A mortgagee protection clause is wording in a lease that protects a mortgage lender if the lease is at risk of forfeiture or termination. It commonly requires the landlord to notify the lender and give it an opportunity to remedy the problem before taking action against the lease.
What are the risks if you proceed without one?
- Barclays may not lend. Its email says it is unable to proceed unless the clause is included. You should not assume the mortgage can complete without Barclays changing that decision in writing.
- The lender’s security could be at risk. If the lease could be forfeited—for example, following a serious breach or unpaid sums—the lender may have no contractual right to notice or time to put matters right before its security is affected.
- Resale and remortgaging may be harder. Future lenders may have the same requirement, which could reduce the number of buyers able to purchase the flat and potentially affect its value.
- There may be disputes or extra costs. The lease, the circumstances of any breach, and the landlord’s actions all matter. A share of the freehold does not automatically remove the lease or these risks.
For a share-of-freehold flat, the freehold may be owned through a company or jointly by the flat owners, but the flat is still usually held under a lease. The exact lease terms and ownership arrangements need to be checked.
How much might a deed of variation cost?
As a rough UK guide, a straightforward deed of variation might cost around £1,000–£3,000 in total, but the amount can be lower or substantially higher. This may include your solicitor’s fee, VAT, the freeholder’s or management company’s legal costs, administration charges, and any Land Registry fee. A complicated matter, a premium demanded by the freeholder, or disagreement about the wording can increase the cost.
Ask your solicitor for a written estimate that separates your legal fees from the freeholder’s fees and other charges. If the variation is simply correcting an omission, a premium may not necessarily be payable, but this depends on the circumstances and the freeholder’s position.
Practical next steps
- Ask your conveyancer to confirm precisely what clause Barclays requires and whether Barclays will approve the proposed wording before anyone incurs variation costs.
- Find out who must sign the deed—this may include the freehold company or all relevant freeholders—and whether their consent is available.
- Ask your solicitor to explain the completion timetable and what happens if the deed cannot be agreed or registered in time.
- Do not proceed on the assumption that the clause is unnecessary just because you will own a share of the freehold. Get advice from your conveyancer, and obtain Barclays’ written confirmation that it will accept the final arrangement.
This is general information, not a substitute for advice on your lease and transaction documents.