In short: a share of the freehold does not remove the fact that your flat is held under a lease. If Barclays has said it cannot proceed without a mortgagee protection clause, proceeding without resolving that requirement could mean Barclays will not release the mortgage funds.
What the clause generally does
A mortgagee protection clause is intended to protect a lender whose mortgage is secured on a leasehold flat. Depending on its wording, it may require the freeholder to notify the lender about certain lease breaches or forfeiture action and give the lender a chance to remedy the breach or pay sums due before the lease is ended.
The precise protection varies. It does not necessarily prevent forfeiture in every situation or guarantee that the lender can fix every breach.
Main risks if you proceed without it
- Your Barclays mortgage may not complete. Barclays has stated in writing that it is unable to proceed unless the clause is included. Your conveyancer should not assume this requirement can be ignored.
- The flat could be harder to sell or remortgage. A future lender may impose the same requirement, and a buyer’s solicitor may raise the missing protection as a problem.
- The lender’s security may be at risk. If serious lease breaches lead to forfeiture, the lease—and therefore the flat interest securing the mortgage—could be at risk. The clause is designed to give the lender relevant notice and an opportunity to respond, subject to its terms.
- Owning a share of the freehold may not solve the problem. The share in the freehold company or arrangement is separate from the lease granting the right to occupy the flat. Losing or compromising the lease can still have serious consequences, and the freehold share may not preserve your flat rights.
What to do before proceeding
- Ask your conveyancing solicitor to review Barclays’ exact requirement and the lease, including any existing clauses that might provide equivalent protection.
- Ask the solicitor to confirm in writing whether Barclays will accept the lease as it stands. The email you quoted indicates it will not, unless its position has since changed.
- If the clause is missing, ask whether the freeholder and any relevant management company can agree to a deed of variation, and whether Barclays must approve the proposed wording.
- Do not exchange contracts or rely on the mortgage completing until your solicitor confirms the lender’s requirement has been satisfied or Barclays has expressly agreed otherwise.
This is general information, not a legal opinion on your lease. Because Barclays has made its requirement clear, ask your conveyancer for urgent advice before committing to the purchase or proceeding without the clause.