Help needed on doubling ground rent

Sandy1983

Hello all, i purchased my "lease hold" flat 3 years ago and have just found out that part of the lease agreement was the ground rent to double every 15 years starting at £150. Does anyone have any advise as i heard on the radio (LBC) this makes my property worthless as the ground rent will eventually be more then the flat costs. i've spoken to a company called Leasehold Advice Centre and he's advised me the "cheapest option" is to try to extend the least from the current 122 years left, to another 90 year and have a peppercorn ground rent but warned it will cost a premium, he also said this would be cheaper then trying to buy the free hold. Does anyone know where i should go from here, its very confusing and am in total shock as to how this is even legal. Thanks in advance.

Rinoa

Sandy1983 wrote: »

Hello all, i purchased my "lease hold" flat 3 years ago and have just found out that part of the lease agreement was the ground rent to double every 15 years starting at £150. Does anyone have any advise as i heard on the radio (LBC) this makes my property worthless as the ground rent will eventually be more then the flat costs. i've spoken to a company called Leasehold Advice Centre and he's advised me the "cheapest option" is to try to extend the least from the current 122 years left, to another 90 year and have a peppercorn ground rent but warned it will cost a premium, he also said this would be cheaper then trying to buy the free hold. Does anyone know where i should go from here, its very confusing and am in total shock as to how this is even legal. Thanks in advance.

Is that £150 per year?

So in 60 years time your ground rent will be £2400 annually?

That could be the price of a loaf of bread by then.

Sandy1983

wish that were the case, it works out over 1,000,000 in ground rent before the term is up.

LHW99

Have you asked the holder of the ground rent what it would cost to buy them out?
Also, not sure whether the Leasehold Advice Centre has qualified people for this or not, their site doesn't appears to give any "About us" information.
The Government website suggests a different organisation, see
https://www.gov.uk/government/organisations/leasehold-advisory-service
which apparently can give free legal advice.

Sandy1983

your sums are once per 15 years its actually each year, i've done the math on the last 15 years to demonstrate.

0yr: £150 x15
15yr: £300 x15
30yr: £600 x15
45yr: £1,200 x15
60yr: £2,400 x15
75yr: £4,800 x15
90yr: £9,600 x15
105yr: £19,200 x15
120yr: £38,400 x15 = 576000

GreatApe

If inflation is high, very high, you might be ok. If inflation is low someone in your situation is screwed.

What you need to look at and find out is the cost of extending your lease by 90 years to £0 ground rent.

I think it might be possible to extend a lease on your terms for maybe £15-20k to forgo the ground rent, the reversion cost will possibly be negligible due to the 122 year term. + legals of maybe £3k.

It is a difficult situation
This is where our MPs need to use some common sense and change the law to set realistic costs and calculations for extending leases. Right now it seems freeholders are benefiting from low inflation to boost both their ground rents real values but also massively to boost their fees for extension leases.

System

Is there an upper limit? Taylor Wimpey built this into their leasehold flats doubling every 10 years I think but there was a cap at 50 years or something like that. It works out at an annualised 7% increase.

I don't know why people don't check what the ground rent is and what the t&c's are. It's part of the cost of buying the leasehold.

PasturesNew

It's legal, you signed for it.
£150 and doubling every 15 years "isn't a lot at all" - you'll not outlive your ability to pay for it. Many flats these days already have a £1-3k/year charge!
It doesn't make your flat worthless.
You're scare mongering yourself unnecessarily.

While the ground rent doubles over 15 years, all other incomes/ expenses will change over that time too. In 30 years' time, when it's £600 you'll still be laughing.

How long do you plan to live there/live?

silvercar

I am moving this thread over to the housing board, where it may see more responses.

ceecee1

Check out the website - Leasehold Knowledge Partnership for information (its a charity) they will be able to advise you

There is also a facebook page - National Leasehold Scandal - who are campaigning hard for people caught up with unsellable properties. There are over 90 MP's supporting them

cloo

It's not ideal, but neither is this a scenario where it renders your property worthless; there's no reason for it to preturb any buyer in the next 6 decades.