Ground Rent Increase with RPI

tomryan89

CML part 1 says:

5.14.9We have no objection to a lease which contains provision for a periodic increase of the ground rent provided that the amount of the increased ground rent is fixed or can be readily established and is reasonable. If you consider any increase in the ground rent may materially affect the value of the property, you must report this to us (see part 2).

Part 2 says : refer to answers which is the link I provided above

kingstreet

...the amount of the increased ground rent is fixed or can be readily established and is reasonable...

I don't see any lender thinking RPI every five years is unreasonable.

Alaska567

tomryan89 wrote: »

Does anyone know if Ground Rent of £350 increasing in line with RPI every 5 years would put of mortgage lenders?

The much better long term option is to do a "statutory" extension which you have the legal right to do as the leaseholder. This would reduce your ground rent to "peppercorn" i.e. basically nothing and automatically add 90 years to the existing lease. The freeholder legally has to respond to your negotiations within a set timeframe and once you serve the section 42 notice, it "freezes" your lease so you don't have to worry about the lease dropping further during any lengthy negotiations. Beware that if you are using the non-statutory route, some crafty freeholders will deliberately delay in responding so that your lease drops further and becomes more expensive to extend. If you decide to go down the non-statutory route, make sure you get any offer proposed by the freeholder checked by a solicitor who is experienced in lease extensions before you sign anything.

Check out the "lease - advice . org " website for more information. They offer a free 15 min telephone appointment service to answer questions you may have (but read the info they already have on their website first). The website also has a webpage to find solicitors /surveyors experienced in this area.

Thrugelmir

RPI is consistently above CPI. Currently around 3.5%.

Using the 2016 figures. Increase in RPI has been

5 years - 11.5%
10 years - 31.77%
25 years - 96.8%

remembermee

You can extend your lease without adding on extra demands or clauses. They're trying it on. There is information on how to do it but I can't remember where. I think it would be in your interest to contact an ALEP surveyor who will negotiate on your behalf - yes you will need to pay but they know that these extra clauses they want to add are a load of rubbish. They cannot legally enforce these additions. So don't agree and don't sign!

remembermee

What Alaska said is correct and better put than mine! You need to serve notice and an ALEP surveyor will do this and k ow all the legal stuff. I know all about this as we are in a leasehold house and currently purchasing.

tomryan89

Thanks guys. I do know all about the statutory process but I do not have the time and cannot find a buyer willing to see the process through themselves.

This means I have no other option that extending the lease informally.

tomryan89

An update Incase anyone else goes through a similar scenario. After stressing about this for weeks, my Solicitors telling me there was little hope, I simply rang up and asked to change the rent review period to 21 years as mortgage lenders wouldn't accept less.

The answer: sure, no problem