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: https://www.cml.org.uk/lenders-handbook/englandandwales/question-list/1865/
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:
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: