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Frustration Clause in New Build Lease Agreement

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  • Frustration Clause in New Build Lease Agreement

    I am in the process of exchanging on a new build in central London and there is a frustration clause in the lease that states the following:

    "In the event of the repair, rebuilding or reinstatement of the Premises being frustrated by any reason beyond the control of the Landlord the Leaseholder will surrender to the Landlord this Underlease in consideration of the Landlord paying to the Leaseholder any insurance monies received by the Landlord in respect of the Premises."

    This doesn't bother me as such, but my solicitor has pointed out that the inclusion of this clause could affect the valuation of the property and therefore my ability to get a mortgage. The property will not be ready until next year, so I have not begun an official mortgage application yet, though I have one approved in principal. The vendor is unwilling to amend the lease, so I have to take it or leave it as is.

    Does anyone know if there is a realistic chance of a mortgage being denied because of such a clause? The worry is that if I were unable to get a mortgage I might lose the deposit. To my mind this should not happen for any reason to do with the property valuation as I have a 20% deposit and the property will probably be worth more upon completion than what I am paying for it.

    I have contacted my mortgage broker to see if they can get an answer to this from the bank, but thought I'd ask here too in the meantime.

    Any help/advice is welcome.