The firm said this would protect lenders against financial losses after a rentcharge lease has been registered at a property and the borrower has not paid the fee, defaulted on the mortgage and the lender has taken possession.
The policy will protect lenders if there is a shortfall on the mortgage following the registration of the lease that has devalued the property.
The policy can be used as an alternative to a deed of variation to waive the rights of remedy under the Rentcharges Act. In some cases, the deed of variation can be more expensive than a property’s insurance premium due to the cost of paying for the rentcharge owners’ legal fees.
Chantelle Wren (pictured), cert CII associate director of underwriting at CLS Property Insight, said: “Where an estate rentcharge remains unpaid for a period of 40 days, the owner of the estate rentcharge has rights, as set out in Section 121 of the Law and Property Act, to enter their interest in the property by registering a statutory lease on the property. This could result in the property being unsaleable.
“Our estate rent charge policy is available where the estate rentcharge has not been paid or where the rentcharges are paid and up to date, but where the lender requires protection in the event the borrower doesn’t pay throughout the term of the mortgage.”
Last year, Shawbrook Partners named CLSQ as one of its climate partners.
