Deed of Variation for error in lease

davidmcn

eddddy wrote: »

I'd have thought 2.2 states that the rent is £200 from year 25.

Nope, because a Review Date is every 5th anniversary of year 25. Not year 25 itself.

Tom99

Is the difference?:
- What was obviously intended = £200pa from yr25 indexed to RPI 5yrly
- What the lease actually says = £200pa from yr30 indexed to RPI 5yrly
So a difference of £100pa for 5yrs plus the indexed increase on £200 over yrs 25-30 for the rest of the lease.

Presumably this deed of variation is going to confirm that the 1st increase is yr25, ie the tenant will pay more than they strictly should do?
It does not seem to be a defect to get worked up about when the solution is to confirm you will pay the higher amount.

getmore4less

1.2 'the First Review Date' means the twenty-fifth anniversary of the commencement of the term

.........
1.4 'the Initial rent' means the sum of £200 per annum
......
2.1 Until the First Review date the Rent is to be £100 per annum thereafter during each successive Review Period the rent is to be a sum equal to the greater of the Rent payable under this Lease immediately before the relevant Review Date or the Revised Rent ascertained in accordance with this Schedule
2.2 The Rent for any Review Period is to be the Initial Rent plus the amount which bears the same proportion to the Initial Rent as the Increase bears to the base Figure

The first review is the 25th year
(although that will be 0 change as the base is used to calculate the increase)

2.1 says it is the rent just before a review date which starts at £100
(or any future indexed amount from £100 ie it can only go up even if the index drops)

2.2 says it is the initial rent which is £200.

That is the potential contradiction.

It could be argued that 2.1 says "greater of" so 2.2 will be greater if it starts at £200

Why are you paying more than £100?

Jigglebiz

The deed of variation is to confirm that the ‘initial rent’ is £100 as stated on the first page rather than the £200 it states in the later section.

As I am paying £145ish pa at present (and haven’t for the past several years of ownership).

I wonder now if the reason the freeholder is stalling is because it has been alerted to them they have been falsely claiming more ground rent than they should have.

They have already claimed in writing to my solicitor that the initial rent should be considered £100 pa.

Jigglebiz

Further thoughts on this... what if the buyers sol has noticed that we are paying too much ground rent and hasn’t pointed it out to our sol... reason being that they will try and claim back our overpayments once they own it

AdrianC

Jigglebiz wrote: »

So I have my lease here. On the front page there is a table which states
"the Rent: For the first 25 years of the Term the yearly rent of £100 and thereafter in accordance with the provisions of the seventh schedule"

p.45
"The Seventh Schedule
Provisions for review of the rent

1. For the purposes of this Schedule the following provisions have the following meanings:
1.1 'the Base Figure' means the Index Figure for the month preceding the First Review Date
1.2 'the First Review Date' means the twenty-fifth anniversary of the commencement of the term
1.2 'the Increase' means the amount (if any) by which the Index for the month preceding the relevant Review Date exceeds the Base Figure
1.3 'the Index' means the 'All Items' index figure of the Index of Retail Prices published by the relevant Ministry or Department and any successor thereto
1.4 'the Initial rent' means the sum of £200 per annum
1.5 'Review Date' means each fifth anniversary of the First Review Date
1.6 'a Review Period' means a period beginning on any Review Date and ending on the day before the next Review Date thereafter
2.1 Until the First Review date the Rent is to be £100 per annum thereafter during each successive Review Period the rent is to be a sum equal to the greater of the Rent payable under this Lease immediately before the relevant Review Date or the Revised Rent ascertained in accordance with this Schedule
2.2 The Rent for any Review Period is to be the Initial Rent plus the amount which bears the same proportion to the Initial Rent as the Increase bears to the base Figure
2.3 If the reference base used to compile the Index changes after the date of this Lease the figure taken to be shown in the Index after the change is to be the figure which would have been shown in the Index if the reference base current at the date of this Lease had been retained
..."

I can see that there are clear contradictions and yet our ground rent is £72.78 per 6 months. I assume from reading this that it has made a RPI linked increase from an initial ground rent of £100 per year - but correct me if I'm wrong!

So year 1 -> year 25, Rent = Initial Rent.
Rent increases to add 5yr RPI on year 25, year 30, year 35 etc.

But the IR is various stated as £100 and £200, and the freeholder is charging you a completely different amount anyway.

I wonder if they've started the +5yr RPI from yr5, not yr25?

Dec04 RPI = 189.9
Dec18 RPI = 285.6 = +50%
So if they're charging you ~£145 now, it looks very likely that they've started from £100, with increases every 5yrs from the start, instead of year 25.


Debts are only enforcable for 6yrs, so at the very most there's going to be about £250-300 that you could get back.

But one thing's for sure - any competent solicitor is going to pick up on this and the sale is going to stall here. So just get it sorted. Yes, it's a PITA. Yes, it's expensive. Yes, it's slow. But...

Is the sol you're using for the sale the same one you used for the purchase? Did you buy the property as a new-build, and was that sol "recommended" by the developer...?

eddddy

Jigglebiz wrote: »

The deed of variation is to confirm that the ‘initial rent’ is £100 as stated on the first page rather than the £200 it states in the later section.

The lease seems very clear on that.

The rent is £100 for the first 25 years.

The 'Initial Rent' of £200 starts after that

Jigglebiz wrote: »

They have already claimed in writing to my solicitor that the initial rent should be considered £100 pa.

The 'Initial Rent' is not £100.

As above, the 'Initial Rent' is £200, and the 'Initial Rent' starts after the first 25 years.

Edit to add..

You seem to be making an incorrect assumption about what 'Initial Rent' means - you need to read the lease more carefully.

Jigglebiz

You seem to be making an incorrect assumption about what 'Initial Rent' means - you need to read the lease more carefully.

I see. So do you think there is not in fact an error in the lease at all?

It does make sense based on what we pay that they have already started adding inflation to the ground rent, which must have originally been £100.

We bought the property via the housing association when it was originally shared ownership. Solicitor was recommended as they specialise in that area. Now we own it 100% and are selling it privately.

Jigglebiz

Should have said - no we didn’t buy the flat from the developer, it was 10 yrs old when we bought it

AdrianC

So that's two solicitors already who've dropped the ball.