemnity PolicyThe second less preferred option is purchasing an indemnity policy. An indemnity policy is an insurance policy which covers a defect which may not be able to be resolved. Instead of trying to resolve the issue, you would take out an insurance policy to protect your interests and potentially also the interests of any mortgage lender. However, this again will only protect their interests if you default in your ground rent payment. This does not reduce the ground rent, nor provide any solutions for you if the landlord has given a notice to repossess the property due to nonpayment of rent.

Lease extensionsA third option is extending the lease which will reduce the rent to a peppercorn. However, a statutory lease extension pursuant to the Leasehold Reform, Housing and Urban Development Act 1993 is only available to leaseholders who have been registered as proprietor of the property of the property at HM Land Registry for at least 2 years. A lease can be extended informally with agreement with the landlord; but the landlord will not be governed by the same rules as with a statutory lease extension and the premium payable is likely to be less favourable.
With either a statutory (formal) lease extension or an informal lease extension a leaseholder will need to pay a premium to the landlord for the additional term of years and will also need to meet the landlord’s legal and surveyors fees in addition to their own.

@Im99912 thanks for all the info, I must admit I've been clueless about the whole process but I've learned a lot!

Don't worry already viewing flats rent from this afternoon!

Im so glad that you have decided against it
new builds where the lease started I think after July 2022 are fine to purchase as the ground rent is a peppercorn rent so no issues

while the GR issue remains and people become more aware of it you will have a huge amount of basically unsalable flats making new builds more attractive

Yes, you’ve done the right thing.@Im99912 speaks well on this.

things are getting worse for leaseholders. Honestly, I’m 2000 I bought by first flat in London. Was aware the lease was low. Then life happened and forget all about it. Not until about 2006 when on mat leave did I have time to panic . I did my research and ended up buying the flipping headlease. Cost me £20k but £££kkk to the value overnight. And I did this informally. This would NEVER happen now.

my cousins lease had dropped to about 30 years and she had to pay almost £100k to get it sellable - that was over a quarter of its value!!!!

Youve dodged a bullet OP.

wishing you well.

The lease on the flat OP is talking about is close to 999 years so very different to your examples

Wait until you try to sell your property.

If you don’t pay your ground rent (mines £50pa) freeholder can take action to repossess.

it’s basically a glorified tenancy agreement.

I rent out my flat on a tenancy agreement but I’m responsible for ensuring and finding repairs.in a leasehold you pay for the upkeep of the freeholder’s bricks and land!