Thursday 11 May 2017

Nationwide Building Society Sets Out New Ground Rent,Event Fees and Lease Length Policy

Following it’s announcement earlier this week to make changes to their lending requirements for new build properties the lender has now updated their CML Part 2 instructions.

Sections 5.14.1 and 5.14.9 now have the following paragraph added:

NEW BUILD PROPERTIES (includes office conversions but does not apply to Shared Ownership)
The following are not acceptable:
- The unexpired lease term on a new build flat is less than 125 years
- The unexpired lease term on a new build house is less than 250 years
- Starting ground rent is more than 0.1% of the property value
The lease must be amended to comply with the above. If not the case cannot proceed. Please advise us where the case cannot proceed.
Ground rents and event fees:
Ground rent and other event fees must be reasonable at all times during the lease term. For example, it is acceptable for ground rent escalation to be linked to RPI (Retail Price Index) or a similar index and where this is the case we do not need to be advised. However, unreasonable multipliers of ground rent will not be permitted, for example, doubling every 5, 10 or 15 years. These must be referred to us and we will advise if our mortgage offer remains valid. If you are unsure as to whether the terms of a lease are unreasonable, please refer the details to us.

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