Rent Charge Mortgage Prisoners

Reports are coming in thick and fast of mortgage lenders finally wanting to think about protecting their freehold interest in homes subject to a rent charge. Recent reports in the media include the trigger article by Mortgage Solutions on 19th November 2019.

This was then followed up on BBC Radio 4 You and Yours and Money Box Live later in that week.

What’s the problem?? We think there must have been a case somewhere in the country (it was briefly touched upon in the Money Box item) where a lease has been taken on a supposedly freehold home by the rent charge owner. We know the Council of Mortgage lenders had asked the government to amend the law to remove this draconian penalty for non payment of the rent charge as long ago as 2016. At that time the risk was academic, but a case makes it a reality.

We have had a trickle of reports from our own supporters of sales falling through because their buyers lender insisted on a deed to protect them against this measure. It appears the developers who wrote the original deeds are not always willing to do this, or the delay causes the chain of buyers/sellers to collapse.

What do we say?? We have lobbied for change in this area for a couple of years, and do welcome recognition and protection for new home owners in future, we have grave concerns about the situation of those who have a rent charge and no protection. Government needs to act quickly and repeal section 121 of the Law of Property Act so that non payment of rent charges can only be pursued in the county courts, like any other debt. This will let us out of “mortgage prison” and obviate the need for individual deeds of variation.

“But there is no government” I hear you say – agreed and all the more reason to challenge your own parliamentary candidates on the issue before you vote for/against them….


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At Last Money Box Speaks!!

We are delighted to hear Money Box has broadcast an article based on the experiences of a pensioner who bought “freehold” to avoid leasehold on a new build development. Later she started to learn of the pitfalls, and is horrified to be sitting on a bomb!!

We have contacted the program offering to provide them with more information/evidence from our substantial membership. They have responded positively and have promised to talk to us before any future items are broadcast.

You can listen to the program broadcast first on October 5th 2019, on BBC Sounds at https://www.bbc.co.uk/sounds/play/m00092tk . The section starts just before 16 minutes in. Some excellent advice on what to ask during purchase by Beth Rudolph of the Conveyancing Association.

She advises potential purchasers to ask for “material facts disclosure” on the property along with estate maintenance budgets for the next 3 years plus management plans for the next 5 years. Our collective experience is that if people did ask these questions, the sale of new build homes on privately managed estates would dry up almost completely.


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