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    • Leedsbuyer82
    • By Leedsbuyer82 14th Jul 17, 9:38 AM
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    Leedsbuyer82
    Doubling ground rent every 25 years
    • #1
    • 14th Jul 17, 9:38 AM
    Doubling ground rent every 25 years 14th Jul 17 at 9:38 AM
    Hi, all

    I'm wondering if you can help... I'm about to buy a leasehold flat with 137 years left; the ground rent doubles every 25 years, is currently £200 and will double in 11 years' time. I'm 35 with a 25-year-mortgage and have been advised by my surveyor (not solicitor!) that I should apply to extend the lease and pay a peppercorn rent instead to secure the future saleability.

    Does anyone have any advice? If I were to sell in 25/30 years' time, would a ground rent of £800 be unreasonable? It sounds OK to me, but I'm a FTB and have no idea!

    I've worked it out as follows:

    Year 2028: GR becomes £400
    Year 2053: GR becomes £800
    Year 2078: GR becomes £1600
    Year 2103: GR becomes £3200
    Year 2128: GR becomes £6400
    Year 2153: lease ends
Page 1
    • ScorpiondeRooftrouser
    • By ScorpiondeRooftrouser 14th Jul 17, 9:44 AM
    • 1,701 Posts
    • 2,473 Thanks
    ScorpiondeRooftrouser
    • #2
    • 14th Jul 17, 9:44 AM
    • #2
    • 14th Jul 17, 9:44 AM
    Hi, all

    I'm wondering if you can help... I'm about to buy a leasehold flat with 137 years left; the ground rent doubles every 25 years, is currently £200 and will double in 11 years' time. I'm 35 with a 25-year-mortgage and have been advised by my surveyor (not solicitor!) that I should apply to extend the lease and pay a peppercorn rent instead to secure the future saleability.

    Does anyone have any advice? If I were to sell in 25/30 years' time, would a ground rent of £800 be unreasonable? It sounds OK to me, but I'm a FTB and have no idea!

    I've worked it out as follows:

    Year 2028: GR becomes £400
    Year 2053: GR becomes £800
    Year 2078: GR becomes £1600
    Year 2103: GR becomes £3200
    Year 2128: GR becomes £6400
    Year 2153: lease ends
    Originally posted by Leedsbuyer82

    It's inflation of about 3% a year. Not hugely unreasonable over such a long period.
    • DumbMuscle
    • By DumbMuscle 14th Jul 17, 9:51 AM
    • 241 Posts
    • 287 Thanks
    DumbMuscle
    • #3
    • 14th Jul 17, 9:51 AM
    • #3
    • 14th Jul 17, 9:51 AM
    Doubling every 25 years is about 2.8% increase per year, on average. This is not an unreasonable rate of inflation. The current fuss is about leases that double every 10 years, which is equivalent to 7% per year, and clearly unreasonable!

    Check with your solicitor, but this seems fine. Yes, it will be more saleable if you are paying a peppercorn rent - but that would be a matter for negotiation with the freeholder, and might cost you more than it's worth.

    (doubling every X years means the increase per year is 2^(1/X) )
    • Leedsbuyer82
    • By Leedsbuyer82 14th Jul 17, 10:00 AM
    • 2 Posts
    • 0 Thanks
    Leedsbuyer82
    • #4
    • 14th Jul 17, 10:00 AM
    • #4
    • 14th Jul 17, 10:00 AM
    Thanks so much, guys, that's reassuring!
    • Alexland
    • By Alexland 15th Jul 17, 12:08 AM
    • 35 Posts
    • 18 Thanks
    Alexland
    • #5
    • 15th Jul 17, 12:08 AM
    • #5
    • 15th Jul 17, 12:08 AM
    I agree it's not as unreasonable relative to inflation BUT it is starting from a slightly high level. I sold a flat a few years ago with 100 pounds a year ground rent and no increase clause in the lease.

    Although extending the lease is cheaper (per extra year) than 1/137th of the current purchase price it still costs real money. If you sell the flat while there are still 110 years left the next buyer shouldn't be concerned enough to affect the value.
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