Home Truths

Mortgage shortfall

My mortgage is approaching the end of its term and I have been advised that my endowment policy may not cover the balance outstanding. What can I do?

M Thompson

Exeter

It is important that you address this problem immediately,as it is your responsibility to ensure funds are available to cover any balance outstanding on your mortgage.

Contact your lender to see if they have any schemes to help you. They may consider extending your mortgage, thereby giving you more time to repay the debt. Any decision on help they can offer you will depend on factors such as your age and the amount still outstanding on your mortgage. Some customers consider taking a separate loan to pay off the shortfall and your lender will be able to give you information on some options. As soon as you receive notification that there is the possibility of a shortfall you should take action.

Absent landlord

The freeholder of the flats I live in has not been seen for some time and has not filed his accounts at Company House for a number of years. I understand that in these circumstances residents can force a sale if two-thirds of them agree to do so. Unfortunately, only half of the residents do. To make matters worse I am moving job, which will involve me moving or a very lengthy journey each day. Is there anything I can do?

John Grout

Leeds

Not having a freeholder or landlord means that there is nobody responsible for maintaining, repairing or insuring your block of flats. This can have an adverse effect on the value and marketability of your flat and, as it stands, you might find it more difficult to sell.

It is possible that your landlord may have died and his estate may not be aware of the problems you face. The Landlord and Tenant Act 1987 and the Leasehold Reform Act 1993 allows courts to vest management and ownership of a block of flats in a leaseholders nominee, where a landlord is not carrying out his duties, or has disappeared.

The Housing Act 1996 also allows groups of tenants to apply to a Leasehold Valuation Tribunal for an order to appoint a manager for their flats, if the landlord is not managing it properly. You should seek legal advice on both points.

Unfortunately, all of these processes are likely to take time. If you cannot or do not want to wait you may still be able to sell the property, but you may not be able to get the full asking price. Prospective purchasers, or their mortgage lenders, may ask you to pay a one-off premium on an insurance policy that protects them against some of the risks of buying a flat with an absentee landlord.

Alternatively, the Leasehold Advisory service (0171-493 3116) may be able to help with practical advice on how to persuade all the tenants that purchasing the freehold of the block is in their best interests.

Stamp Duty

At the last Budget the government introduced new levels of Stamp Duty. Can you let me have details?

Mary Harris

Dunfermline

Stamp Duty was increased with effect from the 8 July 1997, to the following levels:

Property Stamp

value duty%

pounds 60,000-pounds 250,000 1%

pounds 250,001-pounds 500,000 1.5%

pounds 500,001 and above 2%

Loan transfer

Can I transfer an existing loan secured on my current property to a new property?

Darren Poslethwaite

Pontefract

Outstanding loans that are secured on property should be paid off with the money from the sale unless the lender concerned agrees to secure the loan against your new property.

You will need the agreement of your existing lender and also your new lender. In most cases your new lender will want to have the first charge on the property. These matters can take time to sort out and you should contact the lenders for their agreement as quickly as possible.

Property gutted

My friend's property has been totally destroyed by fire. He is in hospital with minor injuries and is still quite shaken up. I am doing as much as I can to help him, but would like advice.

Deidre Lees

Huddersfield

In the first instance you should contact his mortgage company who will be able to give detailed advice.

Generally, where a property has been totally destroyed by fire, the contractors carrying out the repairs are likely to require payments in stages. The insurance monies for the building repairs should, therefore, normally be handled as follows

Leasehold properties (especially flats). If there are a number of other parties (eg adjoining flat owners or the freeholder or property management company) who have an interest in the buildings' insurance policy (not including the borrower, mortgage company and any subsequent lender) the insurance monies could be released directly to the freeholder or property managment company subject to surveyor's certificates. The insurance company will require signed agreement from the mortgage company and the borrower to do this.

Freehold Properties. Insurance monies will be forwarded to the mortgage company who will release them to the contractor subject to surveyor's certificates.

In all cases a new valuation report will be required when the work is completed.

George Wise is managing director of NatWest UK Mortgage Services.

q Send your queries on practical property issues to: Home Truths, Travel & Money, Independent on Sunday, 1 Canada Square, Canary Wharf, London E14 5DL Fax: 0171-293 2043; e-mail: sundayproperty @independent.co.uk