Ground Rent Raising To £4,000???

strawberries1

billy_goat wrote: »

Above should be taken as a good estimate only.

Thank you so much Billy!
I don't totally understand the calculation but I'm grateful for your efforts at setting them out so extensively.

Can you please recommending surveyors and solicitor to use in this situation?

Sapphire

G_M wrote: »

It's nothing like as bad as doubling every 10 years. Having said that,personally I'd avoid if there were other properties I could go for.

Yes, the gov seems to be planning action, though whether it will be retrospective is dubious.

https://www.theguardian.com/money/2016/dec/20/housebuilders-must-halt-leasehold-sales-of-houses-compensation

Thanks for that link. Seems like a prime candidate for a misselling scandal.
:cool:

AdrianC

Sapphire wrote: »

Seems like a prime candidate for a misselling scandal.

<tired> What isn't, these days?

billy_goat

strawberries1 wrote: »

Thank you so much Billy!
I don't totally understand the calculation but I'm grateful for your efforts at setting them out so extensively.

Can you please recommending surveyors and solicitor to use in this situation?

My pleasure reg providing numbers. If I get time this weekend I'll upload a tool for doing these calculations yourself as I don't think there is one online at the moment.

Sadly my knowledge is limited to the financial/numerical calculations - surveyors and solicitors recommendations are beyond me.

strawberries1

billy_goat wrote: »

My pleasure reg providing numbers. If I get time this weekend I'll upload a tool for doing these calculations yourself as I don't think there is one online at the moment.

Sadly my knowledge is limited to the financial/numerical calculations - surveyors and solicitors recommendations are beyond me.

Thanks. I look forward to seeing it.
Is the calculation based solely on the current ground rent not the increased ground rent to come?
Did you work with Lease or the Tribunal then?

billy_goat

strawberries1 wrote: »

Thanks. I look forward to seeing it.
Is the calculation based solely on the current ground rent not the increased ground rent to come?
Did you work with Lease or the Tribunal then?

Ground rent amount is based on the current value of all future payments on the lease (this is why currently online calculators can't do this - because when the ground rent increases their calculator doesn't have the functionality to handle this. its actually quite simple to calculate in something like excel.)

Reversion is based upon the current value of the property discounting until the end of the lease term minus the same but at the end of the new lease term.

And no I don't - but ground rent clauses are purely financial instruments, they have a value and a theoretical yield (made up of the change in the value of the renewal over time and also the cash return). When people see a ground rent clause of £1 a year doubling to £2 a year in x years, they make some arbitrary statement about 'oh that is OK the interest rate is only y%' based purely on the change in the amount that you are paying per year. Sadly this is totally misguided - and the calculation should instead be based on the value of the ground rent lease on the day that the property is purchased.

strawberries1

Hi Billy, you won't believe we still haven't exchanged. Would you be so kind to please upload a tool to calculate as you offered in post 45 above. Thanks again, much appreciated!

Marvel1

Some house prices go up in thousands in a year, so this is not bad in terms of inflation.

No different than landlords rising rent by £50 a month each year.

strawberries1

UPDATE!!

There's an identical property in perfect condition new windows, refurbished bathroom & kitchen, new boiler, freshly painted etc DIY job done by current owner but seems like it's been done well. It's on for £11k more than the one I'm purchasing.

We're about to exchange but I feel I shouldn't continue with this transaction. The doubling ground rent leaves me uneasy. This other one at £30pa with 99yrs left in comparison with £250gr x 2 every 25yrs with 122yrs left the £30 GR seems better but then it's tenanted, notice expiring early Feb (single mum with 2 kids waiting for council property) I wonder whether to pull out of this transaction and go for the £30GR instead but who know if it will go through to completion even if my offer is accepted? The current transaction as taken 8months, indeed 9 to get to exchange and completion.

I plan on living there for 5yrs at least.

aneary

If she is waiting for a council property she won't be able to get one till the baliffs come this could take 40 weeks from feb