Ground rent doubling every 10 years

joanne1971

I think maybe it has been reduced to account for this, or account for something anyway. It is £75,000 which seems really really reasonable price. It is difficult to compare with other flats as there are none nearby.

I have looked on rightmove and the sold for £115,000 in 2006.

I see what you meanMrs Arcanum the solicitors comment that it will be 22000 in 50 years would not be the case. Been still 11000 a year sounds mega heafty even with cost of living rises. I dont really undertsand all this % stuff.

joanne1971

I think the main thing for us - is we are not buying it as an investment - we need somewhere close and ground floor for mother in law to live.

The alternative to this is she would likely need a care home before too long - so that would be even more expensive.

It is just the worry if we could not sell. Making some loss on it is acceptable to us. But not a huge loss.

Mrs_Arcanum

joanne1971 wrote: »

I think the main thing for us - is we are not buying it as an investment - we need somewhere close and ground floor for mother in law to live.

The alternative to this is she would likely need a care home before too long - so that would be even more expensive.

It is just the worry if we could not sell. Making some loss on it is acceptable to us. But not a huge loss.

Given that you are paying cash, have you negotiated a good discount?

The £75,000 purchase cost could be wiped out in 3 years on care home fees alone. So even selling at a loss after your Mothers passing would be a saving. Alternatively perhaps everyone could get together & purchase the freehold before the ground rent reaches silly figures.

martinsurrey

Mrs_Arcanum wrote: »

Given that you are paying cash, have you negotiated a good discount?

The £75,000 purchase cost could be wiped out in 3 years on care home fees alone. So even selling at a loss after your Mothers passing would be a saving. Alternatively perhaps everyone could get together & purchase the freehold before the ground rent reaches silly figures.

the purchase price for the freehold would include the fact of the doubling ground rents so would be very high.

In my opinion, Buy the place, you can worry about the price of a statutory lease extension in the years to come.

It seems that the alternative for your mother could be even more costly and bothersome to you.

The flat will never be unsellable, it just might cost you a bit to alter the lease.

joanne1971

Thanks everyone for the advice.

The flat was selling at 77500, so not much of a discount at 2500, we did offer 74000 and 74500 and they were rejected.

Anyway - I have done some reading and now understand this lease extension thing, I think. Have i got this right, once we have owned the flat for 2 years we can get the lease extended for a further 90 odd years and that takes the ground rent back to peppercorn. BUT we would have to pay to do this and so far I have not found out if there is a formula to work out how much that would cost. Any ideas on approx costs?

Although we are buying the flat my mother in law does have a house to sell - so in a year or so she will have the money from the sale of her house she could use to extend the lease- if that makes sense.

Mrs_Arcanum

joanne1971 wrote: »

Thanks everyone for the advice.

The flat was selling at 77500, so not much of a discount at 2500, we did offer 74000 and 74500 and they were rejected.

Anyway - I have done some reading and now understand this lease extension thing, I think. Have i got this right, once we have owned the flat for 2 years we can get the lease extended for a further 90 odd years and that takes the ground rent back to peppercorn. BUT we would have to pay to do this and so far I have not found out if there is a formula to work out how much that would cost. Any ideas on approx costs?

Although we are buying the flat my mother in law does have a house to sell - so in a year or so she will have the money from the sale of her house she could use to extend the lease- if that makes sense.

Check here for advice.

joanne1971

Thanks, this is the site I found out about the lease extension on. Whilst they seem to have a formula to work out the cost of the extension - I am not sure it accounts for the doubling situation.

Mrs_Arcanum

I know that when they extend leases on shared ownership properties at work it must be viable long term or they would not bother. Nor do I think the costs are exorbitant because work cannot throw money around willy nilly as we are run on a charitable basis.

Biggles

One thing I'm unclear about. I had assumed it was new, but then you said it was last sold in 2006.

So when did the clock start counting for the doubling of the ground rent - 2006? But you spoke as though the first doubling was ten years from now, so does that mean there is a new lease from when you buy? And what will happen when you sell, will the lease start with new terms for the buyer?

joanne1971

The flat is 6 years old, built in 2006. So 4 years left before the ground rent goes up to £700. As I understand it it is the exsiting lease it is not a case of we have a full 10 years before the doubling.