RPI Ground rent review every 7 years - which Mortgage lenders lend?

AnotherJoe

Garyqms wrote: »

- if a future buyer obtains a mortgage I may be asked to take out an indemnity insurance policy to protect against the possibility of the landlord taking possession if the ground rent is not paid on time (current cost £50-100)

Maybe I'm missing something in the wording but how can you take out an insurance policy to protect against something a future buyer may do or not do? Or if you mean you not having paid it say this year, before they take possession, well then pay it !

rachel230

AdrianC wrote: »

Was that in reply to my question?

So you really believe that ANY regular increase - even by inflation, so the amount stays the same in real terms - is "onerous"?


I have zero clue as to what you mean by this.

G/r should not at any stage in the life time of the lease be more than 0.1% of property value.
If you have a 999 year lease how many times does the 7 year rpi increase happen - e.h.6 times (first 42 years of lease? continual through 999 years)?
Also if g/r goes over £250 A year (£1000 in London) that brings a whole new set of problems and makes eviction/forfeiture much more of a risk.

anselld

rachel230 wrote: »

G/r should not at any stage in the life time of the lease be more than 0.1% of property value.
If you have a 999 year lease how many times does the 7 year rpi increase happen - e.h.6 times (first 42 years of lease? continual through 999 years)?

Even if it is continual the property value is likely to increase at a similar rate to RPI so unlikely to be an issue.

rachel230 wrote: »

Also if g/r goes over £250 A year (£1000 in London) that brings a whole new set of problems and makes eviction/forfeiture much more of a risk.

That is a fair point as the legislation stands (Housing Act 1988) however easily avoided by paying ones ground rent. Not a mortgagability issue.

rachel230

Here is one link. There is a lot of information out there for anyone who is interested.
https://www.google.com/amp/s/redbrickblog.wordpress.com/2019/04/01/feudalism-toxic-leases-and-a-parliamentary-select-committee/amp/

AdrianC

rachel230 wrote: »

G/r should not at any stage in the life time of the lease be more than 0.1% of property value.

Well, that's a total and utter non-answer.

Is this "0.1%" figure one that you've plucked from anywhere in particular, or just your humble opinion?

So for a £250k property, so long as it's under £250, you're happy. Woo. But we were talking about inflationary increases. If we assume that the property values also increase roughly in line with inflation, but the ground rent doesn't, then that arbitrary proportion decreases. If property prices increase faster than inflation, as they generally have in the past, then...

If you have a 999 year lease how many times does the 7 year rpi increase happen - e.h.6 times (first 42 years of lease? continual through 999 years)?

There's lovely for you. And?

An annual increase happens 999x. A 10yr increase happens 99x. A 7yr increase happens 999/7 times. It's not exactly rocket science. Or particular relevant.

Also if g/r goes over £250 A year (£1000 in London) that brings a whole new set of problems and makes eviction/forfeiture much more of a risk.

A specific issue, yes, but not one that makes RPI increases "onerous".

rachel230 wrote: »

Here is one link. There is a lot of information out there for anyone who is interested.
https://redbrickblog.wordpress.com/2019/04/01/feudalism-toxic-leases-and-a-parliamentary-select-committee/amp/

Umm, right. And?

It is a progressive political blog with a particular focus on housing policy. As a forum it is open to anyone interested in progressive debate about homes, housing and communities, and wider politics. We are linked to the Labour Housing Group but the views expressed here are those of individual authors and/or the editors and are not necessarily the view of LHG or London LHG.

So somebody random's party political opinion. No more, no less.

rachel230

The 0.1 is the recognised percent that the ground rent should not be above in relation to property value.
Not really interested in your other abrasive, snide comments.

AdrianC

rachel230 wrote: »

The 0.1 is the recognised percent that the ground rent should not be above in relation to property value.

Recognised by who? You?

Not really interested in your other abrasive, snide comments.

Then stop waving your opinions about as if they were anything more.

SmashedAvacado

Rachel it’s clear you feel passionately about leasehold property but filling a thread with misinformation is unhelpful

Further - if you do represent a group then for that group to have credibility you need to use facts and not just state your opinion as fact

The reality is that there is a lot about leasehold law that could do with looking at - however ground tent rpi increases is not one of those areas of concern. Lenders are happy with these and basically anyone with common sense house understand that over 100 or 1000 years of your rent goes up with inflation that’s no worse than the price of your sausages or power or sky tv going up with inflation. If it’s affordable today it will remain affordable in the future.

People come on here for advice and the op asked about what lenders would accept an rpi increase. You’ve not been honest (or you are horribly uninformed) in your answers

Tom99

Why was the 1st review in 2017 not implemented? You say it was a new build in in 2012 so is the 1st review not due this year? Even if it was 2017, I would factor into your figure that the oversight will be spotted and a backdated review implemented. Unless you ask the seller to pay you this backdated rent its you who will be liable, the landlord can collect up to 6yrs backdate rent on demand.

Has the seller lived there more then 2yrs? If so you can ask them to serve a section 42 lease extension notice after exchange of contracts. You then take over and can extend the lease and remove the ground rent without having to wait 2yrs, obviously at a price.

littlerock

One of the issues with RPI increases, is that there are upward only increases, the ground rent does not fall if inflation goes down.