Our solicitor has identified a defect with the lease for the property we are buying in Homerton. The seller’s lawyers have offered title insurance as a workaround. We are content with insurance and will pay for it. Our solicitor has advised that he must be satisfied that the mortgage company is willing to move forward with this solution. Are we the client or is the bank?
The short answer to your last question is that, notwithstanding the potential for a conflict of interest, you and the lender are the client. Your lawyer must comply with the UK Finance Lenders’ Handbook specifications. The UK Finance Lenders’ Handbook conditions require your lawyer to disclose issues such as defects with the lease so that the mortgage company can be afforded the opportunity to check with their valuer as to the extent that the value of the property is affected. Should you refuse to allow your lawyer to make the appropriate notification then your property lawyer will have no choice but to discontinue acting for you.
I am about to put an offer on a leasehold property in Homerton. The property agents say that it is usual for flats in Homerton to have less than 75 years unexpired on the lease. I am getting a loan with The Mortgage Works. Is this going to be acceptable if the lease has 69 years remaining.
Most leasehold conveyancing experts should be able to deal with a lease extension. if you are obtaining a mortgage then your lender may insist that the lease be extended before competition. The Mortgage Works have specific requirements as set out in the UK Finance Lenders’ Handbook in relation to minimum unexpired lease terms. As of 16/10/2020 the requirements read as follows :
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:
Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer
New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer
Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.
SECOND HAND PROPERTIES
Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years
Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary
Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI
NEW BUILD PROPERTIES (includes office conversions)
Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Starting Ground Rent greater than 0.1% of the property value
- Ground Rent review period less than or equal to 5 years
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Ground Rent is linked to any indices greater than RPI
- Ground Rent is linked to the value of the building*
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary
Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- Starting Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than 5 years
- Ground Rent escalation less than or equal to RPI
* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years
I am the sole beneficiary of my late mum's will and I have everything in my name alone, including the house in Homerton. Conveyancing formalities meant that the Land Registry date was in September. I now wish to sell up. I do know about the CML six month 'rule', which means that my property ownership could be treated the same way as if I'd bought the house in September. Will no one buy the property for half a year?
The Council of Mortgage Lenders’ handbook requires conveyancers to: "report to us immediately if the owner or registered proprietor has been registered for less than six months." By the strict wording you might be impacted by that. many mortgage companies would take a pragmatic view as this requirement is principally there to capture subsales or the wholesaling and assigning of property.
is it true that all Homerton solicitor practices on the Virgin Money conveyancing panel are overseen by the SRA?
As a firm of solicitors, in order to be on the Virgin Money approved list of solicitors they would need to be governed by the SRA. The majority of lenders do permit licenced conveyancers on their panel and in that case the firms would be governed by the CLC.
My offer was accepted on an apartment in Homerton on 9/9/2020, valuation was booked 2 days later, all came back fine. Solicitor instructed, so all that was missing was my mortgage offer. Having made daily calls to Aldermore and chasing them on my offer, I have now been told that my offer will not be issued unless the lawyer is on the Aldermore conveyancing panel. Can the lender hold off the offer?
Mortgage companies tend not to not issue an offer until they have details of a lawyer on their panel. It can take a few weeks for Aldermore to deal with your lawyer's application to be on the Aldermore conveyancing panel. There's no guarantee that your solicitor will be accepted.
I have recentlybecome aware that Wolstenholmes have been shut down. They carried out my conveyancing in Homerton for a purchase of a leasehold apartment 9 months ago. How can I check that the property is registered correctly in the name of the previous owner?
The quickest way to check if the property is registered to you, you can make a search of the land registry (£3.00). You can either do this yourself or ask a law firm to do this for you. If you are not registered you can seek help from one of a number of Homerton conveyancing specialists.
I'm buying a new build house in Homerton with the aid of help to buy. The developers refused to budge the amount so I negotiated £7000 of extras instead. The property agent told me not to tell my solicitor about the extras as it may affect my mortgage with Skipton Building Society. Should I keep quiet?.
All lenders require a Disclosure of Incentives Form from the builder of any new build, converted or renovated property, It is available online from the Lenders’ Handbook page on the CML website. CML form is completed and handed to the lender's surveyor when the inspection is done.
Lenders have different policies on incentives. Some accept none at all, cash or physical, while others will accept cash incentives up to 5%.
Hard to understand why the representative of a builder would be suggesting you withold information from a solicitor when all this will be clearly visible on forms the builder has to supply to its solicitor, the buyer's solicitor and the surveyor.
My plan is to purchase a ground floor flat in Homerton. Conveyancing solicitor is awaiting, from the seller, building insurance documents. I was told today I was advised that the seller must send the insurance paperwork for the flat above also. Why does my conveyancing practitioner want to review the insurance for the flat above? Is it strictly necessary? We have been waiting for the previous month…
It is not impossible in leasehold conveyancing in Homerton to discover Conveyancing in Homerton in a minority of cases reveals that the lease provides for the tenant's to insure their individual flats rather than the landlord insuring the entire property - which is clearly better. You should check with your conveyancer but it would appear that your solicitor is attempting to verify that the entire building is insured. Insuring your flat is no help when it comes to rebuilding after a fire if the other flat cannot be rebuilt due to lack of insurance.