Ground Rent- Negotiation? 19 April 2007 at 7:40PM in House buying, renting & selling 3 replies 5.1K views

Cardinal-Red

Hi there,

I live in an apartment complex of 4 purpose built flats. When we moved in the lease stated the ground rent of £600 p.a. with nominal increases. At the time we thought it was quite high, but as the landlords were running the management of the property etc.

Since then though, the freeholders have sold the property they were holding and renting, and control of the management company has moved to the 4 owner occupiers.

The ground rent is due in July and I'm thinking of trying to negotiate them down.

Is £600 p/a generally a high price? Some research I've done has suggested it is - most sites mention rents of £50 - £100 a year, and sometimes just peppercorn rates.

Is there anybody with any experience out there of reducing the ground rent on leasehold properties?

Doozergirl

Definately ground rent and not service charge? Is the original freeholder still the freeholder?

At that price the ground rent sounds like it would be in London? You signed the lease so the present freeholder, unless you have share of freehold, would have reason to reduce it.

If you have the Right to Manage your building but are not Freeholders, then you can set your *service charge* at whatever you want to; nothing if you want, but you need to cover maintenance costs somehow. A nominal service charge helps budgeting.

Sorry I've been a but wishy washy, I've tried to cover all bases.

Cardinal-Red

Thanks Doozer,

No it's not a service charge. As we self manage, we don't have a service charge as such; we just split all bills as they are received by us.

This is money paid straight to original freeholders (and builders, vendors of all 4 properties too) at a rate of £600 per flat.

The actual location is a small village in the south east of Essex, not quite London...

Richard_Webster

Ground Rents are usually fixed by the lease and can't be changed. Sometimes they go up by a fixed amount every so many (e.g. 25) years. Occasionally there is review provision that says that the ground rent is reviewed say every 25 years by calculating the percentage that the original ground bore to the original selling price and then applying it to the present market value, e.g flat sells originally for £60K with £600 ground rent, by review time worth £200K therefore ground rent £2K.

Basically you are stuck with it and the unusually high ground rent should have been a matter of price negotiation when you bought and could well cause a future buyer to offer slightly less. Did your solr point this factor out as it is unusual? May be £250 would be max outside London normally.

As a conveyancing solicitor I believe the information given in the post to be useful but I accept no liability except to fee-paying clients.