LEASEHOLD WORRIES

It seems to me that a significant problem arises from the insurance provisions in clause 6.13 of the Council of Mortgage Lender's handbook as they affect residential leasehold properties.While clause 6.1.3 details the cover required in the subsisting insurance policy, it must also by implication require that in the lease the contractual obligation on the landlord to insure should be couched in similar terms, or should at least amount to an obligation to insure on a 'fully comprehensive' basis.The saleability of the property and the adequacy of the lease must fall into question if the lease merely requires the landlord to insure against fire and 'such other risks' as the landlord in his discretion selects.

Should a landlord wish to exploit his position, he could reduce insurance cover to a standard less than clause 6.13, but nevertheless still within his contractual obligation, thereby rendering the tenant's lease unmortgageable without himself breaching covenant or derogating from grant.

If the contractual obligation on the landlord in the lease is not equivalent to clause 6.13 then a prudent purchaser should insist on a deed of variation before proceeding.Trevor Smith, solicitor, Peacehaven, East Sussex