No Legal Access, No Lending: Nationwide Tightens Its Approach to Rights of Access
When you buy a property, few things are more fundamental than being able to enter and exit. Yet not all properties have a formal legal right of access and the question of rights of way can be uncertain. The entranceway could cross a neighbour’s land or be unregistered, but could, perhaps, have been exercised for many years or have been acquired by some other implied means not always capable of verification. These types of situations can be protected by an indemnity insurance policy. However, Nationwide, one of the UK’s Big Six mortgage lenders, has now signalled that this approach may no longer be enough to resolve a legal right of access issue.
The lender’s baseline requirements
All major lenders set out their requirements in the UK Finance Mortgage Lenders’ Handbook. Part 1 sets out the standard requirements that apply across the board. Paragraph 5.14.4 requires the conveyancer to take reasonable steps to check that a property has satisfactory legal rights, particularly for access, services, support, shelter and protection. Paragraph 6.9.1 requires confirmation that the property benefits from all easements necessary for its full use and enjoyment, and that those rights are enforceable both by the borrower and by anyone who later buys the property from them.
Where those rights are missing, the conveyancer must check Part 2 of the Handbook, which contains each lender’s individual requirements. It is here that Nationwide has taken a notably firmer line than its peers.
Nationwide’s new position
Nationwide’s Part 2 guidance now states that where the problem relates to the only access to a property, an indemnity policy will not be acceptable if the property cannot be legally accessed. Instead, the conveyancer must explore every option to formalise access rights, typically by negotiating a deed of easement with the landowner or perhaps establishing the necessary historical rights to enable an easement to be registered, if this is possible.
If formal access rights can be obtained before completion, then the transaction can proceed without referral to the lender. But if this is not possible, and no alternative access point exists, the instruction must be declined. This means that Nationwide will not lend on a property that is legally landlocked.
Other access issues that fall short of a total absence of rights must be reported to Nationwide with a full description of the problem, the risk it presents and the conveyancer’s professional opinion. Nationwide also requires all lender enquiries to be submitted, with full documentation, at least two weeks before exchange of contracts.
Why this matters
Indemnity insurance has long been the solution for right of access issues. However, this does not create a legal right of way; but does provide financial compensation if the lack of one ever causes loss. Nationwide’s stance recognises that distinction. A policy may be adequate protection where rights are imperfect, but it cannot substitute for access that does not legally exist.
The other major lenders have not yet followed suit. Some continue to accept indemnity policies for access defects, while others ask for cases to be referred for individual consideration. But buyers, sellers and their advisers may be wise to treat Nationwide’s position as a sign of the potential direction of travel.
The real risk here is a property’s future marketability. An owner who relied on an indemnity policy when they bought could find their available lenders reduced by the time they come to sell or remortgage, without anything about the property having changed. The defect has not got worse; the market’s tolerance for it has. A property with no legal right of access could, in time, become effectively unmortgageable.
Practical implications
For buyers, it’s important to identify access issues as early as possible. Negotiating a deed of easement requires cooperation from a third party, takes time, and can involve payment. Combined with Nationwide’s two-week lead time for lender enquiries, a defect discovered late in a transaction could put exchange dates at risk.
For sellers, it is worth reviewing the title before marketing. An access arrangement that satisfied a lender on your last purchase may no longer do so, and resolving the issue in advance avoids losing a buyer whose lender will not proceed.
How we can help
At Brewer Harding and Rowe, our conveyancing team reviews title and access rights as part of the enquiries we make on every transaction and has extensive experience in interpreting and considering rights of way in deeds. or whether an easement might have been acquired by other means, as well as in drawing up deeds of easement or any other paperwork necessary to support an application at the Land Registry. If you are buying or selling a property and are unsure about its legal access, contact us for advice.