1.3bn ground rent....

steampowered

davidmcn wrote: »

You agree to buy the property subject to its existing lease terms, after (hopefully) your solicitor has explained them to you.

I agree, and I think that's a problem. There seem to be a number of cases coming through where people are getting stung to ridiculous degrees on ground rent without the clauses being properly explained by their solicitor.

Now there may be a professional negligence claim against the solicitor in those cases for failing to bring onerous ground rent clauses to the buyer's attention. But I can very easily see how people can find themselves in an awful situation over this.

martinsurrey wrote: »

how do you buy a leasehold without signing anything!?!

You don't tend to sign anything during the conveyancing process. The solicitor/conveyancer typically signs on your instructions.

When I bought my flat using a local solicitor's firm, I was never actually given a copy of the lease until after we had completed. I suppose I had left it with my solicitor to attend to any issues arising from the lease.

If I were going through the same process again I would want to read the lease myself and wouldn't trust the solicitor to do it.

MyOnlyPost

steampowered wrote: »

Also, if you were to buy a leasehold property, you would be bound by the lease terms without needing to sign anything.

However the headline to the story is

"I signed 1.3bn rent contract by mistake", so in this case he did sign which is what I was commentiing on

kinger101

JP08 wrote: »

I've said it on here before, but if does bear repeating.

Doubling every ten years is an annual inflation rate of 7.2%.

According to this site : http://inflation.stephenmorley.org/
£1 in 1827 is worth £90.90 in today's money - that's an average inflation rate of 2.4%

Over the last 50 year (since 1967), it comes out at 5.8%

So, in a highish inflation economy the ground rent deal isn't horrendous - not nice, but not horrendous.

The question is whether today's inflation rates are here to stay or not. Looking at the historical table on that site, I wouldn't bet on it. (Also it's interesting to note just how "boom and bust" the Victorian era was - and it's easy to spot the Wall St Crash in the 20's and the serious deflation then, as well as the WW1 and 2).

In the last century though, there was only a couple of decades in which inflation reached those levels;

year rpi
1915 4.1
1925 6.5
1935 5.2
1945 7.3
1955 10.7
1965 14.47
1975 30.39
1985 91.2
1995 146
2005 188.9
2015 255.4

£250 in 1915 would be £15,573 by 2015. If doubled every decade, it would be £256,000.

It reminds of the old grain of rice and chessboard fable.

kinger101

MyOnlyPost wrote: »

How do you sign anything by mistake? Your hand accidentally wonders across the paper whilst holding a pen and you doodle your signature unconsciously.

Signed it without realising what I was signing for would be far more apt

I think you're confusing the term accident with mistake. Mistake generally is taken to mean lacking care or good judgement.

ColemanC

I did the math and it's not £1.3bn unless I'm doing something wrong. Doubling £250 19 times (once for every 10 years in a 190 year period) is just over £131million which is a 10th of the advertised number. Still eye watering but not quite as news worthy.

kinger101

ColemanC wrote: »

I did the math and it's not £1.3bn unless I'm doing something wrong. Doubling £250 19 times (once for every 10 years in a 190 year period) is just over £131million which is a 10th of the advertised number. Still eye watering but not quite as news worthy.

What you doing wrong is not taking into account it's 10 year at £250, 10 years at £500.......10 years at £655,3600,000.

Marvel1

Would people moan if the value of their property doubles in price in 10 years?

gladtobegrey

When I saw this on the BBC website, I thought 'Hmmmm', and just had to crunch the numbers....

As has been said, it does not reach £1.3bn in the final years of the lease.

In years 181-190 it reaches £65,536,000, and (if the lease was extended/renewed on exactly the same terms) in years 191-200 would be £131,072,000 i.e just over £131 million, not £13 billion. It doesn't reach over 1 billion until years 221-230.

Years		Ground Rent
1 - 10		£250
11 - 20		£500
21 - 30		£1,000
31 - 40		£2,000
41 - 50		£4,000
51 - 60		£8,000
61 - 70		£16,000
71 - 80		£32,000
81 - 90		£64,000
91 - 100	£128,000
101 - 110	£256,000
111 - 120	£512,000
121 - 130	£1,024,000
131 - 140	£2,048,000
141 - 150	£4,096,000
151 - 160	£8,192,000
161 - 170	£16,384,000
171 - 180	£32,768,000
181 - 190	£65,536,000
191 - 200	£131,072,000
201 - 210	£262,144,000
211 - 220	£524,288,000
221 - 230	£1,048,576,000

Still eyewatering landlord greed of Rachman proportions, but 1.3bn it ain't.
Being a sad b****r, I had to email 'More or Less' about it, didn't I ...

stator

The "billion" is the total ground rent paid. So you want a cumulative total, not a yearly rent. Still a load of nonsense though

davidmcn

gladtobegrey wrote: »

Still eyewatering landlord greed of Rachman proportions, but 1.3bn it ain't.
Being a sad b****r, I had to email 'More or Less' about it, didn't I ...

From the BBC page linked to in the OP:

"the ground rent over the whole lease would cost more than £1.3bn"