Wednesday, 22 February 2017

Lenders Start to Change Ground Rules on Ground Rent

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Leasehold as a tenure received quite a lot of bad press in 2016 with the BBC and broadsheets such as the Telegraph  pointing to the risk of people buying homes with escalating ground rents. This culminated in the Government saying that it would reform leasehold property after a campaign by charities and MPs to challenge the arrangements.

With a heightened sense of concern relating to ground rents lenders are now reacting via changes to their individual versions of their CML Handbook or BSA Mortgage Instructions.

In the last few weeks I have seen a number of mainstream lenders amended their instructions to conveyancing lawyers specifically concerning ground rent.

For some lenders such as Yorkshire Building Society a change was made to section 5.14.9. This lender now imposes the following requirements:

With regard to ground rent, please note that we have the following additional requirements to those set out in Part 1 of Section 5.14.9
* the ground rent must not be capable of being increased during the first 21 years
* the ground rent cannot be open-ended i.e. it must not be capable of being increased to an unspecified amount.

Should your firm wish to me made aware of changes to lender requirements please sign up to receive lender notifications.

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