Ground Rent Raising To £4,000???

strawberries1

The below is the ground rent increment on the property I'm in the process of purchasing.

I'm told it has a number of indemnity insurance policies and this exorbitant ground rent that could wipe out any value it might accrue. I'm not happy about it.

I discovered the freehold of the properties in this cul were purchased a few years ago by a company that seems to have a number of litigation ongoing at the leasehold tribunal.

If this was 3years ago I would've pulled out without asking for advice but we've requested searches and mortgage almost sorted.

Will the lender balk at this? If they don't should I?

It doesn't have any service charge but who knows what the freeholder will decide to do in future?

This property has had 2 buyers pull out in the last 10 months. Am I the mug???

122 years left.

For the next 25years of the New Term £250 per annum
For the next 25years of the New Term £500 per annum
For the next 25years of the New Term £1000 per annum
For the next 25years of the New Term £2000 per annum
For the remainder of the New Term £4000 per annum

£500 in 2039 might not be much but £4000 per annum??? :eek:

StephieWillcox

Thats about 2.85% per annum increase - higher than current inflation, lower than expected inflation.

No problem.

It's the ones that double every 10 years that you have to avoid as it makes the flat unsalable.

Hoploz

My first reaction was, with the next 50 years looking manageable it looks fine to me.

However, then I thought more about the future. In 40 years time someone is going to need to extend the lease. Once it gets to the 80 years mark when marriage value would be payable, these terms might mean it's going to cost an arm and a leg to extend, once the cost incorporates a premium to compensate for loss of ground rent.

I've no idea how a lender would react. Hopefully someone else will be along shortly.

[Deleted User]

The Ground Rent is normally the ' cheap ' part

what about the Service Charges ?

Personally do your self a favour and walk, even if you accept these terms will any future buyer should you want to sell.

martinsurrey

strawberries1 wrote: »

The below is the ground rent increment on the property I'm in the process of purchasing.

I'm told it has a number of indemnity insurance policies and this exorbitant ground rent that could wipe out any value it might accrue. I'm not happy about it.

I discovered the freehold of the properties in this cul were purchased a few years ago by a company that seems to have a number of litigation ongoing at the leasehold tribunal.

If this was 3years ago I would've pulled out without asking for advice but we've requested searches and mortgage almost sorted.

Will the lender balk at this? If they don't should I?

It doesn't have any service charge but who knows what the freeholder will decide to do in future?

This property has had 2 buyers pull out in the last 10 months. Am I the mug???

122 years left.

For the next 25years of the New Term £250 per annum
For the next 25years of the New Term £500 per annum
For the next 25years of the New Term £1000 per annum
For the next 25years of the New Term £2000 per annum
For the remainder of the New Term £4000 per annum

£500 in 2039 might not be much but £4000 per annum??? :eek:

its £4000 from 2119, which is 100 years time.

£1 in 1917 is equivalent to £80 now.

so if the next 100 years is similar to the last 100 years that £4000 ground rent will look like £50 a year does now.

(of course we had periods of great inflation and a few wars, but shows the power of compound inflation)

I wouldn't worry about a doubling every 25 years clause.

AnotherJoe

strawberries1 wrote: »

The below is the ground rent increment on the property I'm in the process of purchasing.

I'm told it has a number of indemnity insurance policies and this exorbitant ground rent that could wipe out any value it might accrue. I'm not happy about it.

I discovered the freehold of the properties in this cul were purchased a few years ago by a company that seems to have a number of litigation ongoing at the leasehold tribunal.

If this was 3years ago I would've pulled out without asking for advice but we've requested searches and mortgage almost sorted.

I'd still pull out and accept the hit, unless you are happy to get a cost for the freehold and factor that in ?

The increasingly bad publicity about this sort of practice is only going to make it much worse when you come to sell. There's no excuse for houses to be leasehold (I presume from your wording this is a house and not a flat?) other than ripping off the house owner.

Hoploz

I really think this is one for a broker or a lender to give a view on.

AdrianC

strawberries1 wrote: »

If this was 3years ago I would've pulled out without asking for advice but we've requested searches and mortgage almost sorted.

So you're going to let a few hundred quid costs push you into something you know is a bit duff...?

AnotherJoe

AdrianC wrote: »

So you're going to let a few hundred quid costs push you into something you know is a bit duff...?

Indeed, say it costs you £500 now.
It could easily cost you 10x that off the price when you come to sell.

Mobeer

It's a reasonable rate on increase when considering the effect of inflation in general, no need to pull out (at least not because of this).

Chanes

Just to be clear those figures are not compound?

And what are the indemnities?

It seems messy.