Leasehold new build house and ground rent rising with RPI

Manc37

Hi all - with all the publicity about high ground rent increases I'd like to check something with you. We recently bought a leasehold house which was newly built 2 years ago. Before criticisms about leasehold houses are made, we didn't have a choice in the matter as we wanted to live in the city centre of our major city and new build leasehold houses (of which there are very few in comparison to the thousands of apartments) are all that are available.

The ground rent will increase by RPI ever 10 years. The ground rent is currently £350 per year. As RPI is currently at 3.5% (I know this could rise) this does not seem too onerous to me. However, I thought I should double check this in case I've misunderstood something.

Thanks for your help

Pete7

Your increase will be slightly different if its RPI for each of the ten years so 10 x 3.5%. What is the exact wording?

Pete

DumbMuscle

The publicity around high ground rent increases was regarding properties where the ground rent doubled every 10 years - effectively a 7% year on year increase. While Pete is right that the exact wording matters, it's unlikely to get that high.

Also, pedantry, the RPI is not 3.5%. The RPI has risen by 3.5%, and is currently 270.6 (Jan 1987 is defined as 100 https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/chaw/mm23 ) - so basically a basket of shopping that cost £100 in 1987 would now cost £270. My guess would be that your ground rent is calculated as New rent = old rent * (RPI when new rent is set) / (RPI when old rent was set), and this is done every 10 years

Manc37

Yes, those are our terms for the ground rent DumbMuscle. Thanks v much for the info - it's put my kind at rest!

Manc37

I meant 'mind at rest'!