Ground rent doubling every 10 years

chewmylegoff

joanne1971 wrote: »

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.

the lease is already 6 years through, so the increases will be as follows:

4 years: £700
14 years: £1,400
24 years: £2,800
34 years: £5,600
44 years: £11,200
54 years: £22,400

if you do a statutory lease extension which reduces the ground rent to peppercorn, presumably the fact that the freeholder loses that future income is taken into account when valuing the lease extension premium you have to pay, so I suspect there is a risk that you will be paying the ground rent either way. i don't know this for a fact, but it seems logical to me.

You have paid a specialist solicitor for advice and they have told you not to proceed because of the ground rent issue- a conveyancing solicitor has posted on this thread above and backed up the reasoning you have been given by your solicitor.

Ulfar

Find another flat. This is only the ground rent, what about service charges ?

joanne1971

I cant remember exactly but i think the service charge is about £120 a month or there abouts.

Mrs_Arcanum

chewmylegoff wrote: »

the lease is already 6 years through, so the increases will be as follows:

4 years: £700
14 years: £1,400
24 years: £2,800
34 years: £5,600
44 years: £11,200
54 years: £22,400

if you do a statutory lease extension which reduces the ground rent to peppercorn, presumably the fact that the freeholder loses that future income is taken into account when valuing the lease extension premium you have to pay, so I suspect there is a risk that you will be paying the ground rent either way. i don't know this for a fact, but it seems logical to me.

You have paid a specialist solicitor for advice and they have told you not to proceed because of the ground rent issue- a conveyancing solicitor has posted on this thread above and backed up the reasoning you have been given by your solicitor.

But by 44 years it will be 50 years since the build with 54 years being beyond the time period of the doubling.

joanne1971

Does the £50 years start from when we buy. I;ll check this detail with sol tomorrow.

But all ways up it not looking like we'll go ahead.

joanne1971

sorry that is just 50 not £50

Judith_W

I doubt you would have balked at 3.5%ish increase each year. I'm not sure this is a major concern?

Angry_Bear

Judith_W wrote: »

I doubt you would have balked at 3.5%ish increase each year. I'm not sure this is a major concern?

Except that it's a 7.2% increase, which is (at the moment) significantly higher than inflation and wage increases. This is also the difference at year 44 of ground rent at £1889 per year (3.5%) and £11,200 per year.

As chewmylegoff says earlier - two qualified professionals have already said that they think this is a poor deal so I know it would be a major concern for me!

Not to mention the fact that this doesn't take the service charge into account.

chewmylegoff

Mrs_Arcanum wrote: »

But by 44 years it will be 50 years since the build with 54 years being beyond the time period of the doubling.

oh yeah. duh!

joanne1971

Ok we have spent today looking at other properties and are still keen on this one -BUT we have come up with a plan.

We will buy only if the vendor a company called 'Veritas' who also own the lease (which is a bankrupt company now owned byLlloyds Bank) agree to grant us an extension on the lease. So taking the rent back to peppercorn.

We have yet to get a full valuation of the cost to extend the lease but believe it will be less than 10,000. Apprently we can ask them to agree to a section 42 notice which means we do not have to wait 2 years to get the extension, we can have the lease extension as a condition of completion.

Obviously and a very big but is all this assumes Veritas will agree - but our thinking is surely the bank will want the most money now.

Any thoughts appriciated.