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  • FIRST POST
    • Prairie
    • By Prairie 16th Jun 17, 7:17 PM
    • 6Posts
    • 3Thanks
    Prairie
    999 year lease
    • #1
    • 16th Jun 17, 7:17 PM
    999 year lease 16th Jun 17 at 7:17 PM
    Hello,

    Grateful for advice / opinions on this situation please.

    I'm thinking of buying a flat. However I've discovered that:

    Lease is 999 years

    2030: £450
    2050: £900
    2070: £1800
    2090: £3600
    2110: £7200. Ground rent remains at £7200 for the remainder of the lease.

    The last 3 increases in particular look scary and I'm very unsure now about whether to go ahead with the purchase. I really like the flat however I'm ​concerned about the ability to resell several years down the line (flat fits my foreseeable needs now but if I had kids in the future it would be too small, and likewise if anything unforeseen happened and I had to sell). The issue of ground rent is now much more publicised and I'm thinking possibly this will increase some years down the line making it harder to sell.:
    Last edited by Prairie; 29-06-2017 at 11:39 PM.
Page 1
    • -taff
    • By -taff 16th Jun 17, 7:22 PM
    • 7,113 Posts
    • 5,111 Thanks
    -taff
    • #2
    • 16th Jun 17, 7:22 PM
    • #2
    • 16th Jun 17, 7:22 PM
    Are going to live for 999 years? Or for near enough 100?
    • kingstreet
    • By kingstreet 16th Jun 17, 7:27 PM
    • 32,215 Posts
    • 17,252 Thanks
    kingstreet
    • #3
    • 16th Jun 17, 7:27 PM
    • #3
    • 16th Jun 17, 7:27 PM
    What's £225 going to be worth in 2110 assuming inflation runs at 3% per annum?
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • Chanes
    • By Chanes 16th Jun 17, 8:27 PM
    • 844 Posts
    • 524 Thanks
    Chanes
    • #4
    • 16th Jun 17, 8:27 PM
    • #4
    • 16th Jun 17, 8:27 PM
    I've read some mortgage lenders will not lend money if there is a doubling clause on the ground rent, you could check out further with the Leasehold campaign on Facebook.
    • anselld
    • By anselld 16th Jun 17, 9:27 PM
    • 5,392 Posts
    • 4,946 Thanks
    anselld
    • #5
    • 16th Jun 17, 9:27 PM
    • #5
    • 16th Jun 17, 9:27 PM
    Doubling every 20 equates to 3.5% per annum. Not really punitive.
    Lenders do not object to doubling as such, it depends how often.
    • PasturesNew
    • By PasturesNew 16th Jun 17, 9:29 PM
    • 60,705 Posts
    • 354,871 Thanks
    PasturesNew
    • #6
    • 16th Jun 17, 9:29 PM
    • #6
    • 16th Jun 17, 9:29 PM
    In 2110 just start a JustGiving page
    • eddddy
    • By eddddy 17th Jun 17, 12:24 AM
    • 5,417 Posts
    • 5,085 Thanks
    eddddy
    • #7
    • 17th Jun 17, 12:24 AM
    • #7
    • 17th Jun 17, 12:24 AM
    I guess it depends on if/how people's attitudes to ground rent evolves over time.

    As more flats get Statutory Lease Extensions or Shares of Freehold - meaning zero ground rent - flats with high rising ground rents may be frowned upon, and become harder to sell.

    Or maybe they won't be!
    • csgohan4
    • By csgohan4 17th Jun 17, 7:59 AM
    • 3,960 Posts
    • 2,470 Thanks
    csgohan4
    • #8
    • 17th Jun 17, 7:59 AM
    • #8
    • 17th Jun 17, 7:59 AM
    walk away, ground rent is a disaster waiting to happen. You may find it difficult to sell your house with the clauses
    "It is prudent when shopping for something important, not to limit yourself to Pound land"
    • Prairie
    • By Prairie 17th Jun 17, 1:31 PM
    • 6 Posts
    • 3 Thanks
    Prairie
    • #9
    • 17th Jun 17, 1:31 PM
    • #9
    • 17th Jun 17, 1:31 PM
    Are going to live for 999 years? Or for near enough 100?
    Originally posted by -taff
    I thought that way initially too but people think more long term now with resaleability in mind, otherwise those ground rent terms which double every 10 years wouldn't be such an issue.

    My other worry is lenders changing their criteria. I know Nationwide has recently changed theirs to not lending on new builds with onerous ground rent terms (this flat is not affected by the criteria change but I do wonder if other lenders in the future could place blanket bans on any doubling clauses)
    Last edited by Prairie; 17-06-2017 at 1:35 PM.
    • ceecee1
    • By ceecee1 17th Jun 17, 1:39 PM
    • 377 Posts
    • 815 Thanks
    ceecee1
    Check out the Leasehold Knowledge Partnership website and/or the National Leasehold page on Facebook.

    Nationwide have announced that they will not lend on doubling ground rents OR those whose original amount is over 0.1% of the property value. I don't suppose that will affect the London market !

    I believe that 2 of the big banks will also not lend on these properties so you may find that you need to shop around for a mortgage.

    If it is a Taylor Wimpey property and you will not be the original purchaser you will not be able to benefit from their ground rent assistance scheme which they will not release details of but is widely thought that leases will change from doubling to increasing in line with RPI
    • anselld
    • By anselld 17th Jun 17, 5:15 PM
    • 5,392 Posts
    • 4,946 Thanks
    anselld
    widely thought that leases will change from doubling to increasing in line with RPI
    Originally posted by ceecee1
    Doubling every 20 years equates to 3.5% pa.
    RPI currently stands at 3.7% pa.
    Impossible to say which will be financially better in the long run despite the current hysteria over doubling ground rents.
    • bouicca21
    • By bouicca21 17th Jun 17, 5:30 PM
    • 3,237 Posts
    • 4,026 Thanks
    bouicca21
    Nationwide criteria specifically says unreasonable doubling, as in doubling ever 5, 10 or 15 years.

    At some point it will become cost effective for the leaseholder to get a statutory extension to remove the ground rent.
    • kingstreet
    • By kingstreet 17th Jun 17, 5:49 PM
    • 32,215 Posts
    • 17,252 Thanks
    kingstreet
    It's a flat, so it ain't ever going to be freehold.

    The lease ain't 125 or 150 years, so if you live to 150, you don't have to worry about an extension as there will still be 700+ years left.

    Nationwide is talking about NEWBUILDS only, so this is unaffected.

    I wouldn't have a problem with this. In fact I'd be happier with this than I would with an 80 year remaining lease.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • noddynoo
    • By noddynoo 17th Jun 17, 5:54 PM
    • 286 Posts
    • 69 Thanks
    noddynoo
    After 2 years you can serve notice for a statutory lease extension and because the current lease is so long it won;t be that expensive to do as it won;t increase the value significantly and the ground rent will be scrapped
    • eddddy
    • By eddddy 17th Jun 17, 6:10 PM
    • 5,417 Posts
    • 5,085 Thanks
    eddddy
    At some point it will become cost effective for the leaseholder to get a statutory extension to remove the ground rent.
    Originally posted by bouicca21
    After 2 years you can serve notice for a statutory lease extension and because the current lease is so long it won;t be that expensive to do as it won;t increase the value significantly and the ground rent will be scrapped
    Originally posted by noddynoo

    That's kind of misleading.

    When you get a lease extension, the ground rent reduces to zero - so the leaseholder has to compensate the freeholder for their lost ground rent.

    (It's a bit like paying all your ground rent in advance as a lump sum - but you get a discount.)

    If the ground rent is high, the compensation is high.

    e.g. To take a simple example, you would have to pay 5 times the compensation for a £500 ground rent, compared to a £100 ground rent.


    (That's one important reason why leaseholders should be very wary about accepting informal lease extensions with high ground rents.)
    • zagubov
    • By zagubov 17th Jun 17, 6:22 PM
    • 14,896 Posts
    • 127,250 Thanks
    zagubov
    Nobody here would be daft enough to buy a perpetual timeshare whose fees could erode your estate you pass on to your loved ones (and their loved ones ad infinitum).

    This is a similar situation- not quite as bad, but a trap for your descendants nonetheless.

    Just don't do it.
    There is no honour to be had in not knowing a thing that can be known - Danny Baker
    • JOHANNET
    • By JOHANNET 6th Oct 17, 7:12 PM
    • 1 Posts
    • 0 Thanks
    JOHANNET
    999 Year lease and rising ground rent
    i am interested in buying a property as it has a very long lease 990 years and a possibility of buying a share in the freehold. I have since found out that the ground rent rises by 50% every 25 years, which at first doesn't seem very much but after a approximately 250 years the ground rent will have risen to approx 1278 and after 300 years £2875, 6468 by 350 years etc. So what seems a small amount at first will grow astronomically because the lease is so long. Just to clarify - in case I have got my sums wrong - it starts at £50 then after 25 years rises to £75, then after 25 years rises to 112.5 etc. In real terms no one will be alive in 300 years time, but presumably this will have a bearing on the freehold price. Again, in terms of leasehold extension, the house will probably be no more when this becomes an issue, so will this condition be fairly meaningless, if I were to remain a leaseholder.
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