Repeal Section 121 -Act Now!

There’s a problem we need to urgently address and we call for all our supporters to email their MPs. For full details please :-

As we have reported already, existing estate rent charge victims are facing problems, mainly in the shape of delays and extra expenses, because mortgage lenders are increasingly aware of the onerous penalties for non payment of the charges. Specifically their concern is the ability of the rent charge owner to have a lease granted over the property, which leaves it no longer freehold. So, where there is an estate rent charge, and depending on the wording of the TP1, mortgage lenders are insisting on a deed of variation which protects them from this happening by allowing them to pay the “debt” and recovering it from the home owner or even allowing them to repossess if there is further non payment.

We do not yet know the extent of this problem, but are concerned that it will become the norm. The Council of Mortgage lenders has asked its members for their policy on this and you can check the answers here:

If you are selling a second hand fleecehold home with a rent charge, you could end up having to pay for a deed of variation and face a delay in completion with the risk of a chain collapsing and loss of the sale. We have heard most management companies are agreeing to this, but have not yet been able to substantiate this information. If they don’t agree, then the property will become virtually unsaleable.

Another lender is having concerns over affordability because of the uncapped nature of the charges. We know of two examples of pensioners’ concerns reported in the press in the past couple of years. Regulation and indemnity against defects are really the only measures which can address the current open ended liability for maintenance of often sub standard estate grounds.

However, the government could solve the rent charge issue by simply repealing section 121 of the 1925 Law of Property Act. This would leave any estate charge “debt” to be recoverable in the usual way at the county court just like estate charges imposed via a chain of covenants in a separate deed.

Whilst our aim is the total abolition of estate charges for residential property, we feel we must call on the government to act urgently on rent charge “mortgage prisoners”. It is an easy quick fix while we continue to wait for something more than words to help us. We can’t afford to wait for abolition if people are going to have unsellable homes.

So HorNets, if you agree and are concerned about selling, either now or in future, please write to your MP requesting that they contact the Secretary of State, Robert Jenrick, asking him to repeal this section as a matter of urgency.

Here is a guideline/ template you can use to personalise:

Dear xxxx

I am your constituent living at *ENTER FULL ADDRESS *. I am very concerned that I can/will not be able to sell my home when I need to move because it has an estate rent charge. Mortgage lenders are now refusing to lend because of the risk of repossession of my freehold property due to Section 121 of the 1925 Law of Property Act which gives the rent charge owner draconian rights in the event of non payment for any reason, including not knowing the payment is due!! A lease can be taken out on my home, even if I forget payment or have a dispute over exorbitant fees.

Whilst some sellers are able to use a deed of variation with their management companies agreement, this causes delay and extra expense.

I would urge that section 121 is repealed thus avoiding this serious threat to sellers including myself. I would be grateful if you could write to the Secretary of State, Robert Jenrick at the Ministry of Housing Communities and Local Government on my behalf with this request.

You can easily email your MP using the Write to Them service – start by adding your postcode to the box below:

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16 Replies to “Repeal Section 121 -Act Now!”

  1. I have written to Lord Lytton (and he answerered favourably) and I copied in my MP and the Housing Minister. I posted this link four days ago to the document the Housing Minister sent me in reply, on the Home Owners Rights Facebook page.

    Whilst I agree that the rent charge is a desperate situation for some, on my TP1 there is is no mention of a rent charge but I am in the same trap. The draconian Covenant is being used as the bargaining tool. We are apparently able to form our own management company but that will not alter the fact that the Management company is just a ‘middle man’ within a nest of companies involved in owning and managing the estate. The developer still owns “The Estate’ by holding on to a scruffy river bank. Someone else will be paid for insurances, for gardening charges, for maintenance of the private roads and the SuDS*. We were missold the Covenant in the first place. Who knew that we would be faced with ongoing, uncapped liabilities when the “management charge” was described as a small amount for someone to mow the grass and keep the estate tidy?

    I am in agreement with you that we urgently need changes, but wonder if, by removing just the Rent Charges, the government will ignore other demands in the working group report and consider the job done.

    Local Councils also need to be addressed, their Section 106 on this estate is the stuff of pantomime landlords. Not content with getting council tax from every dwelling on a plot that was formerly a liability, they have charged the buyers, via the developer, for many thousands of pounds more, for permission to build on the unwanted former site of a school.

    I am concerned that if we demand a solution to just part of the problem, we will only be solving part of the problem. We need the government to deal with all the changes that the have been recommended in the report.

    *Sustainable Draining System

    1. We totally understand your concern that government might think it has done enough, but feel the risk is worth it to help mortgage prisoners. We will not “put up and shut up” just because only one of the many issues may have been addressed.

  2. Lenders have already started to refuse mortgages on properties on our freehold development due to the rentcharges on the deeds. We have freehold homes trapped in this scenario on our development and the Developer is pushing the chain into collapse.

    Fingers crossed regulation can come into force before new build sales and remortgages implode.

  3. We are trapped in this scenario at the moment. Our buyers lender won’t let them the money to buy our house due to the £1 estate rent charge and they are insisting on a deed of variation. We have tried to cover this off with an indemnity however their conveyancer has rejected this and demands a deed change… Our conveyancer had replied saying this is completely unnecessary but the whole chain is now at risk of falling down. How can any of this be legal and potentially leave us unable to sell this house!

  4. We finally managed to sell our Bellway home September 2020. Our buyers solicitor insisted on us having a deed of variation drafted to the £1 estate rentcharge ( even though it was not a condition of the buyers mortgage offer).
    Our conveyancer argued with our buyers conveyancer, but if we didn’t have the deed of variation drafted the sale wouldn’t go ahead. It cost me £1260 to have the deed drafted by Bellway’s solicitor and approved by the management company Gateway.

  5. I wrote to my MP who has been extremely supportive in this repeal. He has sent me a reply from the Ministry of Housing, Communities and Local Government confirming that they have committed to repeal Section 121 of the Law of Property Act 1925. Snippets from the comms as follows…

    “We are committed to promoting fairness and transparency for homeowners and ensuring that consumers are protected from abuse and poor service.

    The Government is taking forward a comprehensive programme of reform to end unfair practices and raise standards in both the leasehold and freehold markets.

    The Government is aware that homeowners could be subject to a possession order or the granting of a lease of their home by the rentcharge owner over rentcharge arrears. As part of our leasehold reform work, we have committed to repeal Section 121 of the Law of Property Act 1925 to ensure homeowners are not subjected to unfair possession orders by rentcharge owners.

    The Government also intends to legislate to ensure that freehold homeowners who pay estate rentcharges have the right to challenge their reasonableness and to go to the tribunal to appoint a new management company if necessary.

    We will bring forward legislation as soon as Parliamentary time allows.”

    Posted from someone who abstains from social media i.e. Facebook/Twitter etc., so watch this space by way of any further updates.

  6. We were one week away from remortgaging on a much more favourable rate than we currently have when the lender (TSB) advised oir conveyancing firm that they will require a Deed of Variation excluding the possibility of a lease being imposed. They will not accept the 2 month notice that other lenders may agree to.

    The managing agent has said in a phone call that they or ang other developer would waiver the right to impose section 121.

    We are now faced with the choice of paying £750 to have the DoV drawn up with no guarantee of success (whilst also paying £400 a month extra whilst on our current lender’s variable rate) or starting the whole process again.

  7. We are ready to exchange apart from the buyers solicitor wanting a deed of variation to remove s121 clause, which I have agreed to pay for. The management company(mc) have refused to grant it based on advice from their solicitor. The mc have never enacted it and never will but will not remove it. It’s back with the buyer to make a decision but what can we do? If they are refused to grant the deed we could be stuck in this house forever

    1. Hi, did you get your issue sorted. We are in the same scenario now where our sellers solicitor are saying the section 121 clause can not be removed from the transfer deed of variation which is affecting 6 in the chain. We cannot go ahead without this clause being removed as advised by our solicitor. The whole situation is a mess. We think it’s the management company who our sellers pay a charge each month who are refusing to accept this amendment. This could affect us getting a mortgage offer or selling on. Any advice would be appreciated! Thanks Michelle

      1. It is precisely for this sort of issue that we want the government to first abolish section 121 and ultimately the private estate model as applied to non private estates!! The management company has to agree to a DOV and to be fair, most do so long as you pay the legal fees. If they are being awkward about it now, it doesn’t bode well for any future sales. Although it is a very stressful position to be in, you may find you have had a lucky escape when you look back in a year or two! Hope you get it sorted to your satisfaction. There is no help from government over this yet, your solicitor will have to try to negotiate a DOV.

  8. We are in this situation at the minute. Ready to exchange, this came up last minute. Now we are faced with being unable to borrow against the house we wish to buy because of a rent charge on the freehold from the 1970s. Does anyone know how long a DoV takes? Because it looks like that is the route we are heading down.

    1. Sorry we can’t answer that! I guess your solicitor will be able to advise. We do know of others who have obtained Deed of Variation in these circumstances, but not how long it takes. Good luck!

    2. Richard ,I’m in the same boat except my rent charge owner won’t communicate with me or my solicitors effectively leaving my home unsellable , however I found below on net last night , indemnity policy’s are now available for estate rent charges , a bit more searching and as of this week there are now at least two companies offering this service.
      My solicitor has contacted them today for quote and is looking into the finer points/clauses/ exclusions but so far it’s looking good

      1. I am now unfortunately in the same boat as a buyer. The seller is refusing to request a deeds of variation, and the indemnity policies available are only for lenders.

        @Robert, were you able to bed down the validity of the policy from CLI?

  9. Mel

    Many thanks for sharing this ,Our MP is also very supportive and is engaging with our managing Agents Trinity who are ignoring our emails and non-responsive to telephone calls we have a £1 rent charge on our Freehold property which is preventing potentail purchasers from obtaining a mortgage.

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