Ground rent increasing 1000%, what can I do??

johnsmith0774

Hi

I own a leasehold maisonette in a converted terrace house. The ground rent is £200 annually.

I was reading my lease contract (118 years left) and it said the ground rent will be reviewed in 2019 and will be 0.25% of property value.

This will roughly be £2000 a year. I estimate the place will be £800,000 in 2019.

Is there anything I can do?? I was thinking trying to buy the leasehold but I'm looking for any other ideas?

Thanks.

G_M

I was thinking trying to buy the leasehold but ...

Do you not already own it? Do you mean buy the freehold?

If that's what the lease says, that's what the ground rent will be.

You could (try to) buy the freehold, but the value of the freehold will reflect the future earnings (ie £2000 pa from 2019) so it will be more expensive to buy than where the ground rent was fixed at, say £1 pa.

Presumably this 2019 increase is no surprise - you must have read the lease before buying it.........

davidmcn

johnsmith0774 wrote: »

Hi

I own a leasehold maisonette in a converted terrace house. The ground rent is £200 annually.

I was reading my lease contract (118 years left) and it said the ground rent will be reviewed in 2019 and will be 0.25% of property value.

This will roughly be £2000 a year. I estimate the place will be £800,000 in 2019.

Bear in mind that the value will (probably) be based on the current lease, and therefore reflect the amount of the ground rent payable. As (I presume) did the valuation of the flat when you bought.

G_M

davidmcn wrote: »

Bear in mind that the value will (probably) be based on the current lease, and therefore reflect the amount of the ground rent payable. As (I presume) did the valuation of the flat when you bought.

But the value when OP bought would have (should have) reflected not just the ground rent at the time, but the future ground rent.

ognum

I am aware this is too late for you but it is really important when buying a leasehold property to fully understand the implications of a ground rent and how it will increase.

It is very difficult because often you do not get to see a lease until you have employed a solicitor and fallen in love with a property.

I have backed out of sales when it is clear the property will be unsalable within twenty years because of the way the freeholder has written the lease. It was clear the ground rent would be many thousands of pounds by that time.

You may be able to buy the freehold but the freeholder will be well aware of how much money will be coming to him in ground rent in a couple of years so it could be costly.

ognum

G_M wrote: »

But the value when OP bought would have (should have) reflected not just the ground rent at the time, but the future ground rent.

It is clear to me that people are frequently not properly advised or they would not buy some properties with the ground rents they have at the price they are.

davidmcn

G_M wrote: »

But the value when OP bought would have (should have) reflected not just the ground rent at the time, but the future ground rent.

I think that's what I said...:)

Hoploz

Is it definitely the full value? Could it be something like 0.25% of the uplift in value since it was last reviewed, eg five years ago, or something?