Selling house and buyer had mortgage rejected due to doubling ground rents

saajan_12

Doubling every 25 years is a modest increase, and in line with typical rise by a couple of % every year leases. So there are a few possibilities

1. The buyer's lender is dim/being conservative and is really rejecting based on the ground rent.
-> a. encourage buyer to find another mortgage
-> b. if buyer is convinced this is the common view,

1. Buyer's lender is being dim/conservative and really rejecting based on the ground rent -> convince buyer to find another lender

2. Buyer believes house is unmortgageable as their lender is really rejecting based on the ground rent and buyer is convinced this is the common view. -> not much you can do, find another buyer

3. This is an excuse for cold feet / another issue. -> The fact that they're making excuses suggests they don't want you to resolve the real issue to get the transaction back on track. Find another buyer.

Mutton_Geoff

saajan_12 wrote: »

Doubling every 25 years is a modest increase

Very modest, in fact just about in line with inflation over the last 25 years, so actual increase in real cost nil.

wantonnoodle

Regardless of the ground rent doubling every 25 years - which as everyone is saying is not a huge increase, I think one thing is being missed. How long is left on the lease? It could be the case that the lender is getting twitchy because the lease is too short. From what I've heard from friends / read in the media (we're freehold so don't have experience of leases), lenders can be reluctant to lend if the lease is less than ~80 years. Could that be the issue?

If there's plenty of time left on the lease, then I agree that the buyers may be getting cold feet and are using the ground rent as a convenient excuse.

CouponClipper

Me and my partner brought a flat in December with a mortgage through Lloyds that has a doubling ground rent ever 25 years and is currently at the base of £300 with approximately 15 years left before it doubles for the first time.

I agree with the other posters that this really shouldn't be a problem. Someone isn't telling the truth!

ijones8784

Thanks for all replies. 123 years left on the lease - so still considered long. Last ground rent increase was 2009, so next increase will be 2034 - so yes, sooner than 25 years from today but still quite a way off.
Our Solicitors agree that is not unreasonable, but seller still wants to push for deed of variation. To be honest we’re fully expecting a refusal from the landlord, and since for some reason our buyer is not happy to apply for another mortgage, looks like it’s back on the market for us. Already mentally preparing the flat again! Wasted us £100s but at least we’ll know where we stand soon, it’s the not knowing that’s annoying. Thanks all.

strawberries1

I'm in a similar position about to exchange but so many having issues with doubling ground rent. It's £250 doubling every 25 with 120 left so in 20yrs It'll be £500

swathikapu

We are about to exchange on a flat with 118 years lease left, ground rent doubling every 25 years.

2010-2035 - 300 (25 years)
2036-2068 - 600 (33years)
2069-2094- 1200 (25 years)
2095-2120 - 2400 (25 years)
2121-2135 - 4800 (17 years)

We are going with Barclays and they are reviewing this at the moment, not sure what would be the outcome. Could you tell me which bank did your buyer went for his mortgage ?

swathikapu

Were you able to complete on this ?

bouicca21

You could offer to serve notice of an intent to extend the lease - the buyer can take advantage of that and go down the statutory route which will wipe out the ground rent. Mind you it will be expensive, but you needn't tell the buyer that!

swathikapu

strawberries1 wrote: »

I'm in a similar position about to exchange but so many having issues with doubling ground rent. It's £250 doubling every 25 with 120 left so in 20yrs It'll be £500

Were you able to exchange and complete on this ? Thank you.