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Solicitor unhappy with escalating ground rent - help!

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Solicitor unhappy with escalating ground rent - help!

edited 30 November -1 at 1:00AM in House Buying, Renting & Selling
43 replies 3.3K views
michaelsftmichaelsft Forumite
54 posts
edited 30 November -1 at 1:00AM in House Buying, Renting & Selling
Hi all, I'm in need of a little guidance and I hope some can offer some words of wisdom. Long story short, at a late stage in my purchase of a new flat (M21 - Chorlton) my solicitor has advised me to pull out on the basis that there is an escalating ground rent clause which goes:

£100 - first 25 years (10 years remaining at this stage)
£200 - 2nd 25 years
£400 - 3rd 25 years
£800 - 4th 25 years
£1600 - 5th 25 years

Now, I don't think these prices themselves are outrageous but my solicitor has decided we must seek a deed of variation to get rid of this and that it'll cause many problems when selling in the future. She feels very strongly about it. My mortgage broker and estate agent don't seem particularly phased by the rate so I'm in a bit of a tiff. The sale has been going on for too long already and the buyer of my current flat is eager and willing to move at a moments notice.

If I pull out of my sale I would still sell mine and rent somewhere while looking for somewhere else but that's a whole new level of annoyance. Storing things, paying rent, moving stuff twice. Obviously it would be easier to just go ahead with the current sale (much much easier) but I don't know who's advice to take - my solicitor or pretty much everyone else I have spoken to.

All comments and advice are greatly appreciated.
Thanks for reading
Michael
«1345

Replies

  • Tom99Tom99 Forumite
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    Doubling every 25yrs is not too bad added to which the initial ground rent at £100pa is quite low. The rent will not exceed £200 for the next 35yrs.
    The problem will be if your solicitor is also acting for your mortgage co but most mortgage co's now have their own rules about what the will or will not accept.
    You can buy out the ground rent after 2yrs using the lease extension legislation or if the current seller has owned for 2yrs they can serve notice now which you take over immediately.
  • ACGACG Forumite
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    Estate agents wants to sell the house.
    Mortgage broker - hopefully has your best interests at heart, but still gets paid if you take out your mortgage so should be taken with a pinch of salt.

    Solicitor is the one you should be listening to.

    Chorlton is the one part of South/West Manchester I am not too familiar with. I grew up in Burnage, spent 10 years drinking in Didsbury, I live in Cheadle, and my office is in Urmston, so I have spent my life around it but never in it. I know there are parts that are quite in demand and parts less so.

    Assuming your solicitor is able to complete (ie the mortgage lender is not preventing it), then you have the choice of completing in the knowledge that it could be an issue or pulling out or I suppose trying to get the ground rent altered (which will take time and probably cost money).
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Fire_FoxFire_Fox Forumite
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    They are definitely not 'your' estate agent. They are the vendor's estate agent. Your expert legal eagle advises get a deed of variation which is nothing like pulling out.

    Never buy a property simply because you are bored, frustrated or feel too invested financially or time wise. Leasehold purchases are inherently complex because there are more interested/ involved parties. You are not at a late stage until after exchange of contracts.
    Declutterbug-in-progress.⭐️⭐️⭐️ ⭐️⭐️
  • michaelsftmichaelsft Forumite
    54 posts
    My Estate Agent (on my sale not the purchase) was pretty balanced on it (purple bricks so he doesn't care, he's getting paid either way), he acknowledges that it's not ideal but also got me to look into what it really means. In 110 years someone will be paying £130 a month in ground rent. What will £130 a month mean to the average property holder in 110 years time - my guess is, very little really. Everything goes up in cost and besides, it'll have been renegotiated by that point anyway. From memory once a property has 90 years left on the lease it's getting due to be extended so all the terms can be changed then. My mortgage advisor has been brilliant with me for years and he seems utterly unconcerned by it.

    It's starting to feel like a mountain out of molehill. Chorlton is a very desirable place to live and can be very expensive but I found a decent deal here (£198k for a 2 bed flat in a relatively modern 14 year old build is about as good as it gets).

    If I try and get the ground rent altered now it'll push everything back to the point my buyer will probably pull out. I'm not prepared for that to happen but the hassle of storing everything and moving twice and paying rent and everything else that comes with a new place just feels so daunting. Two hours ago I was ready to pull the plug but if I think about it, the costs just don't bother me very much. I have to think, would it really bother other people that much more than me?

    Is someone in 35 years time really going to baulk at £400 a year? Will it ever get that far? The lease should be renewed by then anyway. Am I being too cavalier about it? I've half a mind now just to tell her to go ahead and ignore that. The language she used was very very worrying but should it have been?

    " I am concerned that the escalating ground rent could seriously affect the future marketability of the property and I consider that a deed of variation is obtained from the freeholder. If the seller or freeholder will not agree to this, I must advice you not to proceed with the purchase."

    "As advised, you do need to look at it as a let off really. It could have been much worse if you had gone ahead with the purchase and then has trouble selling in the future."

    Thank you to anyone who posts on here, it may seem like I have made up my mind but I'm really just going through things in my head and all comments are very very welcome. It is a big decision I know so I appreciate you all.
  • haras_nosirrahharas_nosirrah Forumite
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    lenders don't like doubling every 10 yrs but I believe doubling every 25 yrs isn't an issue.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • michaelsftmichaelsft Forumite
    54 posts
    Fire_Fox wrote: »
    They are definitely not 'your' estate agent. They are the vendor's estate agent. Your expert legal eagle advises get a deed of variation which is nothing like pulling out.

    Sorry I was referring to my estate agent who I called for advice on the matter, he's been pretty good to me and I wanted his thoughts on the matter. My 'legal eagle' advises getting a deed of variation but the time and cost involved make this prohibitive and since the terms of the lease aren't particularly heinous it is probably also unlikely it will be amended. Just wheel spinning when the sale/purchase have already taken quite a long time to get anywhere.

    In all likelihood, it would probably mean pulling out if I take her advice, or at least having to leave my place and sort everything else because I don't want to jeopardise my own sale. I guess what I'm trying to make sense of is, is this really a problem or just a pretty common part of many leaseholds.
  • MojisolaMojisola Forumite
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    In a hundred years, £1600 probably won't be very much money!
  • michaelsftmichaelsft Forumite
    54 posts
    lenders don't like doubling every 10 yrs but I believe doubling every 25 yrs isn't an issue.

    This is what I've heard today as well. If the bank is happy to lend how worried can I be?
  • michaelsftmichaelsft Forumite
    54 posts
    Mojisola wrote: »
    In a hundred years, £1600 probably won't be very much money!

    Also my thinking. I've read some shocking stories of 10 year doubling that puts the rate up to £10k plus after 50/60 years but this seems like a different kettle of fish.
  • TrickyDicky101TrickyDicky101 Forumite
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    On the basis of what you've stated, the GR does not even seem to keep pace with long term inflation (let's assume it's the BoE's target rate of 2%) so I personally don't think it is at all onerous.

    Has your solicitor explained why she feels it is a no-no?
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