Paying off ground rent in full

EdInvestor

There are quite a lot of houses around on 999 year leases which have a peppercorn rent and no lease as they are for all intents and purposes really freehold.

Is it one of these? If so, no point in buying out the ground rent.

savingforoz

No, Ed, it's not a 999 year lease but a freehold property. When I bought I definitely didn't want either a flat or anything leasehold.

ManAtHome

Mine is the same - I pay less than £3 a year ground rent for my house (only 920 years or so left to run). Can only think that when the land was released for development, future levels of inflation hadn't been accounted for.

[edit] if it's a house and you pay ground rent, surely it's leasehold?

savingforoz

No, it's not leasehold, the house is freehold.

flower_72

I don't understand savingforoz. If your property is freehold. Why do you pay any ground rent?
If you pay rent on the "ground", in my understanding, then the property is leasehold. You own the house but not the land it's built on hence the rent payment of £3 a year.
If you own both the house and the land. I would stop paying those £3 a year and certainly not pay £260 for something I already own.

Please correct me if I'm missing something. I'm confused!

charley1965

savingforoz wrote: »

Hi, I've just had my annual ground rent invoice (all of £3!!), along with the offer to redeem it in full for ever for £260. What are the advantages , if any, of doing this? The blurb in the letter says "Enjoy 100% control of your property" but as far as I can see I have that anyway. I am thinking of converting my house into 2 flats - would redeeming the ground rent charge help in any way?

Hi, I would ask this question on the forum below. You generally get a solicitor who answers the question for you and it's very helpful indeed.

http://www.landlordzone.co.uk/forums/forumdisplay.php?f=11

savingforoz

flower_72 wrote: »

I don't understand savingforoz. If your property is freehold. Why do you pay any ground rent?
If you pay rent on the "ground", in my understanding, then the property is leasehold. You own the house but not the land it's built on hence the rent payment of £3 a year.
If you own both the house and the land. I would stop paying those £3 a year and certainly not pay £260 for something I already own.

Please correct me if I'm missing something. I'm confused!

I'm confused as well, flower 72, believe me! I think MarkymarkD is probably correct in his answer. I own the freehold of the house but not the ground it's on, so have to pay ground rent at the princely sum of £3 per year. I think MarkymarkD is right and there are no benefits to redeeming it, but I will see what they say when I call tomorrow.

MarkyMarkD

It's not a very common thing but it certainly affected us when we lived in Bristol and was common in that area.

It's very definitely NOT leasehold but something entirely different.

EdInvestor

savingforoz wrote: »

I am thinking of converting my house into 2 flats - would redeeming the ground rent charge help in any way?

If you do that you are going to have 2 leasehold flats, both paying ground rent to a freeholder who himself pays ground rent to some other entity.

Some buyers, lenders and solicitors might think that is a touch too confusing to be worth the potential aggravation.It might be worth sorting out the freehold since it is so cheap.

Just a thought.

MarkyMarkD

It's NOT buying the freehold. It's buying out the ground rent liability.

I suppose I agree with your point on financial grounds, although I hate to agree because I don't like the idea of paying out to the ground rent speculators.