Many of us who are unwittingly trapped in the private estate model have observed what amounts to a conspiracy of silence over the true risks of the rent charge. It involves the developers, councils and property industry as a whole, but also those very many homebuyers who hope that by keeping quiet, the problem will just disappear! HorNet have taken some flak for daring to talk about it, but at the end of the day it is the mortgage lenders concerned to protect their investment who are exposing the secret.
We now have reports from members that the new Law society form FME1 is being used if their potential buyers are with Nationwide BS. No doubt others will quickly follow suit.
If the mortgage company finds a rent charge, it appears they are now insisting on a deed of covenant with a protective clause in it to prevent the rent charge owner from effectively repossessing the house. The clauses will usually allow the lender to pay any arrears/out standing charges, so that a lease is not taken out. We understand that this sort of clause has been common to protect lenders against forfeiture of leasehold properties.
If you care to study form FME1, you will see that it was only created in March 2019 and its use is therefore likely to increase. You will also see that we had nothing to do with its creation!! We do agree that home buyers ought to have the sort of information requested in it, but want to know what is going to compensate us for not having this information or protection! Sellers are experiencing delays right now because of this belated inquisition without any prospect of compensation. Why did their lender not take this up at the outset? Is there some lack of due diligence here??
An indemnity can be taken out if the property isn’t new at a fairly low figure but not new properties. I would like to know if this would cause a resale problem